When Evan Spiegel asked Intuit cofounder Scott Cook to invest in Snapchat’s Series A round of funding, Cook was sure that the app would be a complete flop.
“I didn’t believe in the product,” he told Business Insider during a recent interview. “Who needs disappearing photos? I thought he was dead wrong on the business.”
In retrospect, Cook admits that he was the one who was wrong.
Despite not believing in the original idea behind Snapchat, Cook invested early (and still owns his shares) because of how impressed he was after a surprise encounter with Spiegel back in 2011.
Betting early on Spiegel
Cook was a guest lecturer for a graduate-level MBA class on entrepreneurship and venture capital at Stanford. The class was conducting a case study on the original business plan for Intuit, the software giant behind services like TurboTax and Mint that Cook cofounded in 1983.
“This particular year, the class was struggling,” Cook told BI. “The answers were not very good. They were not thoughtful.”
Toward the end of the class, one student in the back of the room raised his hand.
“And he laid it out brilliantly,” said Cook. “He aced it. He understood both sides, could speak to both sides, and could explain why ultimately we did not get venture funding.”
The answer came from Spiegel, who was auditing the class as an undergraduate product design student.
“Watching him outperform the MBAs, that was pretty impressive,” Cook recalled.
Cook was so impressed with Spiegel’s answer that he asked the class’s professor to introduce the two at the end of the class. He then invited Spiegel to help with a new product Intuit was developing for India while he finished his degree.
The product never took off, and Spiegel only sat in on a few meetings with Intuit before he dropped out of Stanford to work full time on what would become Snapchat. But Cook was taken with Spiegel, and the two quickly formed a friendship.
When Spiegel later approached Cook, who has a net worth of $US2.5 billion, to see if he wanted to invest in Snapchat’s first round of funding, Cook agreed because of his faith in Spiegel as an entrepreneur.
“I thought he’d figure it out rapidly and he’d pivot to something that is good,” said Cook.
Looking back, Cook attributes Snapchat’s rapid growth to the “innovative thinking” at the company, and how Spiegel has built on the app’s core concept of ephemeral messaging.
“It’s not just the original idea anymore of only photos,” he said. “He captured the main essence of allowing people to create and share — hence Stories and lot of other things. And then what he’s innovated in is the advertising, creating stuff that’s consistent with the user behaviours and allowing advertisers to do what they want to do in a way that works for both.”
Cook’s faith in Spiegel as an innovator was cemented after the 26-year-old famously turned down a roughly $US3 billion acquisition offer from Facebook CEO Mark Zuckerberg a few years ago.
“We spent time together before he met with Mark,” said Cook. “I’d say he surprised me there. It would have been very easy to say yes to that offer. And in hindsight, he clearly made the better choice.”
So what does his decision to rebuff Zuckerberg say about Spiegel’s vision for Snap?
“I think it says that he thinks he’s got a lot more innovation that will outlast any rival. Why sell out when you see the things you want to do next and you’re excited about them?”
Get the latest Snap stock price here.
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