Oh Snap

Evan Spiegel Takes a Power Move out of Zuckerberg’s Playbook

Spiegel and Snapchat co-founder Bobby Murphy want to retain management control of their company.
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By Larry Busacca/Getty Images.

Before Facebook went public, a then 28-year-old Mark Zuckerberg made a series of moves to ensure he’d retain majority control of the social-media giant he had launched, a few years earlier, in his college dorm room. A 2012 S.E.C. filing showed that some of Facebook’s most powerful shareholders had handed over their voting power to Zuckerberg—so while he owned just 28.2 percent of the shares in Facebook, he was granted additional “shares subject to voting proxy,” bringing his total shareholder voting power to 56.9 percent, cementing his position as the most powerful person at Facebook. Last year, he consolidated his power again, getting the board to approve a new stock class structure that would allow him to retain control of the company even if he sells most of his shares.

Now, another aspiring young C.E.O. appears to be taking a page out of Zuck’s playbook. It’s common for tech entrepreneurs to want to retain management control of the companies they build, and Snap—the parent company of ephemeral messaging upstart Snapchat—is no exception. While Snap is planning to go public this year, founders Evan Spiegel, 26, and Bobby Murphy, 28, who own about 45 percent of Snap’s stock, will retain more than 70 percent control of Snap voting rights, The Wall Street Journal reports, thanks to a new class of shares given to new investors in Snap’s I.P.O. that will deny them any voting power.

While it is not common for tech companies to deny new investors voting shares, Spiegel and Murphy may be leveraging the fact that Snap’s I.P.O. is one of the most hotly anticipated in an era when the tech I.P.O. pipeline has cooled dramatically. Nor is it the only way in which Snap and its young co-founders have acted strategically to prepare for a public market debut. Last year, the company rolled out a new, limited-run product called Spectacles, and rebranded itself as a “camera company,” though arguably Snap continues to be more well-known as a messaging platform. It launched Snapchat Partners, a much-anticipated A.P.I. that fueled rumors of a pending I.P.O., and added board member Stan Meresman, an expert on advising C.E.O.s on how to go public. Last week, Sony Entertainment CEO Michael Lynton announced in a memo to his company that he would be stepping down to focus on his responsibilities at Snap. (“As some of you are already aware, I have been involved with Snapchat since its early days. Given Snapchat’s growth—and my growing role and responsibilities in it—I recently determined that the time was right to make a change,” Lynton, one of Snap’s earliest investors, wrote in the note.) Snap, which has 150 million daily users, could go public as soon as March, at a valuation of as much as $25 billion.