#CNBC Transcript: Snapchat (NYSE: $SNAP) Co-founder & CEO Evan Spiegel Speaks With CNBC's Julia Boorstin On "squawk On The Street" Today
June 18, 2018 (Investorideas.com Newswire) CNBC's "Squawk on the Street"- Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Snapchat Co-Founder and CEO Evan Spiegel and CNBC's Julia Boorstin on "Squawk on the Street" (M-F, 9AM-11AM ET) today, Monday, June 18th. Following is a link to the interview on CNBC.com: https://www.cnbc.com/video/2018/06/18/watch-cnbcs-full-exclusive-interview-with-snap-ceo-evan-spiegel.html.
Julia Boorstin: Good Morning. Im Here At Cannes Lion With Snap Ceo Evan Spiegel. And Before We Get Started Full Disclosure. Nbc Universal, Cnbcs Parent Company, Is An Investor In Snap. Evan, Thank You For Joining Us Here Today We Really Appreciate It. Your First Tv Interview Since Your Ipo Over A Year Ago Here You Are At Cannes The Big Question Is, Are You Winning Ad Business From The Likes Of Facebook This Year?
Evan Spiegel: Well, Theres Definitely A Lot To Go Around, Obviously, As People Start Transitioning Dollars Away From Traditional Mediums Like Television. The Really Important Thing For Us Has Been The Way Weve Evolved The Business Over The Last Three Years. Three Years Ago At Cannes We Announced Full-screen Vertical Video And People Thought We Were Crazy. At The Time Everyone Had Postage Stamp Sized Video. And Thats How They Were Running Ads All Over Mobile. So We Started Cutting Everything Full Screen Vertical And Now Thats Just Become A Dominant Format All Across Mobile. And What We Tried To Do Since Then Was Start Solving Problems Advertisers Were Having. In The Beginning People Said Gosh, Advertising Is Really Expensive On Snapchat. Its Hard To Buy, Hard To Measure. Over The Last Three Years We Went From Being One Of The Most Expensive Ad Products To Today The Least Expensive In Our Peer Set Thank To Programatic And Things Like That.
Boorstin: Theres Been A Lot Of Tension Here On The Fact That Facebook Has Copied Some Of Your Most Popular Features How Do You Address That When Youre Talking To Advertisers?
Spiegel: I Think We Just Have To Continue To Innovate And, Obviously, I Think One Of The Things Thats Become Clear Over The Past Couple Of Months Is How Important Values Are To Consumers And, Therefore, To Advertisers. So I Think Now A Lot Of Times When People Are Buying Advertising Products They Want Them To Work So We Have To Provide A Lot Of Roi And Value For Advertisers. They Also Want To Feel Really Good About Their Advertising They To Feel Like Like Theyre Having A Positive Impact On The World
Boorstin: Your Stock Is Still Down 90% From Your Ipo Price. What Does It Mean If Youre Innovating And Someone Is Copying That Innovation How Do You Talk To Investors
Spiegel: I Think One Of The Things We Have Seen In Technology Over Time Is That The Innovators Win In The Long Run. We Have To Stay Focused, Focus On Our Customers And Continue To Deliver Great Innovation
Boorstin: Does That Mean Youll Continue Innovating And That Facebook Is Going To Conitnue Copying Your Innovation? How Do Innovators Win When You Have A Giant That Massive That Can Copy The Innovation
Spiegel: Usually When The Innovators Win Is When A Really Big Platform Shift Happens Which Is Why We Are Investing So Heavily In Augmented Reality. We Believe Ultimately In The Next Couple Decades Computing Will Be Overlaid On The World Around You And Ultimately Thats Why Its So Important To Focus On The Camera Because When You Open Our Application Today, You Open Into Your Own Experience Rather Than A Feed Of Everyone Elses Experiences. Starting That Journey To Opening Into Your Own Experience And Overlaying Computing On Top Of That Will Be Very Important For Us In The Long Run.
Boorstin: Those Lenses Are Something That Facebook Does Facebook Is Also Now Competing Against You In The Premium Content Business They Are Investing In Content For Watch. You Have Discover. Facebook Has Talent Such As Tom Brady Making Content For Them. How Your Going Up Against Facebook When Trying To Get The Same Premium Content
Spiegel: One Of The Unique Things Weve Done In Our Ecosystem Is Really Protect The Friend Graph – So For Us Its Important To Feel Comfortable Expressing Yourself On Snap Chat Weve Tried To Do Over Time Is Make Sure You Only Add People You Really Care About So You Arent In That Awkward Situation With 1,000 Friends You Dont Know At All. Thats A Long-term Competitive Advantage By Being Really Careful About Who Youre Actually Sharing Your Content With On Your Service It Makes You More Likely To Create And Feel Comfortable Creating
Boorstin: What About The Premium Content Business Though. What Facebook Is Trying To Do With Watch What Youre Doing With Discover That's Separate From The Friend Graph That's The Kind Of Deal That You Are Striking With Parent Companies Like Our Parent Company Nbcuniversal There Are Now A Lot Of People Competing For That Very Same Kind Of Content.
Spiegel: I Think The Really Important Thing Is You Look At The Premium Content Business How Youre Generating That Traffic In The First Place So If You Look At A Business Like N Netflex, They Invest In Tentpole Shows To Try To Get You Tru Out Netflix Or Subscribe. For Us Our Tentpole Content Is Content Created By Your Friends. And That's Why It Is So Important For Us To Continue To Protect That Friend Graph And Make Sure People Feel Comfortable Expressing Themselves That Brings People Back Into Our Service Every Day. When Youre Done Checking Out Your Friends Stories And You Are Bored You Can Just Scroll Down, Check Out A Whole World Of Content On Snap
Boorstin: Do You Think Of Yourself As A Media, Tech Or Social Company?
Spiegel: Definitely A Technology Company
Boorstin: But You Sell Advertising Like A Media Company And –you Let Friends Talk To Each Other More Like A Social Platform How Do You Explain This To Investors And Advertisers Who Are Here?
Spiegel: I Think The Really Important Thing To Understand Is The Central Role Of The Camera And The Way Its Changing All Sorts Of Things We Do Every Day. The Cameras Dramatically Alter Communication People Now Communicate Visually In Ways That Were Not Possible Even 10 Years Ago. Its Obviously Changed The Media Landscape For Sure As We Look At Our Company, Were A Technology Company Focused On Innovating Around The Camera And That Impacts Things Like Media And Communication.
Boorstin: You Announced Youre Opening Up Snap To Integrate With Developers Pandora Is One Of Your Launch Partners People On Snap Will Be Able To Access Pandora And Pandora Access Information About Users You Criticize Facebook For Doing This Very Thing And The Risk That Opened Facebook Up To In Terms Of Data Privacy. Why Are You Doing This
Spiegel: We Think Its Important For People To Understand They Can Get A Lot Of Value From Developer Products Without Compromising Their Privacy So, Of Course, Its All In The Way You Do It. One Of The Things Weve Done With Our Customers Is Built A Lot Of Trust So People Understand Were Respect Their Data And Give Them Choice About How It Is Being Used.
Boorstin: Why Are You Doing This At All? This Is Counter To The Way Youve Been Running Snap The Last Couple Of Years. Is It To Reverse Slowing User Growth
Spiegel: We Havent Yet Been In A Position Where We Can Expand All The Great Services We Offer A Snapchat Into Other Applications And Services. Its Really Only Now In The Sixth Year Of Our Existence As A Company That Weve Really Been Able To Invest In Growing Other Platforms.
Boorstin: Youve Been Adding Users But The Growth Has Been Slowing. Do You Think This Specific Addition, The Integration With Other Apps Will Be The Things That Revs Up Growth?
Spiegel: The Thing Were Focused On When It Comes To Gorwth Is Our Android Product Which Has Unfortunately Not Been Up To Our Standards For Quite Some Time. Weve Been Investing In Totally Rewriting The Android Product From The Ground Up And We Think This Modularization Of Android Is Really Whats Going To Push The Business Forward.
Boorstin: Thats More So Than Integration With Pandora And All These Other Apps
Spiegel: I Think That There Are A Lot Of Things That We're Working On Obviously To Grow The Business. But As I Look At A Big Opportunity Ahead, I Think Getting Android Right Is Critical For Us.
Boorstin: What About This Whole Question Of User Data? Do You Need To Be Accessing More Data? Do You Need To Be Giving Developers Access To More User Data For You To Really Properly Become A Third Player And Compete With Facebook And Google?
Boorstin: And So What Do You Have To Say To Mark Zuckerberg? Do You Think You Would Have Handled His Cambridge Analytica Scandal Differently?
Spiegel: I Think One Of The Really Unique Things Is Even From The Beginning Of Our Company, When We Were In My Dorm Room Or My Dad's House, We Were Thinking A Lot About Data Minimization And These Issues. And I Think It Hasn't Become Clear Until Just Recently, Over The Last Few Months, How Important That Is.
Boorstin: But Are You Saying From The Beginning You Were More Cautious? I Mean, There Were All Sorts Of Concerns About Screen Grabs Being Taken Of Snaps That Were Meant To Be Private. I Mean, It Seems Like These Are Issues For Any App, Any Platform.
Spiegel: Well I Think If You Go Back To The Beginning Of Snapchat And Really This Focus On Empowering People To Express Themselves, We Believe That For You To Feel Comfortable Expressing Yourself, You Need To Have Control Over Your Data. If You Don't Know Who Is Watching What You Create, How Can You Feel Comfortable Communicating? And So For Us, That Focus On Self Expression Has Really Dictated The Way That We Built The Business Over Time.
Boorstin: So You Are Saying You Will Never Have A Data Privacy Issue The Way Facebook Has?
Spiegel: Well, I Wouldn't Say That. You Know, We Have Definitely Made Mistakes And We Probaly Will Make Some In The Future. But I Think This Trust That We Have Built With Our User Base Over Time By Doing The Right Thing Will Certainly Help Us Navigate Any Mistakes We Make In The Future.
Boorstin: Advertisers Are Also Talking A Lot About Transparency. We Just Spoke To Unilever's Cmo Keith Weed And He Said That He Is Really Cracking Down On Influencers Buying Followers – On Bots As Fake Followers. How Important Is That To You? You Have A Lot Of Influencers On Your Platform.
Spiegel: That Is Really Important To Us. And One Of The Things That We Have Done From The Beginning Is Really Focus On Having Real Users. And We Do That By Doing A Lot Of Advanced Spam And Bot Detection Even As Youre Signing Up For Our Service. And So Rather Than Having This Approach Where I Think Other Platforms Just Let These Bots And Fake Users Sort Of Proliferate And Then Just Disclose The Percentage Of Their Users That They Think Are Fake. What We Do Is Just Trying To Keep Them Off In The First Place.
Boorstin: Are You Referring To Facebook And Twitter There?
Spiegel: I Think There's A Variety Of Platforms That Struggle With Those Issues.
Boorstin: You're Doing A Remarkable Job Of Not Uttering The Word Facebook. I Assume That's By Design. So It Sounds Like You've Reassured Keith Weed That He's Fine In Terms Of Influencers Not Having Fake Followers On Snapchat.
Spiegel: Well, Our Advertising Model Is Really Different. And So, If You Look At The Advertising, Snap Ads For Example Or Even Our Lenses, What We Really Try To Do Is Integrate Advertising Into The User Experience. And What We Found Is That On Other Services When They Rely Too Heavily On Influencer Advertising, It Can Feel Like You're Getting Marketed To All The Time Even When You're Not Viewing A So-called 'ad'. So The Endemic Ad Load Per Se, Is A Lot Higher On Those Services.
Boorstin: Speaking Of Influencers, Kylie Jenner Did Not Like Your Redesign. How Often Do You Hear From Celebrities Or Popular Influencers On The Platform With Problems And Issues?
Spiegel: We Hear From People All The Time And We Love Getting That Feedback. I Think It Is Really Important To Have That Dialogue With Our Community And To Help People Understand Why Were Making The Changes That We Are. Because Ultimately There Is Going To Be Some Bumps When We Make A Change. But We Historically Have Always Tried To Do The Right Thing For The Long Term.
Boorstin: It's Been Four Months Since Your Initial Redesign And The You've Tweaked It Since Then. Users Responded Pretty Badly. Were You Surprised?
Spiegel: I Wasn't Too Surprised. Because My Wife, First Thing She Said Was, "what Are You Doing?" I Thought It Would Be A Little Choppy, But I Think The Really Important Thing Is To Help People Understand That We Are Migrating From This World Where The Stories Page Was Really Just A Finite List Of Your Friends To Now Being A Page That Is Open To A Whole World Of Personalized Content. And That's Going To Have To Be Something That We Get Good At Over Time. We Are Not Going To Be Amazing At It Overnight. But Laying That Foundation To Open Up The Whole World Of Content On Snap Rather Than Just A Small List Of Your Friends While Still Protecting All Of The Benefits Of Having A Small Friend Graph On Snap Is Really Important To Us In The Future.
Boorstin: But Do You Think The Fact That People Responded So Badly, Do You Think That Damaged Your Brand In A More Permanent Way Or Do You Think You'll Be Able To Earn Back That Trust And In What Way?
Spiegel: Well, I Hope What Happens Is Similar To What Happened With Our Programattic Advertising Transition For Example. People Were Really Upset That We Shifted To Programmatic And That Was A Very Disruptive Change For Our Business. But Now, 18 Months Later, That Was Just Very Obviously The Right Thing To Do. So I Think Hopefully, We Look Forward To 18 Months From Now Or Maybe At The Next Cannes, And We Can Talk About All Of The Great Benefits Of The Redesign.
Boorstin: But If Programmatic Was The Right Decision To Make Even Though It Was Critiqued, The Redesign, You Walked Back Some Of Those Changes. Do You Think Critiques Of The Redesign Were Fair?
Spiegel: Absolutely. We Definitely Made Some Changes To The Communication Side Of The Service That We Didn't Need To Make And Frankly, I'm Happy With The Changes We've Made Over There.
Boorstin: So When You Look At Your Next Couple Of Years, Do You Plan To Do Such Much Dramatic Changes To The App Or Other Additions?
Spiegel: We Are Going To Have To Continue To Do What Is Right For The Business Over The Long Term. And I Think, You Know, The Three Pillars That We Have – The Lens Studio And Spectacles And Snapchat The Application – Are Really Coming Together Nicely Now. So It's Really Important To Us To Stay Focused And Execute.
Boorstin: Can You Imagine Splitting Them Up And Having A Family Of Apps?
Spiegel: Not At This Time Because I Think We Get So Many Benefits From The Way The Little Mini Apps Inside Snapchat Work Together. So For Example, Our Map Application. I Dont Think We Would See The Same Traction Without That Being An Integrated Service.
Boorstin: A Lot Of People Have Said Now That Facebook Is Under So Much Scrutiny And Google, They're Both So Massive, That Gives More Opportunity To You When It Comes To Building Out Your Family Of Apps. Could You Ever See Making An Acquisition?
Spiegel: We've Made Great Acquisitions In The Past And Some Fantastic Teams Have Joined, Us So I Wouldn't Rule It Out.
Boorstin: So Five Years From Now When We Are Sitting Here, Is Snapchat One App Or Is It A Family Of Apps Like Facebook Is?
Spiegel: I Don't Want To Give That Away, But We Have A Lot Of Work To Do.
Boorstin: Just A Final Question On Your Focus On Management Of The Company. There Have Been A Number Of Executive Exits. Do You Need To Invest More In Recruiting Top Talent To Come Work At Snapchat?
Spiegel: That's Something I'm Constantly Thinking About And Working On. It's Really Important To Us To Constantly Be Improving The Team. And That Comes From Growth, It Also Comes From New Hires. And So I Think, You Know, Tim, For Example, Who Just Joined Us As Our New Cfo, Is Fantastic. He Is Already Making A Big Difference On The Management Team.
Boorstin: And Just A Final Question. You Control The Stock At Snapchat. Would You Ever Consider Changing That Structure? Potentially Generating More Shareholder Value By Giving Shareholders A Vote?
Spiegel: I Never Say Never To Anything. But At This Point, I Think Bobby And I Have A Shared Longterm Vision For The Company And We Are Executing Against It.
Boorstin: Great. Evan Spiegel, Ceo Of Snap, Thank You For Talking To Us Here At The Cannes Festival. Really Appreciate.
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