Feb 24, 2021 · 40m · 20vc
20VC: The Snapchat Memo: Lightspeed's Jeremy Liew on The 4 Key Elements To Consider When Evaluating A Consumer Social Product, What is Good/Great/World Class For Retention, Usage and Downloads in Consumer Social Today & The Core Insight Development of Eva
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Memo on 20VC, host Harry Stebbings interviews Lightspeed partner Jeremy Liew to break down the original seed investment memo for Snapchat. Liew shares how he tracked down Evan Spiegel, the critical metrics that signaled massive potential, and fundamental lessons on consumer social investing.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 29.9% of the talking time here. How this is scored →
Harry as informed peer 2.9 Guest teaching 3.8 Guest disagreement 0.8 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:40 Jeremy rejects Harry's metric degradation comparison
Jeremy counters Harry's premise comparing engagement drop-off to e-commerce CAC decay, pointing out that core communication use cases like messaging apply universally across all demographics.
Hardest push from Harry ▶ 28:08 Harry questions product vision moat against Big Tech copycatsHarry directly challenges the defensibility of consumer product innovation when well-resourced giants like Facebook and Instagram can clone features instantly.
Biggest teaching moment ▶ 25:50 Jeremy details the chronological feed heritage and Stories innovationJeremy delivers a masterclass on feed evolution, showing how Friendster's arbitrary design choice was blindly copied across MySpace, Facebook, and Instagram until Evan Spiegel re-engineered feeds from first principles.
Harry holds his own ▶ 17:17 Harry draws parallel between engagement metric saturation and CAC decayHarry demonstrates keen investment acumen by pressing Jeremy on whether stellar early user metrics are merely an artifact of temporary early-adopter alignment.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Sourcing Snapchat: The Pursuit of Evan Spiegel | 2 | 2 | 1 | 1 | Harry sets up the interview by asking Jeremy to detail how he first sourced Snapchat. Jeremy recounts tracking down Evan Spiegel through cold emails, Whois lookups, LinkedIn, and eventually a Facebook message. Harry listens casually and asks a brief follow-up on advice for young venture associates. | |
| Young Women as Early Adopters of Pop Culture | 2 | 5 | 1 | 1 | Harry prompts Jeremy on why young women were recognized as an important consumer demographic. Jeremy educates Harry on pop culture early adoption dynamics, noting how women build relationships through direct conversation and information sharing while men often engage in activities to avoid talking. | |
| Virality, Word-of-Mouth Growth, and International Breakout | 3 | 3 | 0 | 3 | Jeremy explains how Snapchat rapidly expanded into Norway, proving its international breakout potential. Harry gently pushes on whether an app needs to unlock broader demographic swathes beyond youth to achieve massive venture outcomes, leading Jeremy to explain advertising TAM requirements. | |
| Evaluating Snapchat's Early Traction Metrics | 5 | 4 | 2 | 4 | Harry questions early engagement metrics, comparing them to CAC degradation as products move past core demographics. Jeremy reframes the point, explaining that universal messaging use cases differ from e-commerce and providing concrete retention benchmark thresholds. | |
| Ephemerality and Overcoming Performance Anxiety | 2 | 5 | 0 | 1 | Harry asks how Jeremy evaluated backing student founders. Jeremy details Evan Spiegel's core insight into performance anxiety on permanent feeds, explaining how default ephemerality restored authentic, full-spectrum relationship sharing. | |
| First-Principles Innovation: The Invention of Stories | 2 | 5 | 0 | 1 | Jeremy highlights Evan Spiegel's first-principles thinking, using the creation of Stories to illustrate how social feeds historically copied reverse-chronological orders from Friendster without considering narrative sense. | |
| Features vs. User Culture in Consumer Social | 5 | 4 | 2 | 5 | Harry challenges Jeremy on how product vision retains value when incumbent platforms easily copy features. Jeremy distinguishes between features and entrenched user culture. Harry also probes Jeremy on Lightspeed's past valuation mistake when passing on Snapchat's early follow-on round. | |
| Unsung Heroes and Venice Beach Beginnings | 2 | 2 | 0 | 0 | Harry concludes with quick questions on unsung heroes and favorite memories. Jeremy praises co-founder Bobby Murphy and early executive Imran Khan, and fondly shares a story about visiting the small team at their Venice Beach house after a workout. |
Statements from this episode (24)
Consumer Social Apps Lack Context Without an Active Friend Network
“If you start using Snapchat without having other friends who use Snapchat, you lose all context. You don't sort of understand what it's for.”
Evan Spiegel Met Liew Because of His Obama Facebook Profile Photo
“At the time, I had as my profile a picture of me at Obama from a fundraiser that I had attended. During his first election campaign, and he said, well, you know, you had a picture of you and Obama there, so I figured you must be a decent person. So I figured I…”
Snapchat Raised Seed Capital When Server Costs Exceeded Spiegel's Credit Card
“Frankly, I think the thing that probably changed the most was that they finally had a need for financing. You know, at that first meeting, they ran us through some of the metrics of the business, and it looks tremendous. And we said, well, is there anything we…”
75% of Snapchat's Early Users Were High School and College Women
“When we met Snapchat, one of the things that really caught our attention was that 75% of the user base were young women in high school and college”
Young Women Are the Primary Early Adopters for Social Platforms
“Whether it be Facebook or Instagram or Pinterest or Vine or Tumblr back in the day or TikTok, you know, it's always been young women who've been that first set of early adopters”
Black Americans Are Core Early Adopters Driving Consumer Software Trends
“At least in the US, the African-American population has also been one of the core early adopters that has, again, sort of propagated pop culture across apps and more broadly.”
Snapchat Became the Third Most Popular App in Norway in 2012
“In fact, it had become the number three most, most popular app in Norway at that time, so ahead of Instagram, ahead of Facebook, and so forth.”
Snapchat Had 90,000 DAUs on 180,000 Installs When Lightspeed Invested
“So when we met them in, you know, March, April of 2012, they had about 90,000 daily active users off of a base of 180,000 installs.”
Snapchat Had 50% MoM Growth and 50% 90-Day Retention in 2012
“But I remember seeing 50% month on month growth. 50% DAU to MAU ratios, which suggests very high engagement, and 50% retention after 90 days, which again suggests high engagement, high retention, high growth.”
The Dominant VC Narrative in 2012 Was That Consumer Social Was Dead
“And I think you also have to bear in mind that in 2012, the dominant narrative was that social was dead. Facebook and Instagram had run the table like there were no more new opportunities in social anymore.”
Social Networking Creates a Response Obligation, Unlike Social Media
“I draw the distinction between social media and social networking as to whether or not a response is required. So messaging and social networks, if you leave someone a message or post something You know, there is a social obligation to respond. To not reply wo…”
Outlier Social Apps Require >50% DAU/MAU and 30-40% D30 Retention
“In messaging and social networks, you would want to see at least a DAU to MAU ratio of north of 50%, and you would want to see at least a D-thirty of, say, 30 to 40%. For, you know, for something to really be working, to be sort of at that outlier level.”
Top Social Platforms Were All Founded by People in Their Early Twenties
“If you look at Snap, if you look at Vine, if you look at Facebook, if you look at Instagram, if you look at Tumblr, they were all started by people who were, you know, in their early twenties.”
Path Attempted a Close-Friend Network by Placing Caps on Friend Counts
“There was a social network called Path, which had been started a few years earlier by Dave Morin, who had explicitly set out to try to build a use case for close friends. He did it by trying to cap the number of friends you could have.”
Bobby Murphy Built Early Snapchat Code Off-Hours While at Another Startup
“Evan was partnered with Bobby Murphy, who was a fraternity brother of his from Stanford, who graduated a couple of years earlier. And he'd been the guy who was building all of this and had obviously demonstrated an ability to like build high quality, scalable …”
Relying on Product Best Practices Creates Local Maxima
“You know, one of the funny things about product management is that it gets built up on the quote unquote best practices of product over time. And so, you know, everything ends up being an iteration on top of the thing that came before. And that can lead you to…”
Snapchat Stories Became the Dominant Format Across All Social Networks
“And with that one insight, starting from first principles, thinking about how people interact with each other, he has changed the course of all social networks, because you can't find, you know, whether it's Twitter, or LinkedIn, or, you know, obviously, Whats…”
Social Software User Culture Is Much Harder to Change Than Features
“Social software, there's two key components. There's the features and functionality, but then there's also the user culture, and user culture is very, very, very hard to change.”
Instagram Stories Is Restricted by the Platform's Highlight-Reel Culture
“Stories on Instagram, the culture of Instagram is still, look at how great my life is. You know, it's still highlight real type, you know, use case and culture, and that then propagates into stories.”
Snapchat's Monthly Burn Rate Exceeded $1M Within a Year of Seed
“Burn, within a year from our investment, Burn was in excess of a million dollars a month”
Social Networks With 100M Monthly Active Users Typically Monetize Successfully
“Historically, what we've found is that if a social network can get to a hundred million monthly active users, it typically finds a way to monetize.”
Lightspeed Passed on a Snapchat Follow-On Investment at a $13M Valuation
“If we'd invested, I think that if we'd done that round, I think the terms were three on 13 or something like that. It would have been a great outcome for the company and for Lightspeed.”
Lightspeed Invested in Snapchat's Seed Round at a $4.25M Valuation
“At the seed at four and a quarter pre, and, like, here we are looking at 13, and just thinking, well, you know, that's three times higher.”
Bobby Murphy Built Snap's AR Roadmap Starting in 2012
“From the very beginning, from, I think, maybe a couple of months in, was thinking about the, you know, the breakthroughs that had been happening in computer vision and the implications for what that could build, and he had been working on, you know, a lot of t…”