CNBC Exclusive: CNBC Transcript: Snap CEO Evan Spiegel Speaks With CNBC’s Julia Boorstin Today On CNBC’s “squawk Alley”
WHEN: TODAY, MONDAY, NOVEMBER 18
WHERE: CNBC’S “SQUAWK ALLEY”
A Look Back At Warren Buffett’s Legendary Washington Post Investment
Throughout his long investment career, Warren Buffett has made thousands of investors and bought tens of businesses. However, a couple of examples really stand out. Q1 2020 hedge fund letters, conferences and more These companies stand out for a range of reasons. The Nebraska Furniture Mart, for example, stands out because it was such a Read More
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Snap CEO Evan Spiegel today on CNBC’s “Squawk Alley.” Following is a link to the video on CNBC.com:
Watch CNBC’s full interview with Snap CEO Evan Spiegel
All references must be sourced to CNBC.
Julia Boorstin: hi contessa thank you so much I’m joined by Evan Spiegel, CEO of Snap in a rare exclusive interview. Thank you for talking to us this morning from your offices.
SNAP CEO Evan Spiegel: of course I have been looking forward to it.
Boorstin: we appreciate it. I want to talk about your earnings four weeks ago you reported accelerated user growth 7 million additional daily active users but Snap is still so tiny compared to Instagram which has 500 million daily active users does snap have any chance to catch up
Spiegel: there is certianly a lot of head room and I think some of the early indicators for example in the united states we reach more 13 t0 34 year olds than Facebook or Instagram I think gives us a lot of confidence that we can achieve really broad reach around the world.
Boorstin: what about this competition with Instagram do you have to catch up to Instagram to succeed?
SNAP CEO Evan Spiegel: well I think if we look at the broad opportunity, snap is really about real friends connecting, having conversations with one another and we think everyone will enjoy visual communication with snapchat so it is less about competing with Instagram and more about providing the value of snapchat to as many people as possible around the world.
Boorstin: the stock is up dramatically this year but it is still down 4% since your earnings about a month ago you beat expectations on the top and bottom line but it was the outlook that seemed to raised concerns. What is it about the outlook you look is sparking concerns among investors?
Spiegel: I’m not sure. We guided to another year over year acceleration in revenue growth we are excited about the progress growing the community so I think I guess if the stock’s up 150-something percent in the year a couple percent here and there probably don’t make much of a difference.
Boorstin: your users are young people 90% of 13 to 24-year-olds in the u.S. Use snap. Do you think that investors are a different demographic that they’re not fundamentally familiar with what snap is really about
SNAP CEO Evan Spiegel: well I think a lot of investor that we speak to have children that love the product and so they get to enjoy the product with their kids and often times that inspires them to join so I think it’s easy to use snapchat once you try it out and I think over time the company’s still 8 years ole or something like that so over time I think more and more people understand the value of snapchat in their lives.
Boorstin: what is difference about snap is the hold on those young people, 13 to 24-year-olds how do you make sure that that generation doesn’t age out of using snap
Spiegel: we have shared great retention stats in the past so I think if you look at users who signed up five years ago for people still using the service at the end of that year they retained at a 95% rate over the next 5 years and we believe that as more and more people join the service they find value, they love using it, they stay as they grow older and that’s why we reach 70-plus percent of 30 to 34-year-olds in the u.S.
Boorstin: so how much of your future growth is about a getting totally different demographic, older demographic, maybe those people’s parents to use snap
SNAP CEO Evan Spiegel: we think a lot of that will happen as the community grows up because visual communication is a powerful tool. Once you transition from sending text messages back and forth which are really impersonal, usually convey information to communicating visually showing your friends how you really feel it is go back to going back to text based communication and broadly people will embrace it visual communication more and more.
Boorstin: back to the first question of competing with Instagram, owned by Facebook, Facebook on many different counts copied some of your most successful features. How do you think about competing with this behemoth
Spiegel: the strategy that worked for us is to continue to innovate and lead the way and trying to serve our community so I think that’s why we have seen such strong growth over the past year and excited about the progress we are making.
Boorstin: the most recent copycat move from Facebook is Instagram threads, taking the most appealing part of your communications and creating an entirely new app around it for Instagram users to communicate what do you think of that app?
SNAP CEO Evan Spiegel: you know what I haven’t had a chance to try it out but if we look at the value of snapchat provides, investments in ar and evolution of the product of really becoming a platform, whether that’s with content or gaming, snap provides a lot of value to the community and focus on that.
Boorstin: you are doing a good job of not mentioning Facebook and not using the word Facebook but can you speak sort of specifically about the challenge of you’re innovating, creating products here at the headquarters and then the headline comes out about Facebook launching a new app that’s taking some very valuable things you are doing and putting them in front of their 500 million daily Instagram users. How do you deal with that on a day to day basis?
Spiegel: it is inspiring for the designers so the work that they do and create gets an even broader audience and looking over the last few years, we have defined the standards across mobile communication, mobile content and so I think if you’re a designer and you have broad reach for something you created that is inspiring.
Boorstin: inspiring but not frustrating?
SNAP CEO Evan Spiegel: I think for us we get a lot of excitement and joy of creatingnew things and much more focused on building and trying to delight our community than we are about other things.
Boorstin: so do you think Facebook’s behavior is anti-competitive
Spiegel: gosh. I think there are some things that they have done in the past, you know, that could be perceived to be anti-competitive, limiting the reach of other services on their platform, preventing people from using a snap code in the profile or something like that so services that have reached as broad as Facebook are held to a different standard obviously so I think we’ll sort of see what happens over time.
Boorstin: are they continuing to do those things
Spiegel: you know, it’s hard for me to speak to what’s happening currently. But you know, I think the government’s quite focused on that we have to learn from --
Boorstin: it’s pretty widely reported that snap kept a dossier codename voldermort of the different anti-competitive behavior that you were seeing Facebook do coming to snap and sharing this information with the ftc as they do the investigation into Facebook what is it that you think the public and the ftc should know when they’re looking at the landscape and Facebook’s behavior
Spiegel: gosh. I’m not actually sure that we have shared anything yet but I think it’s just important to understand the really important role that these technology platforms play in people’s lives and everyone wants to make sure there’s a fair playing field for all new competitors all new innovators because I think as we have looked at the technology landscape in america a lot of the big breakthroughs, stories or augmented reality, the products we have created, a lot of those innovations driven progress overall in the industry and the bottom line is competition can be really productive because it encourages companies to change, provide better products for the people that they serve.
So I think for us overall we need to make sure that small companies have a real opportunity to compete in an environment with really large technology players and I think snap is the success story but many, many start-ups that haven’t had a chance to get off the ground because these companies are so large and wield so much power.
Boorstin: you were once a tiny start-up and you did manage to succeed. What do you think the remedies are to make sure that start-ups can compete against a facebook
Spiegel: you know, that’s not my area of expertise so it’s hard to say what the remedies would be but I think a lot of people are very focused on figuring that out probably less of a question of regulation and now more a question of implementation and we should leave that to the experts.
Boorstin: do you think Facebook should be broken up
Spiegel: I don’t know. I don’t know what impact that would have for consumers so I think the real question is, would Facebook being broken up contribute to more competition in the ecosystem overall and benefit consumers. To be honest, I don’t know if that’s the case.
Boorstin: do you think it would benefit snap
Spiegel: I don’t know. I think the thing that it seems like regulators are most concerned about is the current sort of plan that Facebook has to integrate all of their services, integrate what’s app and messenger and Facebook and Instagram and I think the question then that regulators have is if that integration happens, will regulators still have an opportunity to break them up right? That seems to be the big debate and less should they be broken up than should they be allowed to integrate it takes years, these anti-trust investigations take a really long time and the question will be seven years from now the world will look totally different. Snap is only eight years old the world will look very different and I think the question will be what remedies are available at that time in the future.
Boorstin: seems like one thing that’s important to snap is this idea if I take a photo on snap with a signature lenses I should be able to share it on Facebook’s or Instagrams platforms without them blocking or deprioritizing that post. Is that the kind of thing that can be regulated?
Spiegel: I don’t know. I’m not sure how their service works but I think the regulators will sort it out.
Boorstin: mark zuckerberg talked about is the need for federal privacy regulation what do you think about that and there’s a new california privacy law for next year.
Spiegel: looking at successful privacy law I think we look to gdps as an example that’s really benefited consumers and still supportive I think of small businesses and makes sense because in europe competition is sort of looked at as an end in and of itself and want to support a competitive business environment. That’s always a priority and the united states thinking about competition we think about consumer harm and what’s interesting about ccpa is this is an example of regulation that may actually entrench larger players and make it harder for smaller publishers and I think the questions will be in the united states and california can we have regulation to support small businesses and provides consumer protections and I think we can be inspired by gdpr and the progress it has made in europe.
Boorstin: you have not been called to testify in front of congress as jack dorsey and mark zuckerberg have when it comes to privacy issues. Is snap in a totally different position than they are when it comes to these privacy issues?
Spiegel: we architected our service very differently snap is about communication and not public social media and so we don’t confront some of the same issues that those platforms have over time. We really pioneered things like this idea to delete people’s data was at the time quite radical. People said it was just for sexting and now this idea affemorality is very broad based and widely adopted by the industry and we have really focused on how to protect consumer privacy because privacy is key to self expression and on our service because we want to promote people’s ability to express themselves freely and communicate with their friends we want them to feel like their privacy is protected.
Boorstin: where do you fall on political ads? Jack dorsey said twitter won’t accept them at all zuckerberg said we will accept all political and issue ads and we won’t decide or fact check them or decide what is accurate or not where does snap fall
Spiegel: we tried to strike the right balance. We subject all advertising on the platform to review including political advertising and tried to create a place for political ads on the platform because we reach so many young people and first-time voters and want them to be able to engage in the conversation but we don’t allow things like misinformation to appear in that advertising.
Boorstin: so you fact check the political ads?
Spiegel: that’s correct, yes.
Boorstin: do you have external groups or an internal team?
Spiegel: an internal team that works on that so that might be more similar to cable rather than broadcast. I’m sure you’re familiar with the political advertising regulation.
Boorstin: one other political issue that’s come up recently is tick tock owned by a chinese company and whether that ownership of this company that is very popular here with teens in the u.S. Could be potentially dangerous or risky what do you think about those concerns of tik tok
Spiegel: I’m really not sure and not sure it’s a political issue more than a competitive issue but a great example of a chinese technology company successful with u.S. Consumers it’s one of the first times that’s happened in the us and I think our country’s grappling with that because we have a free market and encourage that competition and how we want to regulate data sharing and things like that going forward.
Boorstin: are you seeing the growth of tiktok competition for your users or stealing that demographic that you have such a hold on?
SNAP CEO Evan Spiegel: snap and tiktok are so different and consider them a partner. They’re an advertising partner, a snap kit partner meaning tiktok content gets shared through snap so people can discover it more easily but the services are very different. Snapchat is about communicating with close friends and seems like tiktok is a popularity contest.
Boorstin: all this -- talking about the competitive landscape and meantime trying to build a business how different does snap look from five years from now
Spiegel: wow you know, I think if we look back five years a lot’s changed for snap we built things like the discover content platform, the ar platform, launched gaming and so snap changed radically in the last five years and looking forward we expect that change to accelerate now that the company has found so much traction and continue to innovate at such a rapid pace and you’ll see us invest around augmented reality.
Snap chat opens directly into the camera so we see a lot of opportunities to continue expanding that capability beyond creative tools and effects which is primarily how it is used today and into more utilities so things like the partnership with photo math have been really exciting because you can use a camera to solve math problems press and hold on a problem and it helps you solve it and that’s an example of ar expanding into the utility use cases that are exciting.
Boorstin: what about maps it’s unclear to me how this I going to really be a key part of the growthwe know about google maps. Google has made such a big investment there with waze what is this meaning for you and your advertising business?
SNAP CEO Evan Spiegel: we see a huge amount of opportunity around maps and still very early and the fundamental thesis is maps should be personalized so if you open up maps on the phone today, Google or Apple , we have the same map despite the fact that we all have different friends and live in different places and visit different restaurants or theaters so snap maps is really architected around the idea of in the future it’s much more personal and started with your friends. You can see what your friends are up to, easy to meet up and see events happening around the world through the snaps that are posted so I think snap map is the beginning of maps becoming much more personal over time.
Boorstin: but right now the vast majority of the advertising is through the discover platform and the professional content for people to watch that’s sort of integrated with ads. How much of an ad business could grow around maps and how quickly becoming something to be as big as discover?
Spiegel: there’s a huge opportunity in local advertising and focused on building that engagement and building the core product of maps and over time will think more about advertising.
Boorstin: you have also talked about augmented reality and specifically of these spectacles you have introduced various versions of these ar glasses and haven’t tipped the mainstream. What’s it going to take for them to be something to see around the place, not just as sort of a novelty item
SNAP CEO Evan Spiegel: I think it takes time and a lot of technical innovation to get to you ubiquity with spectacles. Looking at the journey of hardware cameras over the past 100 years spectacles may follow the same trajectory. So if you think back in time people got the photo taken once a year and then cameras more portable, bring them outfor special occasions like a birthday and now with snapchat people use the camera all day every day and so spectacles is reallly with an event based product on the vacation, capture this amazing 3d immersive content you wear spectacles but not all day every day. Maybe ten years we’ll get to a place of key innovations around the display, for example, battery technology, even processing will allow us to create a product to be worn all day every day.
Boorstin: do you think it’s for consuming content or for creating content?
Spiegel: I think spectacles will be about experiencing the world so I think that’s more the -- if you look at the broad evolution of computing, the first desktops about information retrieval. Over time as mobile came along, computing is primarily about communication and a huge amount of internet traffic is about communication and going forward we believe compting will really be about experience and so computing is going to be overlaid in the world around you.
Boorstin: Apple discussed they’re doing a big investment in ar, an ar headset in 2022. Ar glasses by 2023 it sounds like what they’re doing is a little bit like your spectacles is this another tech giant coming in and going to steal your fire here
Spiegel: I’m not sure what Apple’s strategy will be but to date we have been great partners with them on augmented reality. They’re doing advanced things with their ml hardware that allow us to run sophisticated augmented reality lenses on their devices so I think we have seen that their investments in hardware have helped our business and we hope that will continue.
Boorstin: but they have said that these glasses to work on could replace phones is that similar to what you’re doing or is it complimentary is Apple going in a very different direction or competition?
SNAP CEO Evan Spiegel: I think it’s unlikely that these glasses are going to replace phones in the same way people still use desktop computers use their laptops etc . I do think they’ll be supplementary to the other computing experiences. And I hope to continue to partner well with Apple in the future.
Boorstin: great fascinating space to watch with maps and AR. Evan, we really appreciate you taking the time to talk to us.