Thursday, March 14News That Matters

Snapchat CEO said app is not for ‘poor countries like India’

A Snapchat ex-employee has alleged that the company’s CEO Evan Spiegel was not interested in expanding the business in ‘poor countries like India’ as recently as 2015.

American website Variety quoted the former employee Anthony Pompliano as saying that Spiegel told him this during a meeting in 2015.

“This app is only for rich people,” Spiegel said, according to Pompliano. “I don’t want to expand into poor countries like India and Spain.”

And this, at a time when Silicon Valley giants such as Google, Facebook, Amazon, Microsoft and Tesla are looking to generate new revenue streams from India by offering innovative services and offline apps.

India is currently going through a mobile and data revolution. It is not only the second largest smartphone market in the world but also the fastest growing market in number of handsets sold/shipped.

Several market research reports also indicate that Indians are consuming more data than ever and inclusion of Reliance Industries-led Reliance Jio has forced other telecom companies to reduce data rater or rather offer more data at the same price which in turn in resulting in high consumption behaviour. Content companies such as Netflix and Amazon Prime Video are expecting growth from the country.

Pompliano, a former Facebook employee, was in a meeting with the CEO to discuss overseas growth of the app. He was abruptly cut off by Spiegel as he tried to propose new ideas to drive growth from developing countries.

The allegations are contained in Pompliano’s lawsuit, filed in redacted form in L.A. Superior Court in January. On Monday, Snap Inc. — the parent company of Snapchat — dropped its efforts to keep the unredacted complaint under seal and released it in a public filing.

Snapchat unredacted lawsuit by gmaddaus on Scribd

Pompliano’s suit tells a story of his brief, three-week tenure at Snapchat, during which he says he learned that the company had inflated its user data and that top executives were “completely misinformed” about key metrics.

Snapchat had filed a counter complaint and described the employee as “disgruntled” only to later drop the complaint. Pompliano has accused Snap of data analytics inefficiency.

Pompliano’s lawsuit carries the instance of a meeting with two data analysts, who confided to him that Snapchat had “an institutional aversion to looking at user data,” and its efforts in that area were marked by “utter incompetence,” says the Variety report.

The suit also claims that Snap has been fudging and misreporting key numbers such as daily active users and user growth.

For one, Pompliano says Snapchat was inflating its registration completion rate, which it claimed was about 87%. In fact, Pompliano says it was less than 40%. The company was also claiming to retain 40% of its users after seven days, when in fact the figure was closer to 20%, Pompliano claims.

Pompliano who was later fired, also alleged that Snap executives spoke ill of him to other prospective employers, making it difficult for him to find work. He has also claimed that Snap sought to violate his confidentiality agreement with Facebook by improperly asking him for a detailed Facebook org chart, a request he says he refused.

Snap has filed a motion seeking to force the case into arbitration.

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