Snapchat struggles in 'rich people gate'
Southern California-based social media company Snap Inc., which highly publicised IPO in March with value at $24 billion, faced backfiring as CEO Evan Spiegel was accused of claiming that Snapchat was an app "only for rich people".
Snapchat, which was labelled by business analysts as the strongest rival to Facebook, had to start damage control urgently, saying Spiegel never made such remarks and "these words were written by a disgruntled former employee", Xinhua n news agency reported on Sunday.
The quote, which Snapchat called "ridiculous", came from a recently unredacted court complaint by Anthony Pompliano, who was hired away by Snapchat from Facebook then served as the company's growth lead for a few weeks in 2015.
Pompliano's lawsuit filed in redacted form in Los Angeles Superior Court in January. Snap Inc. dropped its efforts to keep the unredacted complaint under seal and released it in a public filing last week.
In the complaint, Pompliano recounted an exchange he said he had with Spiegel in a September 2015 meeting about the app's international growth plans. He said he presented methods to address the issue, but Spiegel abruptly cut him off.
"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."
These words sparked outrages from all around the world, especially in India.
Hundreds of thousands of users voiced their disapproval via social media posts and one-star reviews in Google and Apple's app stores.
"Mr CEO of Snapchat, we may be poor but we have bigger hearts than you," a user named K.P. Naik said in a recent one-star review in Play store.
Another tweet posted by Shreyas Singh on April 15 said: "I am very poor so uninstalled #snapchat but thanks for entertaining for this many days. @evanspiegel @Snapchat don't mess with India."
"This is ridiculous," as a statement released by Snap argued, saying those words were written by "a disgruntled former employee".
"We are grateful for our Snapchat community in India and around the world," the statement said.
However, Snapchat would face a huge challenge in this lawsuit more than PR works as Pompliano also claimed that he learned the company had exaggerated its user data and that top executives were "completely misinformed" about key metrics.
According to report of Variety, in the lawsuit, Pompliano said that on his second day of the job he met 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."
Pompliano said he found Snapchat's daily active users (DAUs) was much less than the company's boasted number, 100 million DAUs at the time, moreover, the user base increased only one to four percent per quarter, far less than the double-digit month-over-month growth the company was claiming.
Pompliano also claimed that he was fired because Spiegel determined that he "presented a risk to Snapchat's IPO".