
Snapchat Has Been Faking Growth Numbers, Ex-Employee Alleges - rlanday
http://variety.com/2017/digital/news/snapchat-fake-growth-lawsuit-pompliano-1201952800/
======
minimaxir
Direct link to (redacted) complaint:
[https://www.scribd.com/document/335725243/Pompliano-v-
Snapch...](https://www.scribd.com/document/335725243/Pompliano-v-Snapchat)

The General Allegations reads like the synopsis of a Silicon Valley episode.

~~~
NolF
It indeed does. Firing someone with that kind of track record for incompetence
within 3 weeks and then bad mouthing to all four winds about it? Something
more credible would be that visions did not align, clash of personalities, or
that he did not fit the culture, but incompetence? Also, isn't standard
practice for companies to only confirm employment rather than give a review
exactly for this kind of lawsuits?

~~~
tw04
Well, if his claims are accurate and they are defrauding investors, I'm sure
they want to trash him before he can suggest anyone else look into it.

"Oh, THAT guy? Ya, he's just angry we fired him because he's an idiot and has
no idea what the numbers we were showing him even meant." \- quick guys, let's
find a way to fix or bury those numbers we showed him!

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aliston
The story just doesn't add up.

"2X successful founder"... looking on Crunchbase, he founded Digiforce
"acquired" by Strategic Link partners. digiforce.com directs to some random
japanese site and the Strategic Link site looks like something made from a
(bad) wordpress template. I almost wonder if he made up a company to acquire
his company.

Next, no way Facebook hires someone like that to lead "THE" growth team for
pages. Maybe as an entry level PM or something. He was only at facebook for
1.5 years, which also makes me skeptical he was such a high priority hire for
Snapchat.

Sounds like a bunch of hot air and resume puffing to me. My guess is that
Snapchat realized he had an overly active imagination and had taken liberties
with his resume.

~~~
AnotherHustler
I registered a throwaway account to play devils advocate with what feels like
a straw-man argument from yourself:

>digiforce.com directs to some random japanese site

It could be that the brand digaforce wasn't valuable to strategic link
partners & they let it go.

> the Strategic Link site looks like something made from a (bad) wordpress
> template.

Their target market looks like military and law enforcement. You don't
necessarily need shiny marketing to sell to the land of powerpoint: personal
selling through established contacts works. Ex military stick together because
of how bonds were forged.

>I almost wonder if he made up a company to acquire his company.

Are you suggesting he invented strategic link partners? This is probably
pretty easy to validate as their management is well documented on their site -
all ex military.

>Next, no way Facebook hires someone like that to lead "THE" growth team for
pages.

You've built the next step of your argument assuming your previous allegations
are true.

>Maybe as an entry level PM or something.

Is what you argued previously about his character true or not? If he was
fraudulent (i.e. inventing companies etc.) then Facebook probably wouldn't
hire at all (or he'd get washed out pretty quickly).

> He was only at facebook for 1.5 years, which also makes me skeptical he was
> such a high priority hire for Snapchat.

His allegation says that Snapchats intent was to gain confidential information
about Facebook. Does 1.5 years matter in this case? Recent information is
what's key here.

> Sounds like a bunch of hot air and resume puffing to me.

What are the facts we know for sure? He worked for Facebook. He was involved
in some startups. He is ex military. He was hired by snapchat briefly and
fired.

>My guess is that Snapchat realized he had an overly active imagination and
had taken liberties with his resume.

Have you read his complaint? He alleges he was calling out snapchat internally
on misrepresenting metrics to prospective investors - and they fired him for
it.

What's more likely? He faked his way into Facebook and survived 1.5 year,
generated enough demand to get noticed by Snapchat and then jumped to snapchat
only to be found out to be completely incompetent in three weeks?

Or... his military / honour based mindset got him in trouble when he saw
things happening in snapchat that were at odds with his value system.

There is definitely smoke here in my opinion. You have to be grossly
incompetent to get fired within three weeks. If he did manage to fake his way
into Facebook then he does have a level of competency. To me, it doesn't make
sense that he'd screw up and get fired in three weeks. Especially given his
military background.

Does this make sense?

~~~
lumpypua
> There is definitely smoke here in my opinion. You have to be grossly
> incompetent to get fired within three weeks.

Agreed. _grossly incompetent_

~~~
AnotherHustler
Yes. Further, if you put yourself in his shoes. What are you doing in those
three weeks? You've sold them on the growth strategy - now you're getting up
to speed on the details getting ready to execute. It's natural that you'd look
into things in more detail. If you find something that's not right... whoah...
differences.

If you _were_ a fraudster, you'd just go along with it ;-)

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jzl
Important to note from the filing: this all went down in September of 2015. I
wouldn't be surprised if they had trouble with their growth numbers at that
time, but in 2016 they seem to have exploded growth-wise.

Not saying his lawsuit isn't legit, but I wouldn't take this as a sky-is-
falling for a 2017 IPO.

~~~
joopxiv
Well, the allegation is that they were faking their growth numbers, or
planning to. If this is true, than I doubt this was aborted after firing the
guy.

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ohstopitu
If this is true (and if he wins), won't snapchat's customers - the advertisers
sue it too? (because they lied about the numbers?)

Also, it is well known now that Reddit's initial userbase was all fake - so
does anyone know what the appropriate way to report this to customers is?

~~~
dsacco
When WSJ reported that Facebook inflated its view count metric was inflated,
there were no ensuing lawsuits. My significant other works directly in
advertising for one of Facebook's advertising partners, and while she told me
there was a lot of concern about it, there was almost no trickle down effect
to the downstream customers. After a week or two, life went on as usual.

This may not be a completely equitable comparison (Facebook has far better
brand equity and a longer history of trustworthiness than Snap at this
juncture), but I think it's illustrative that this may not have the "sky is
falling" impact we would otherwise anticipate.

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gigatexal
If true this could be really bad for their IPO plans. Yikes.

~~~
bhouston
Even if it isn't true, it is something that Snapchat would like to to go away
quickly.

~~~
randycupertino
The mere implication of that would bring on predatory suits from disgruntled
ex-employees looking for an easy payday...

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blubb-fish
> organizations which design systems ... are constrained to produce designs
> which are copies of the communication structures of these organizations

[Conway's law]

So if Snapchat is what Snapchat Inc designs then I'm not at all surprised if
the initial communication structures turn out to be of the alleged kind.

I mean Snapchat is a shallow concept promoting short-term thinking and used
for boasting :D

It's like Facebook - just worse. Facebook is almost academic in comparison -
you actually have to _write_ things.

~~~
dx034
But Facebook is very profitable with it. And that's what counts. The lawsuit
is in connection to an IPO, so he probably states that user/revenue/profit
numbers are somehow misstated. Not the quality of the content, that doesn't
really matter here.

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michaelvillar
Interestingly, the tweet
([https://twitter.com/APompliano/status/639097166405853184](https://twitter.com/APompliano/status/639097166405853184))
mentioned by Techcrunch ([https://techcrunch.com/2015/09/02/snapchat-hires-a-
new-growt...](https://techcrunch.com/2015/09/02/snapchat-hires-a-new-growth-
lead/)) doesn't exist anymore.

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friedman23
Do these documents ever get unredacted? Because I want to read this document
so badly.

~~~
TheSageMage
Right? I was wondering if it would be possible to build something to guess
what these redacted lines(at least for the not-8-page-part) say. Since they
redact mid-sentence, could you calculate the font size, estimate how many
characters there are, and fill in some common words using an NLP based
implementation? Or would the sheer volume/complexity be too much?

~~~
asher_
[http://www.nytimes.com/2004/05/10/business/technology-
resear...](http://www.nytimes.com/2004/05/10/business/technology-researchers-
develop-computer-techniques-bring-blacked-words-light.html?_r=0)

------
raiyu
There have been a few issues with how Facebook has calculated some of their
views as well so it's not surprising that there maybe issues with Snapchat.

But regardless of whether they are misquoting some of their growth numbers or
not I think even without that they are going to have a difficult time with
their valuation and IPO. They are already at $25B in the private market and
with an IPO investors would be hoping for at least $40-50B. To justify that
price just look at some of the companies in that range and the amount of
revenue and growth they have in order to justify it.

Snapchat is not a ubiquitous service like Facebook so ultimately it's going to
be in a category somewhere between Twitter and Instagram.

Instagram has one of the easiest on-boarding processes and with their static
stream from friends that are now directly hooked into FB you are immediately
immersed in what the experience is. Snapchat is a bit more complex.

Regardless to justify a $50B valuation they are going to need a substantial
revenue growth story with no hiccups. And they are ultimately going to have to
prove out to about $2.5B of revenue in 2017 which is impossible.

Comparatively speaking FB IPO'd for $100B in 2012 and had $5.2B in revenue for
that fiscal year and also don't forget that it lost about 30% of it's value
after IPO before rebounding substantially and their revenue growth and
profitability has been world class.

So I'm not looking at Snapchat with a commentary on it's product, but simply
from a financial perspective and it's hard to create a story that validates
their $40B-50B IPO target that they are most likely shooting for.

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jpeg_hero
Vanity Metrics = largest plausible number with a straight face

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raleigh_user
just as a little side note.....I don't believe anything Pompliano says. I
created this account to further hide my identity since I live/run a company in
Raleigh where he is now a "VC". He claims to "innovate VC" and was written
about in the business insider ([http://www.businessinsider.com/full-tilt-
capital-22-deals-90...](http://www.businessinsider.com/full-tilt-
capital-22-deals-90-days-2016-11)).

I work/live with the supposed 22 deals. Only 1 of these 22 deals has been paid
(100k checks). The only one that was paid was paid after the founder
threatened to go public with these numbers.

Look into his firm and ask around in the raleigh area. 21 unpaid checks.

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samnwa
Snapchat makes no sense to me so I choose to believe this. Theranos 2: The
Snappening coming to a theater near you!

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stevesun21
no body care about how much growth is faked? The discussion here is kind of
focus on wrong area.

~~~
madgar
Nobody wants to speculate in an area where they might be vulnerable
themselves.

Maybe storytime won't always be sufficient to run a business.

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grej
The uptick...

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bruceb
TL;DR

According to the complaint from Anthony Pompliano: When they were trying to
hire him Snapchat said they would hire 40 people under Pompliano for his
growth team. Based on this promise he left FB to join Snapchat. He then found
the numbers they were touting were not accurate and they were not committed to
what they told him.

When the complaint gets to what happened starting the day Pompliano was hired
and more specifically what happened when working there, it is blacked out for
the next 8 pages.

After those pages it says he was fired after 3 weeks and Snapchat told
employees, media contacts, and a company looking to hire Pompliano he was
fired for being incompetent. This misrepresentation has cost him his
reputation, money, etc.

~~~
bhouston
It is common knowledge that you risk getting sued if you give negative
references to ex-employees:

Source: [https://www.totaljobs.com/careers-advice/money-and-
legal/ref...](https://www.totaljobs.com/careers-advice/money-and-
legal/references-faq)

~~~
tehlike
it is probably a bit hard to prove competency/incompetency in just 3 weeks.

~~~
probablybroken
It can be in extreme cases, and in these situations it's better for both
parties to resolve things quickly.

