The Snapchat Lawsuit, Or How To Lose Your Best Friend Over $70 Million

“This is a case of partners betraying a fellow partner.”

One week ago, Reggie Brown filed a lawsuit alleging that he is a co-founder of Snapchat, a red-hot impermanent photo messaging app, and is entitled to an original one-third ownership stake along with co-founders Evan Spiegel and Bobby Murphy.

What’s at stake? Snapchat won “Fastest Rising Startup” at the 2012 Crunchies and recently raised $13 million at a $70 million valuation.

Brown and Spiegel lived on the same floor of the freshman dorm Donner at Stanford University during the 2008-2009 school year. The two quickly became very close friends.

The duo rushed the Kappa Sigma fraternity in the spring of their freshman year, and lived there with Murphy the following year.

“[Murphy and I] were living in the house together for a little while. He was down the hall and whenever I needed CS help I’d go wake him up at like four in the morning,” Spiegel told me in an interview in May 2012.

In the spring of 2011, when the app was born, Spiegel and Brown were juniors and still very close friends; Murphy had graduated the previous spring.snapchat timeline

One source, who spoke on condition of anonymity, said he was in his room in the spring of 2011 with Brown and another member of the fraternity, neither Spiegel nor Murphy, joking about sexting when Brown came up with the idea for an app with disappearing photos.

“Spiegel wasn’t even part of the convo at the idea’s inception,” the source tells me. “Reggie [Brown] ran out of my room after he thought he struck gold and went to Spiegel…he just knew [Spiegel] would take him seriously and move forward.”

Brown’s lawsuit claims Spiegel “repeatedly exclaiming that Brown had indeed conceived of a ‘million-dollar idea.’”

While no one has been able to verify this exact scene as the initial creation of the idea, as Brown did not respond to an interview request and the source would not identify the other member in the room with them, nearly a dozen sources confirmed that Brown was involved in the early stages of the company, but refused to comment further as many claim ongoing friendships with Brown, Spiegel or both. Spiegel and Murphy did not respond to requests for comment on this story.

Spiegel has never mentioned Brown in the five interviews he and I have done for TechCrunch pieces, and he has talked at length to the media about coming up with the idea with Murphy.

One example, possibly referring to Brown as the friend, pops up in Snapchat’s first media exposure, an April 2012 New Yorker article:

“The idea came to him when a friend said, “I wish these photos I am sending this girl would disappear.” As Spiegel and his partner conceived it, the app would allow users to avoid making youthful indiscretions a matter of digital permanence.”

When I asked Spiegel to elaborate on this comment—specifically the app’s ties to sexting—in our original May 2012 interview, he told me, “I think that definitely was the inspiration for something that ended up being quite different.”

That summer, Brown, Murphy and Spiegel worked at Spiegel’s father’s house in Los Angeles, where the company was headquartered until December 2012.

A source says Brown, an English major, acknowledged that he “had a little less to contribute but was still working on what he could do” and that there were emails about Spiegel and Murphy taking equal cuts that were larger than Brown’s. Spiegel majored in product design and Murphy studied mathematical and computational science.

Another source, who also spoke on condition of anonymity, says Brown would go out constantly, partying at all hours and not working on the app, while Murphy coded and Spiegel worked on design. The source says Brown added virtually nothing to the team beyond the initial concept.

Brown’s suit claims he worked on a number of tasks, including writing the app’s terms of use and answers to FAQs, marketing, and the patent application.

In August 2011, the suit alleges that Spiegel and Murphy changed the passwords and forced Brown out of the company after a big argument.

“There was a big argument over patent filing,” the first source tells me. “Then there was a huge fight where each person said terrible things about the other and then Spiegel changed the passwords and Reggie just sat and waited to file…it was something to do with who’s name was listed first. Literally a pointless argument. The bigger thing was what happened after. I really don’t think the patent ended up being a problem. It’s pretty much just a fight between friends and people calling each other out. Not much basis for why they actually had a big split up.”

After that, the source says Spiegel and Brown didn’t talk at all, besides a few attempts from Brown to try to figure out a settlement.

In September of 2011, as Spiegel and Brown prepared to return to Stanford for their senior years not on speaking terms, the app only had around 100 users.

That fall, Spiegel and Murphy introduced the app to parents and high schoolers in Orange County, and the app quickly gained thousands of users in tight circles in a few Malibu high schools. In January of 2012, Snapchat had over 30,000 users who were primarily using it as a goofy communication tool, not for sexting.

Over the next year, with Murphy leading the coding team and Spiegel speaking and maneuvering as the public face of the company, the app exploded in popularity, seeing 60 million snaps sent per day as of February 2013. Spiegel and Murphy regularly appeared on TV and in newspapers and blogs. The company raised nearly $14 million, hired more engineers and support staff, and moved to a new office on Venice Beach.

Meanwhile, Brown graduated from Stanford in June 2012 and moved back to his native South Carolina.

Disclosure: I am currently a junior at Stanford and the president of the Stanford chapter of Kappa Sigma. By the time I joined the fraternity, in the spring of 2011 (my freshman year), Murphy had graduated Stanford, and Spiegel and Brown had left the fraternity.

I have never met Brown. I’ve met Murphy once. I have gotten to know Spiegel since the spring of 2012, mostly through interviews for TechCrunch.

I have not previously disclosed this information beyond the TechCrunch editors because my connections to the Snapchat team were no more significant nor relevant than my ties to any other Stanford startup. Because key details of this story revolve around our shared community of Kappa Sigma, I find it important to disclose this information, but it in no way affected my objectivity or ability to report this story.