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Snapchat's Fil-Am Co-Founder $2.1 B Richer Just 2 Days After IPO

Bobby Murphy's 27.1 million shares are now worth $5.7B after price closed 59% up last Friday
By Elyssa Christine Lopez |

 

 

Snap Inc., the parent company of the ephemeral messaging app Snapchat, saw its share price surge by almost 60 percent in its first two days of trading after listing at the New York Stock Exchange Thursday. From an offer price of $17 before listing, Snap's price closed at $24.48 on Thursday and at $27.09 last Friday. The stock's first day gain of 44 percent is considered bigger than those of other tech stocks such as Alibaba, Facebook and Google.

 

Though Snap still has to make money and faces rising competition from Facebook, its impressive market debut effectively values the company at about $31.3 billion. It also pushed the company's co-founders Evan Spiegel and Bobby Murphy, whose mother migrated from the Philippines to the US, into the top ranks of technology billionaires.

 

Both founders sold 16 million shares of Snap each at the offer price of $17 as part of the IPO, earning a cool $272 million each. However, the partners still own more than 210.97 million shares each. At the offer price of $17, the shares were worth $3.6 billion for each of the partners. That has grown to $5.7 billion each based on the stock's closing price of $27.09 last Friday

 

While Spiegel is the company's public face, Murphy, who is chief technology officer, is considered the "brains" who developed the popular app.

 

Here are some things you should know about the 28-year-old CTO:

 

1. He’s a Stanford University alumnus

In a reprise of Mark Zuckerberg’s Facebook story, Murphy and Spiegel met in Stanford, and were inseparable ever since. The former, who was two years senior to Spiegel, was taking up mathematics and computational science. The duo first built a startup which helped high school students manage college applications. It didn't take off.

 

A few months after, they got an idea from another friend about a platform that can help people upload images that will disappear soon after they were sent. Snapchat was born. “We believed that visual content was the most engaging, interesting form of content that there was. We wanted to create a way to enable that to be a means of communication rather than a mere piece of content around communication,” Murphy said in a rare talk back in 2014 in a Google Cloud Platform event.

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2.  He only makes half of Spiegel’s salary

Even with the technological know-how he brings to the table, Murphy apparently only makes half of what Spiegel gets. Snap’s filing last month revealed that Murphy does not receive any salary for his role as director but gets US$250,000 pay as an employee annually. Meanwhile, Spiegel receives US$500,000.

 

However, this deal will soon be an all-or-nothing scenario for the CEO. The filing revealed that Spiegel’s salary would be slashed to a mere dollar after the IPO. But here’s the catch: out of all the executives, he’s the only one to get a bonus of a million dollars if Snap does well for the next year.

 

 

3. He controls half of the voting shares

One of the most discussed details of Snap's IPO filings was its interesting stock structure. The company has three kinds of shares: Class A which holds no voting power; Class B which accounts for a single vote and Class C which accounts for 10 votes. While Murphy and Spiegel respectively own 21.8 percent and two percent of the Classes A and B stocks, which are sold at a premium to investors to raise money, they each own 50 percent of the Class C ones, solidifying their role and place in the company. Bloomberg noted this ownership setup is common in traditional media companies that are owned by employees to ensure "editorial independence" from financial investors.

 

 

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Elyssa Christine Lopez is a staff writer of Entrepreneur PH. Follow her on Twitter @elyssalopz.

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