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Ousted Snapchat early employee Reggie Brown was paid $157.5 million in a settlement in September 2014 to close off a 2013 lawsuit<\/a> he had brought against other co-founders Evan Spiegel and Bobby Murphy, alleging that they had taken his original idea and run with it, pushing him out of the company without compensation in the process.<\/p>\n The details were made public for the first time in Snapchat\u2019s\u00a0parent Snap Inc. S-1 filing today<\/a>, unveiled as a first crucial step in the startup\u2019s\u00a0bid to go public on the NYSE<\/a>, which is expected to happen in early March, according to our sources.<\/p>\n The S-1, in a section about ongoing and settled lawsuits, does not mention Brown by name, and certainly does not refer to him as a co-founder of the company \u2014 that was something Brown claimed but the other two denied. The dates and details match up with what we already knew, though:<\/p>\n \u201cIn February 2013, an individual filed an action against us, our predecessor entity and two of our officers in Los Angeles Superior Court, alleging that we were using certain intellectual property that the individual jointly owned with our founders,\u201d the S-1 notes. \u201cIn September 2014, the parties entered into a settlement agreement that resolved all claims among the parties. Under the agreement, we agreed to pay the individual a total of $157.5 million and such amounts were recorded in 2014. We paid the individual $50.0 million in 2014.\u00a0As of December 31, 2015, $107.5\u00a0million was included in accrued expenses and other current liabilities on the consolidated balance sheet. We paid the individual $107.5 million in the year ended December\u00a031, 2016. There are no further amounts required to be paid in the future.\u201d<\/p>\n<\/blockquote>\n Why $157.5 million? It\u2019s not exactly clear, but an in-depth report<\/a> that we published in 2013 when the suit was freshly filed notes that Brown started to get his ducks in order after Snapchat had raised $13.5 million at a $70 million valuation<\/a>, so it may have been a calculation based on the value of the company at the time. Considering that this IPO will likely see Snap raising $3 billion at a $25 billion valuation, it seems like that was an ultimately small price to pay to settle the case.<\/p>\n Brown\u2019s bone of contention was that he claimed he had originally thought of the idea that became\u00a0the central premise of Snapchat \u2014 the ephemeral\u00a0photo. As we reported at the time, Spiegel and Brown were brothers and friends at the same fraternity:<\/p>\n 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, was joking\u00a0about sexting when Brown came up with the idea for an app with disappearing photos.<\/p>\n \u201cSpiegel wasn\u2019t even part of the convo at the idea\u2019s inception,\u201d the source tells me. \u201cReggie [Brown] ran out of my room after he thought he struck gold and went to Spiegel\u2026he just knew [Spiegel] would take him seriously and move forward.\u201d<\/p>\n![\"murphybrownspiegel\"](\"https:\/\/i0.wp.com\/www.rsoftsolution.com\/blog\/wp-content\/plugins\/RSSPoster_PRO\/cache\/7f983_murphybrownspiegel.jpeg?resize=450%2C354&ssl=1\")
The financial terms of the deal between Snapchat and Brown were\u00a0not disclosed when\u00a0the settlement was first announced<\/a>.<\/p>\n\n
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