Turning $450k into Snapchat billions

Jeremy Liew was a mega-nerd at school.

The former Duncraig Senior High School student, and member of the Australian maths Olympiad team, was, in his own words, "not a cool kid".

But if ever there was a real-life revenge of the nerd, Liew would be it.

Now 43, he is a partner in Silicon Valley venture capital firm Lightspeed Venture Partners, which controls about $US2 billion ($2.6 billion).

And - more importantly for your teenage children who are probably doing it on their phones right now - Liew is responsible for arguably the firm's biggest windfall: Snapchat.

For anyone older than 30 who may have heard of its existence but, like Instagram two years ago, has no idea what it is - Snapchat is an instant messaging service that deliberately erases any text, photo or video just seconds after it is viewed.

For teenagers and 20-somethings, it is a new form of communication. And it is booming.

Snapchat is now valued at $15 billion

According to its latest valuations, Snapchat is worth $15 billion - validation for founder Evan Spiegel who, as a 22-year-old in 2013, famously turned down a $3 billion takeover offer from Facebook.

Liew's involvement in the company comes through funding.

He arranged Lightspeed's injection of $450,000 of seed capital into Snapchat in mid-2012, in return for a stake of about 10 per cent.

That stake has been maintained through Snapchat's development, including two rounds of funding, where Lightspeed's plugged in millions.

The firm's stake is now worth about $1.5 billion.

Speaking to WestBusiness from Silicon Valley, where he has lived for the past decade with his wife and two young children, Liew declined to reveal the size of his potential personal windfall from the investment.

But if, or when, Snapchat becomes a publicly listed company, Liew is in line to receive what could be tens of millions on current valuations, or even more, through various kickbacks through the venture capital fund.

"But all these are paper valuations that you can't take to the bank," he said.

"If Snapchat realises its potential our investors will be happy, and yeah, I'll be happy."

But he added, with a laugh: "But if you're asking me how much money I'm making, I'm not telling you."

The story of how Liew became exposed to Snapchat reads like a Hollywood script.

After a partner at his firm spotted his teenage daughter using the app in early 2012, the partner told Liew, who recognised Snapchat's potential.

Liew went to the Snapchat website. There was no email address.

On LinkedIn, no one was listed as working for Snapchat. He tried all forms of email under the @snapchat domain name. Again, nothing. Determined, Liew resorted to his inner geek and found an email through an IP search of the Snapchat website.

"I flicked them an email and I waited and waited but never got any response," he said.

"But I eventually found him (Spiegel) through Facebook. I messaged him and got a response straight away.

"He told me he saw the profile picture I had of me shaking hands with Barrack Obama, and said 'I figured you were legitimate'.

Jeremy Liew with Barack Obama

"We met. I looked at their analytics and knew it was going to be something interesting, and you just hope for the best.

"At the time when I invested (the $450,000) they had about 100,000 users and couldn't pay their server bill."

Snapchat now has 100 million monthly users, and Forbes magazine values Spiegel's wealth at $1.5 billion

Unsurprisingly, Liew says its success has "gone well beyond even my greatest expectations".

But what does he pin it to?

"Facebook is like the highlight reel of life," he said. "But not everyone is doing that well, in reality. With Snapchat, when the messages disappear, it frees the user from having to be clever, funny or impressive - they can just be themselves, and I reckon that's why people are using it so much.

"But you've got to remember a lot of these companies, they say about 60 to 70 per cent of those that are funded end up losing money.

"And the percentage of failure is higher overall in start-ups in general. Most fail.

"It's a risky business for sure - it's not like buying government bonds."

Liew described his journey to Silicon Valley as serendipitous.

After studying science and linguistics at the Australian National University he travelled to the US in 1996, in between a brief sojourn to South Africa, to follow a mentor who was founding a company involved in a fledgling phenomenon called the internet.

"I remember at the time I asked: what's the internet?" he said. "At that time, if you worked in the internet space for more than six months you were really experienced."

From there it was stints with media giant AOL and Netscape until 2005 when a friend at Stanford University - where Liew studied business after the dotcom boom went bust - called to encourage him to come to Silicon Valley.

"I wish I could tell you that I planned it all along but I just ended up following people that I thought were really good," he said.

Liew's parents still live in the Duncraig house where he grew up, and though he has not visited Perth for a few years it is still "home".

Jeremy Liew pictured at the 1988 International maths Olympiad

But he won't be heading back anytime soon.

Liew said Silicon Valley was the ideal place for him, and he loved it.

"This will be the last job I ever have," he said. "I mean, I'm a long way from retirement. But you get a window into the future doing this.

"You see people doing something and you think, 'one day everyone's going to do that' . . . that's pretty cool."

So, what does he think is the next big thing?

"Giphy," Liew said. "They are mini videos with no sound that play continuously - it is the new Emoji. Instead of sending a text saying 'Happy Valentine's Day', you send a Giphy of two rabbits kissing.

"Its traffic has increased by 30 times over the past two years, and the geeks and the kids are both using it.

"And I can tell you, that's a pretty good sign."