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Snapchat faces lawsuit

Former Snapchat employee sues company over inflated growth metrics

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A lawsuit filed by a former Snapchat employee alleges the company inflated key growth metrics to mislead investors ahead of a possible $25 billion USD initial public offering, and wrongfully terminated his employment over his refusal to cooperate.

Anthony Pompliano, who joined Snapchat’s business operations team in August 2015, filed the lawsuit on Wednesday in Los Angeles. In the suit, Pompliano said the tech company misrepresented its key growth metrics when it was recruiting him from Facebook, and shared the inflated metrics with some investors, such as the China-based Alibaba group, “out of the avarice of the small group of executives” for a larger valuation in anticipation of its IPO.

According to the court document, the company fired Pompliano three weeks into his employment after he refused to participate in the scheme and raised concerns about the metrics with three senior executives internally, including Snapchat’s vice president of finance Drew Boiler, its then-vice president of communications Jill Hazelbaker, and its then-director of business operations Brian Theisen.

Snapchat’s CEO, Evan Spiegel, “simply did not care about user engagement metrics”, according to the complaint, prior to starting preparation for the IPO.

Snapchat’s spokeswoman, Mary Ritti, said the company has reviewed the complaint. “It has no merit,” she said in a statement. “It is totally made up by a disgruntled former employee.”

Prior to joining Snapchat, Pompliano worked at Facebook starting from February 2014 to lead growth and engagement initiatives for Pages. Pompliano claimed that Snapchat tried to pressure him into sharing proprietary information about Facebook, and ran a “smear campaign” against him, portraying him as “incompetent”. He is seeking damages for lost wages and an injunction against the company due to “harm to his professional reputation”, as well as punitive damages based on Snapchat’s “misconduct”.

Snapchat will seek to raise as much as $4 billion in its planned initial public offering, which could value the company at more than US$25 billion, according to published reports. The company has claimed 150 million daily active users.

This story was first published in Marketing Magazine.

Photo / 123RF

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