Chief Executive Evan Spiegel and Chief Technology Officer Robert Murphy acknowledged that their former fraternity brother, Frank Reginald Brown IV, was integral to the birth of their popular app, where 700 million disappearing messages are sent every day.
This settlement is coming just a fortnight after Snapchat was valued at £6 billion ($10 billion). Negotiations have been going on for a year-and-a-half.
Mr Brown originally came up with the idea for Snapchat – which sends disappearing photos – in 2011 when the three men were at Stanford University. ‘He then collaborated with Spiegel and Murphy on the development of Snapchat during its early and most formative days,’ a statement issued by Snapchat explains.
But Mr Brown was later ousted and has been pushing for a favourable settlement.
The final settlement resolves all disputes between the former students and is confidential, but a statement put out by Snapchat acknowledges that Mr Brown came up with the concept for the app.
‘Reggie Brown originally came up with the idea of creating an application for sending disappearing picture messages while he was a student at Stanford University,’ the statement reads.
Mr Spiegel said: ‘We are pleased that we have been able to resolve this matter in a manner that is satisfactory to Mr Brown and the Company.
‘We acknowledge Reggie’s contribution to the creation of Snapchat and appreciate his work in getting the application off the ground.’
In August last year, Mr Brown unearthed photos, emails and other ‘evidence’ in a bid to prove he was an integral part of Snapchat’s success, but the other founders claimed he had ‘no equity’ in the venture.
It was reported at the time that he was suing the company for a third of its $800 million (£496 million) valuation.
Only the individuals involved know the financial outcome of the settlement, so it is impossible to speculate whether Mr Brown received this figure, something lower, or a much higher settlement based on the company’s soaring valuation.
Mr Brown claimed he came up with the ghost logo and the original name, Picaboo, which the trio used in the launch of July that year.
Snapchat turned down a £1.8 billion ($3 billion) offer from Facebook, and while some doubted the app could grow further, the company was valued at a staggering £6 billion (£10 billion) two weeks ago.