The history of Instagram
Luck, talent, and a favorable environment
Instagram was launched on October 6, 2010: let’s have a look at the technological environment at the time.
Apple had just launched, in June of the same year, the IPhone 4: it was the first smartphone with a decent camera (5MP). Previous IPhones had only 3 or 2MP sensors and relatively poor lenses quality.
IPhone 4 had also a good quality, high-resolution screen, called retina to signify the fact that pixels were not visible to the naked eye, which was on the contrary the case for the previous low-res screens.
It was maybe a coincidence, but the almost simultaneous release of a new high quality IPhone model and of Instagram was of great mutual benefit for both brands.
Anyway, In October 2010, most of the IG early adopters were still equipped with IPhones 3S, 3 or first generation. The quality of the images they could capture was average or, most often, poor.
The possibility to filter low quality photos was at the time a nice way to embellish their iPhone’s shots, and contributed largely to the success of Instagram.
However, a lot of filters apps like Hipstamatic where already available in 2010, so filters alone are not sufficient to explain Instagram’s success.
IG is a pure product of Silicon Valley’s smart, hyper connected people, and most of the early adopters knew already that there was a chance that IG was going to be the Next Big Thing.
Kevin Systrom and Mark Krieger: the founders
So let’s have a look at the founders, Kevin Systrom, a US citizen from a little town in Massachusetts and Marc Krieger, a Brazilian expatriate.
Kevin, as well as Marc, attended Stanford University, the iconic tech university of the Silicon Valley, and were part of the Mayfield Fellowship Program, an academic organization where the valley’s venture capitalists spot the future start up creators and help them with connections and advices.
While at Stanford, Kevin was an intern in a company called Odeo. Does this company name sound familiar? It should, as Odeo eventually became Twitter, and Systrom was at that time very close to Jack Dorsey, the Twitter founder and one of Instagram’s early investors (February 2011 round).
After university, Kevin worked for more than two years at Google, on products like Gmail, and subsequently joined a company called Nextstop, a travel recommendation site, later acquired by Facebook.
Kevin’s goal however was to create his own startup, so he dropped out from Nextstop and partnered with Mark Krieger, his former Stanford fellow, to work on his personal app project.
At that time Foursquare was a strongly acclaimed mobile social app (is fair to say that there was not so much concurrence around), based on the concept of checking-in in popular locations. Kevin and Mark where impressed by the Foursquare concept and started to work on their own Forsquare-like application that they called Burbn, a tribute to Kevin’s penchant for strong liquors. But, although the two got a confortable 500K$ for the financing of Burbn, the app never found his public.
Nevertheless, there was a function that actually Burbn users liked a lot: the possibility to shoot photos and to localize them, which at the time was quite a new feature for a mobile app.
When the two realized that Burbn would never become a hit, they decided to develop something completely new about the photo localization feature; something that was functioning like a social network, with some similarities to Twitter, a big source of inspiration for Kevin as he worked there. Instagram adopted indeed some of Twitter’s features; the most remarkable one is the use of the Hashtags.
Another excellent idea was to add to the new app the filters feature. Kevin was a passionate photographer: while at Stanford he attended a three months photography course in Florence, Italy.
One day his girlfriend showed him Hypstamatic, a mobile photo filter app still available nowadays, and whose filters are inspired by the Lomo Cameras.
Kevin immediately understood that filters were a strategic function to add to IG.
So the two worked very hard for several months on a hybrid app composed of a mobile social network, a geo localized photo sharing feature and photo filters.
Once a stable beta version was available, Kevin and Mark, sent it to several Silicon Valley friends and the app immediately received very favorable opinions. Prior to the release of the V1, a big gathering of tech bloggers and journalists was also organized, and Twitter’s Jack Dorsey was invited too. This well prepared communication plan was of huge importance for the future success of IG.
As the New York Times states in a very interesting article published in 2012: “The extraordinary success of Instagram is a tale about the culture of the Bay Area tech scene, driven by a tightly woven web of entrepreneurs and investors who nurture one another’s projects with money, advice and introductions to the right people. By and large, it is a network of young men, many who attended Stanford and had the attention of the world’s biggest venture capitalists before they even left campus.”
Although it is undeniable that the two founders had a lot of talent, it is also clear that Instagram success was made possible by the exceptionally favorable environment of the Valley, and that success stories like the IG one are much less likely to take place in less encouraging places for startups, like for example, Europe.
Building a community
IG reached one million users only two months after his launch, and ten millions after just one year: this is the fastest growing rate ever registered for a social network. How was that possible?
We have already seen that the buzz in the Silicon Valley facilitated the notoriety of the app. Instagram was also a savvy mix of fascinating new features, and had the luck to be released virtually at the same time as the iPhone4.
Although the two founders where programmers and not interface designers, the original interface had had an excellent, simple and intuitive design and Instagram was a remarkably stable, user-friendly app.
Is this enough to explain the huge success of Instagram? Not quite.
Another key ingredient of the IG success comes from the fact that the founders understood from the very beginning the importance of building a community and were ready to invest energy and resources into something that was not just IT resources: the first Instagram employee was not a programmer, he was a community manager!
Have you ever heard of “Facebookmeets”? “Twittermeets”? “Youtubemeets” or “Pinterestmeets”? Probably not, and is not a coincidence: those events simply doesn’t exist.
But you have probably heard of “Instameets”, Instagram meetings in the real world: the first Worldwide Instameet was held in March 2011 in Los Angeles and it was organized directly by the Instagram team.
From the very beginning Instagram’s users started to meet and to share their passion for mobile photography, and IG understood very soon that users wanted more than just a virtual place to exchange photos.
Many spontaneous IG communities soon emerged all around the word: in Europe the first instameet was held in Milan in September 2011, organized by Igersitalia.
The Igers community, to which Igesitalia belongs, is a dynamic, independent organization interacting closely with the IG management team in order to animate and develop mutual beneficial initiatives around mobile visual content.
Even now, despite a clear advertisement-oriented strategy, Instagram is filled with communitarian initiatives: in almost every country of the world there are groups of passionate users not linked to any specific brand that animate the platform, bringing to it inspiration and passionate new users.
Instagram itself organizes also regularly local meetings in different cities, and also international worldwide meetings.
Engaged users can be selected by the instagram’s community managers and displayed in the “suggested users” special page, and may receive at their home address presents as an acknowledgment for their engagement on the platform, and gadgets meant to be distributed to the community members during the Instameets.
Photo contests, called the “Weekly Hastag Project” are also regularly organized by IG, and have a great success as being among the winners gives a huge visibility on the network.
The photo challenges are still today an important part of IG strategy to acquire new loyal users.
Going Android
IG’s first year of existence was amazing: the app had reached more than one million users and had astonishing amounts of daily photo uploads.
In December 2012 Apple labeled it “app of the year”.
Instagram was one of the biggest successes on the Apple store, but if it wanted to reach an even bigger community it was necessary to come to terms with Android.
When Instagram was launched in 2010, the Google mobile OS was still in his infancy, and Android-based smartphones where no match for Apple devices.
Instagram V.1.0 was consequently only available on the App store, and it remained an exclusive Apple mobile application for more than one year.
The Android version was available on the Google play store from April 2012.
It was a clever, stable Google Play app, with a coherent design that matched the iPhone version.
For a tiny company composed of less than ten people, dealing already with millions of users, producing an Android app was a remarkable achievement. However, above all, this release represented a strategic move that drastically changed the social networks landscape for the years to come.
Joining the Android platform was not an easy decision: IPhone users where strongly opposed to an Android version: they considered themselves the only genuinely creative people legitimate to use a creative, cool app like Instagram.
The risk was to loose many fervent, creative Apple users, and indeed the android release provoked a little wave of indignation among iPhone customers.
Nevertheless, in a few months, the Android version more than doubled IG users’ base. Where the Android users less creative? It is impossible to say, but I think that going Android confirmed the fact that Instagram was not about creativity and not even about photography. Instagram was, and is an extremely efficient social communication tool.
The new Istagram logo, that has almost erased the ancient Polaroid like photo camera that was the former symbol of the app, represents well this detachment from the original photography focus. Kevin Systrom himself disappointed all the IG photographers by saying in an interview: “Instagram is a media company. I think we’re about visual media.”
The one billion dollar deal
Instagram sold to Facebook only 6 days after the Android version was ready. This is of course not a coincidence.
Since months the Silicon Valley’s big fishes where scrutinizing all the whereabouts of the photo sharing app, and trying to understand when was the best moment to move. But it was not an easy task, as the two owners seemed interested to build a fully independent company.
There have been already talks with Google, Twitter and even a face-to-face meeting in 2011 between Zuckerberg and Systrom, but no purchase or even collaboration deal was ever signed.
Just days before the FB acquisition, the company received 50 Millions Dollars from a pool of investors, for an evaluation of 500 Millions Dollars, so it seemed that the company was going to stay independent for the years to come.
But the immediate success of the Android version modified entirely the situation. Instagram was now a powerful competitor for Twitter, and a competitor and also a huge threat for Facebook.
FB was at the time experiencing a big rise in his photo sharing potential, but was nevertheless still mainly a complex desktop social network, lacking the coolness, ease to use and visual impact of Instagram.
It seemed that, among others, Twitter’s Jack Dorsey made a consistent offer: he was fully entitled and represented a trustworthy partner, being an early Instagram’s investor.
But it was ultimately Marck Zuckerberg that concluded a super fast and generous deal, securing Instagram for one billion Dollars and the guarantee to don’t interfere with his independence.
The news just stunned the entire tech world. How was it possible that a one and a half year old company with just 13 employees, run by two twenty-something managers, could be evaluated one BN$?
Many insisted on the nonsense of the new economy, or criticized the excesses of the Silicon Valley. Others believed that this Facebook’s worst deal of his, not so long, history.
However, we know now that this was indeed a very wise and cheap acquisition for FB, and it is even possible that in a not so far future Instagram will represent the most important revenues source for his huge parent company.
Are social networks democratic?
Users seldom read those long and legally complicated agreements that each software application invites us to agree… however, only six months after entering into the Facebook’ sphere of influence, Instagram changed his “Terms of Service”, the contract that explains to the users what are their rights and obligations.
The original Instagram’s terms of service where fairly respectful of the user’s sole property of their personal photos, but this suddenly changed on December 2012. Under the pressure of the parent company, the terms where changed in a more restrictive and advertisement-oriented way.
Basically everyone had now to abandon every possible photo possession claim: IG was going to share all the media with FB, but also with interested advertisers, and this without any notification nor any form of payment.
As soon as the new terms where published, a wave of indignation hit Instagram. The app was filled with photos showing protest and anger.
Instagram’s competitors experienced sudden rises of new users, on the contrary IG was facing an abrupt decrease of photos posted and even a significant quantity of deleted accounts.
There where frantic days in IG and FB headquarters: nobody will know exactly what happened, but we can suppose that there was a big clash between the two management teams.
After investing 1B$ in a 0$ revenues company, FB wanted a quick return on investment. This was just a wrong calculation lacking any business logic: at the time Instagram was simply not mature, structured and large enough for advertisement.
But what was also completely misunderstood by FB was the special relationship that linked instagram’s users to the platform. We saw already that a communitarian spirit impregnates IG, and posting photos is in a way posting something intimate.
By abruptly stating that this little fragment of our life is no more our propriety, that it can be shared and sold to everyone without our consent, that others can make money out of it, Facebook was risking to kill the very spirit that determined Instagram’s success.
Mark Zuckerberg is for sure one of the most skilled businessmen around, but in this occasion he demonstrated a great lack of comprehension, sensitivity and also business intuition.
After just a few days Instagram went back to the old terms of use, demonstrating that social network’s only assets are the users and their satisfaction. Here an interesting article from the Huffington Post that describes those chaotic days.
Does this mean that social networks are democratic? It is a complex issue that will require a whole book and the involvement of a large political and philosophical debate. What we can say is that, at least in this occasion, it was the case.
Killing the competitors
As we saw in the previous chapter, social networks are not meant to be charitable organizations. Social networks are indeed a very risky business, and this is due not only to the effort needed to imagine and run them, nor to the technical difficulties to program and keep efficient such platforms.
The main difficulty is due to the fact that returns on investments, if they exist, are extremely long, and that popular networks with a lot of followers are very expensive to operate.
For investors, it is a considerable risk to place a lot of money in companies that for years earn no money, and that may shut down abruptly as there is no long-term return on investment.
In this book we expose the successful story of Instagram, but for every Instagram or Facebook around, there are dozen of social networks that went burst, and many of them where not necessarily the less promising ones.
In the field of mobile visual communication Instagram has virtually killed all the competitors either by growing faster and stronger than the others, or even by attacking the competitors directly.
Who remembers 500px, Path, Eyem, Streamzoo, Picplz, and Hipster? They are either defunct or relegated in an irrelevant market niche, in search of ideas that will differentiate them substantially from Instagram.
Instagram frontally attacked Vine, a video sharing social network owned by Twitter that experienced a certain success from 2012 to 2014. In June 2013 videos became an additional IG feature, disappointing all the users that believed that IG was solely about photography. Since then Vine started to decline, attacked also by Snapchat on his user’s segment, the teens.
In turn, Snapchat was recently directly hit by Instagram, which copied almost exactly the Snapchat “Stories” features, calling them, with a lot of creativity: Instagram “Stories”! Snapchat, with his 150M active users base and his unconventional and spontaneous approach to communication had become a too dangerous treat for Instagram.
In an interview to Techcrunch, Sysrtom candidly admits that Instagram has copied the feature and that “Snapchat deserves all the credit!” This also means that it is now possible in the social network industry to frankly state that coping is not anymore a taboo and that we have bypassed the patents era, which is an interesting societal evolution.
Since the beginning of the Industrial revolution at the end of the eighteenth century, in any new phase companies, often using questionable methods, struggle to become the market leaders of their time.
The social networks revolution is still in his early stages, and what we observe now is the first consolidation phase that might eventually lead to the combined domination of Facebook and Instagram.
An example of what can be done using “Instagram stories”, very similar to the “Snapchat stories” feature.
Moving toward return on investment
On October 2013 Instagram announced the introduction of sponsored photos and videos, a euphemism for saying: we are getting serious now, we start to advertise on the platform.
It is important to say that the process of introducing ads was cautious and slow: the management team wanted to avoid clashes with the community, as it was the case with the sudden change of the Terms of Service.
Before opening the platform to advertisers, Instagram experimented for months, with only a few brands, the impact of the ads on the community.
The chosen brands were selected for their commitment to IG and for the quality of the media already posted, among others the first happy ones where:
General Electric, Michael Kros, Ben & Jerry, Levi’s, Lexus, Burberry, Starwood.
After the positive results of this initial phase, IG opened the platform to everyone who wanted to advertise: like the parent company FB, Instagram has now publicities that shows up inside every user’s feed. The choice of the ads displayed depends on an algorithm that analyzes our life habits and is meant to propose brands that are coherent with our preferences and needs.
The merge with FB was of big strategic interest for the transformation of Instagram into a social advertising platform: all the parent’s company sophisticated and efficient analysis tools for business where already there.
For brands used to advertise on FB the process is extremely simple, as the procedures and statistics are the same on both platform.
To develop from scratch all the advertising software would have required to IG substantial financial resources and a lot of time, so even in this field the merge was a good deal for both companies.
According to Bloomberg, 2016 will be a boom year for IG advertisement, with a revenue on advertisement of 3B$, three times the price FB paid for it in 2012, confirming that the purchase was to date the best deal FB has ever made.
But instagram is not only paid brand advertisement, is much more complex than this, and we will see in the next chapters how brands can capitalize on this creative and dynamic platform in alternative ways bypassing the instagram official advertising features.
The official story
Instagram has an almost hidden webpage where it explains, via images posted on the app, the official story of the company. The page is not easy to find by searching on the web, also because is called “Press” and not “Instagram History”.
Have a look yourself; you will find a lot of interesting information on it!
PS: This text may become part of a book i’m willing to write on Instagram, your comments and suggestions are welcome :)
