Billion Dollar Baby

Sarah Lacy & Startups.co chat with Kevin Systrom, Co-Founder & CEO of Instagram

I am hard pressed to think of a company run by just a handful of people — with less than 100 million users and no revenue at its peak — that has had such a transformational impact on the consumer Web than Instagram.

Had Instagram stayed independent, it may well have wound up looking a lot like Twitter, today.

Had Twitter bought Instagram, everything would look different: Facebook struggles more with teens and mobile just after it’s IPO, and Twitter doubles down on photos/expression/celebrity and pop culture.

But instead, Facebook bought Instagram and that one move made the strongest market player way stronger than the $1 billion it “overpaid” for the asset. Not only did Instagram give Facebook youth again, celebrity, it’s first successful “mobile first” product, and a continued hold over photo sharing. But it robbed Twitter of all of that. And, Instagram has mostly been Mark Zuckerberg’s sandbox for ripping off and blunting the rise of Snapchat.

Instagram also gave future Facebook acquisitions the confidence that they would indeed be left alone, be able to run their businesses, and keep their properties distinct.

It was a huge risk as Facebook was nearing its IPO. But Zuckerberg saw what Jack Dorsey didn’t: He had to own this asset at any cost.

I interviewed Instagram’s co-founder and CEO Kevin Systrom just months after the combined companies went public. We talk about the company’s early days, why he sold, and a story I’d never heard before about how he and Zuckerberg first met.

Sarah Lacy: Let’s talk about the beginning of Instagram, because you guys were a company that a little bit came out of nowhere, and was a fanboy favorite, and then really started looking legit. The next thing we knew, you were bought. You didn’t have as long of a time in the public eye as a lot of companies that wind up as big.

First of all, tell us something about you. Were you one of these guys who grew up always wanting to be an entrepreneur? Do your parents find it strange, the journey your life has taken?

Kevin Systrom: No. In fact, looking back on it, I actually think that our history makes complete sense, a hundred percent complete sense ‑‑ not the speed with which it happened, but rather what we worked on, the people we worked with, and in what order, frankly.

As a kid, I was the guy in fourth grade who wanted to start companies in my classroom, and I was charging people for candy out of our lockers. I won’t say I was a natural entrepreneur, I think I was actually pretty bad at that. People didn’t really buy the candy, and people were like, “Why are you doing this?”

I’m like, “Buy some candy out of my locker.” They’re like, “Who’s this creepy guy?” Honestly, growing up, I grew up in Boston, Massachusetts, or outside of, I went to this small little private school in Concord, and I guess an example is I decided…I loved music, and I loved DJing, and I decided I wanted to start a radio station.

I got an alumni to donate some money to buy an antenna. I hung this antenna outside of our dorm room, and I just started a radio station with a transmitter. It was me and a couple of friends.

This is one example. It was having ideas and wanting to make things happen, and not really having that part of your brain that tells you not to do something because either it’s illegal or it’s not the right thing to do.

You just do it anyway, because you’re having fun and because you want to start something that people love. That carries through, I think, into college where I would start little websites on the side.

One of them was called Swap‑Swap, it was Craigslist, but for colleges. I think the idea has been done 40 times, all unsuccessfully.

That’s actually how I met Mark Zuckerberg and those folks, initially, because they were doing the stuff out in Palo Alto, and I was working on this site.

I guess it’s just an example of me loving to start things and never really having the attention span to follow through on it. I guess it’s kind of fitting that this took such a short time.

Sarah Lacy: You might have lost interest right before Mark called.

Kevin Systrom: I might have lost interest. I don’t know.

Sarah Lacy: Wait. How did you meet him? Was there a convention of dorm room founders? How did that happen?

Kevin Systrom: It’s really weird. The history between our company and Facebook goes back probably seven‑ish years or so. Basically, at Stanford, they had moved out. I remember hearing about this thing, Facebook, and I signed up for it. Everyone was obsessed, and they were trying to get the most friends.

A couple months later, it was like, “Oh, I think the guys that started that are in the fraternity house right now. They’re walking around.” I was in this small fraternity at Stanford, not the cool one. I won’t say which one, but it was the one where we like to study a little bit more.

They came, and I remember walking in a room, and Mark was sitting and talking to one of my friends, Mike. That’s how we met initially, and we got to talking about the websites that I was working on. He was like, “Oh, I have this thing called Facebook. You should come check it out.” That’s where the relationship started.

You guys chuckle, but Facebook back then, it was literally just Facebook, the website. It wasn’t this thing that everyone knew about.

I remember telling my friends, “Oh, they’re looking for interns for the summer.” They’re like, “Ah, it’s a fad.” I had mentors over the summer tell me, “Oh, no. It’s a fad. It’ll be gone in a year,” like, “Get a real job.”

I know. Everyone is laughing now, right?

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