The story of how Instagram started is quite a short one, but an interesting one nevertheless. Instagram was still in its infancy when it was purchased by the social media behemoth that is Facebook. An app that had existed for just 551 days, and had made absolutely no revenue, sold for $1 billion. How exactly did the 28-year-old company founder, Kevin Systrom, manage to pull off this feat?
In the beginning of January 2009, Systrom, who had no formal computer science education, started to put time and energy into teaching himself to be able to code. It was around about this time that Foursquare was beginning to become popular, which resulted in the increased interest of location check-in apps. Although Systrom had a few concepts developed for these type of apps, in late 2009 he started to pour all of his attention into a single up. This app combined many elements of things that were popular at the time, including Foursquare.
"I figured I could build a prototype of the idea in HTML5 and get it to some friends," Systrom said, in an interview. "Those friends ended up using the prototype without any branding elements or design at all."
This initial app was called Burbn, and its primary function was to allow users to check in to locations and earn points by meeting with friends and posting pictures. However, although he let his close friends trial the app, he needed a large investment of money to be able to release it as a full product. In March 2010 he decided to leave his full-time job behind, to pursue making Burbn a fully fledged company. Within two weeks he managed to raise $500,000 and was able to start putting a team together.
Mike Krieger, who was an engineer for Meebo, was Systrom's first hire and eventually became the co-founder of Instagram.
"Once he joined, we took a step back and looked at the product as it stood," Systrom reminisced. "We decided that if we were going to build a company, we wanted to focus on being really good at one thing."
The pair felt that Burbn had too many features and was cluttered, but the photo feature was definitely the most popular. In August later that year, they decided to completely scrap the Burbn project, to build a completely new one. Essentially, they stripped Burbn of everything except for its basic features like photo upload, commenting, and like capabilities.
They both came up with the name Instagram from the words instant and telegram. For the next eight weeks, Systrom and Krieger worked night and day to perfect and refine their new project. Their friends and families were used to test the app in its beta stages and to help them fix bugs. They also helped with the decision to only have 11 filters on launch, rather than the 30+ that were originally proposed.
On October 6, 2010, at 12:15 in the morning, Instagram went live. They expected to be able to actually get a good night's sleep, considering the app was launched not during peak hours; however 10,000 users downloaded the app within a couple of hours, from all across the world. Because of this, they then had to rush into the office to provide additional resources and capacity to their servers. After the first week, 100,000 users had downloaded the app, and by December the Instagram community had grown to an astonishing million.
In February 2011 Instagram started to get more interest from investors as well as having the whole company valued at $20 million. During this time, Instagram had 1.75 million users who were sharing approximately 290,000 photos a day. At the time, only four people were working on Instagram, but these additional financial investments allowed their workforce to increase.
What's unique about Instagram is that it has barely changed from its initial creation purpose. During 2011, they continued to work on features, but never added any way of generating revenue. All their time and focus went on refining the app and meeting the demands and needs of the user base. Mid-2011 to the beginning of 2012 saw very little change and minimal updates were made. However, they did hire a couple of extra designers, engineers and community managers.
By March 2012, the Instagram user base was recorded to be at 27 million. it was also during this month that Facebook acquired Instagram for $1 billion, which is almost comparable to Google's acquisition of YouTube, in 2006, for $1.65 billion. Since acquiring Instagram, Facebook has added a few more features in order to drag people away from some of the other social media outlets that are available. Some of these include being able to post a video story, similar to Snapchat. They also now allow users to directly message each other, which has a similar feel to twitter's direct message feature, and probably the reason why Facebook initially bought this up in the first place, targeted ads.
Here is the simplified version of the creation of Instagram, during the 8 week period:
- Kevin Systrom started to learn to code that night, after work
- Built his prototype in HTML5, and called it Burbn
- Gave out the unbranded version to friends and family for feedback
- Met investors and showed them Burbn
- Quit his job to pursue making his own company
- Managed to get $500,000 in funding
- Started to collaborate with Mike Krieger
- Decided to focus on the photo niche
- Created a new photo app from scratch, but scratched it
- Went back and started to look at Burbn again
- Turned Burbn into an iPhone app
- Felt that the app was too cluttered, so discarding everything except for the photo sharing features
- Renamed it Instagram
- Launched, and within a few hours became the number one photo app on the iOS store
This story is a perfect example of how understanding the wants and needs of your target audience pays off. It's also a good example of how making cash grab applications can actually hurt the popularity of your app and its investment opportunities because if Instagram was launched with lots of interfering adverts on launch, it definitely wouldn't have had the success that it has had.