Jim Harrer


Three lessons learned from the Facebook – Instagram $1 Billion Acquisition.

Ten years ago, I couldn’t finish a dinner with my friends without someone asking me a computer related question. Even though,  I was a software guy, I was their go-to guy all things PC. The last two years it has turned to smart phone applications.  Now that I’m involved in startups and an accelerator, the dinner chatter often turns to startups.

1-Billion-DollarsLast night, all they wanted to talk about was Facebook’s acquisition of mobile photo sharing application, Instagram for a cool $1 billion dollars.  Was Instagram, which is still pre-revenue, worth $1 billion? Yes.  A company’s worth is measured by another company’s willingness to pay.  At this moment in time, Instagram and its team of 13, are worth $1 billion dollars. That shouldn’t be the main question.

To me, the true lesson here is about the founders. I wish I could say I know them, I do not. I’ve never had the privilege to meet Kevin Systrom and Mike Krieger. Based off what I’ve studied about their product, I can tell you that they are intensely driven by the user experience (UX). Instagram user interface is efficient and elegant.  For them, their Minimal Viable Product (MVP) had to have a WOW experience, which is why 25,000 people downloaded the application on their iPhone the very first day it was released in October 2010. Ninty days later, over 1 million people had it on their iPhone.  Today, it’s close to 30 million subscribers and with last week’s release for the Android market, that hockey stick is likely to continue.

So, what are the lessons we can learn from Instagram’s early success?

  1. instagram 1 billionUX (User Experience) matters.  The lean startup and MVP principles don’t always mean your interface can (or should) suck. Also, you have to give credit to both founders for making sure the back-office was well designed and could scale. They clearly learned from Twitter and MySpace’s early failures. In order to have an awesome UX, the total user experience needs to be awesome. The fact they were able to pull this off, with their explosive growth, is impressive indeed.
  2. Focus on what matters. Instagram is available only as a mobile application. Unlike Pinterest, you can’t view it on a website. This was another great decision because it allowed them to stay insanely focused on the user experience.  It also plays well for the type of photos they’re looking for. They want photos of people living life. Pinterest’s market is decidedly different. Just compare the photos on Instagram and Pinterest and you’ll see what I mean.
  3. Keep it lean. According to CrunchBase, Instagram funding was $57.5 million from Benchmark Capital. A total staff of 13, they kept the group agile. Most companies with $50 million in funding would immediately grow to 100 to 200 people. This is impressive to me and something we can all learn from.

So even though I don’t know the Instagram team, I want to tip my hat to them.  Anything is possible, dream big!


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