Instagram acquisition is a big deal. Big deal, as-in a serious big deal and an aspiration for entrepreneurs across the world that a small tiny 13 people company can make a giant restless.
Instagram acquisition is not about the reasons behind it (investors money? was Facebook scared??) , but it’s a lot more and as somebody who has been with technology startups for a very long time, here are a few (random) thoughts I want to share with the community (especially in the Indian ecosystem context).
2006: Youtube/Web2.0 Phenomena
When companies like Youtube and Flickr were acquired, the entire geeky community across the globe started believing that building a cool thing works. Youtube’s $1.65Bn acquisition was a milestone for the technology community, as Youtube did not have any monetization model in place (in fact, they were bleeding money).
Youtube acquisition fueled a new set of startups and while the ‘web2.0 revolution’ was happening across the globe, I can speak for the Indian startup community and let me tell you that such Silicon Valley acquisitions gave a lot of hope to Indian entrepreneurs (that building a cool product is actually a cool thing).
But the supporting ecosystem and mindset wasn’t there – right from VCs asking for ‘monetization model’ to lack of early adopters etc; and the result was that most of such *no-revenue* products didn’t do very well. Maybe, they were too early to the market or maybe, they were building the right product at the wrong place (like this), but the reality is that these products do not exist anymore.
2009: What changed
I strongly believe that the biggest impact in Indian entrepreneur’s mindset was the last recession, which showed the value of money. A lot of entrepreneurs who were building cool products suddenly started building more serious stuff and the result is the healthy startup ecosystem we see in India today.
These days, I am amazed to see when geeks talk some serious money and the growing SAAS space is a testimonial that you can build a global product from India and disrupt the space, just by virtue of building a better product.
In short, things are happening and while we all hope to have Instagram kind of stories in India, hope can never be strategy and let’s not discount revenue model in favor of building a great product.
2012: The Instagram Story
Coming back to where I started off, that is Instagram acquisition – it’s a great news for product entrepreneurs, but the learning should be limited to the Instagram product success story and not the acquisition story that followed.
As far as learning from Instagram success is concerned, here are a few thoughts (please add to this):
1. No formal degree
“I started doing more and more engineering at night on simple ideas that helped me learn how to program (I don’t have any formal CS degree or training).” Kevin Systrom, cofounder of Instagram has no formal degree in CS. [quora]
In short, get your hands dirty.
2. Focus on 1 thing
Till last week, Instagram was an iOS-only app. Going by pundit’s view, this was a disaster [“how can you ignore one of the fastest growing platform, i.e. Android?”]. But they just remained iOS-only for a very very long time. Maybe, that resulted in the app taking the ‘aspirational’ branding and the result is that the Android app had 430K+ people in the waiting list!
But the harsh truth is that Instagram closed on all other options and stuck to only one thing, i.e. iOS for a very very long time. It was a bet that worked (and they actually made it work)!
3. The product distribution model, beyond SEO
You can’t really find Instagram photos on Google – and this is a big proof that you can build a business model which goes beyond Google. Startups have depended on Google for discovery and companies like Instagram (and Facebook) have proven that there is a business beyond SEO (think social). In fact, if you are building a social platform – you should be thinking beyond Google.
The day Instagram was launched, they had 25,000+ users and 30million+ registered users in 2 years. Apart from product engagement, there were many other causal factors in the Instagram story (i.e. of Facebook’s IPO and the need to acquire a Facebook-killer), but nothing matches the sole focus the team had in building a super simple utility that worked as-expected.
Plain lucky? Yeah, overnight success takes many years of hard work.
Long story short, we all need to look at Instagram acquisition in a certain context (of building a great product whose value multiplied owing to the intrinsic network effect) and treat it as an inspirational story to follow – of 13 employee company building a ‘feature’ and in the process, grabbing a billion dollars (without even exploring the revenue model)!
In short, Instagram is a great product story and acquisition is not what you should remember the product for. The learning, in my opinion needs to go beyond the $1Bn, which unfortunately has eclipsed the product story.