Instagram an app, that allows one to modify photos and share them with the friends was recently purchased at the price tag of one billion dollars by Facebook. The world watched with astonishment as a small company of just thirteen employees were now all millionaires. The company is only two years old.
A few people I have talked to, are amazed by the way a simple photo sharing app can be purchased for such a mighty price. A few people have tried to find out how the overall purchase price is justified. Whatever be the reason, Facebook has seen the value in the app and decided to pay a huge price for it.
In my opinion, here are a few reasons for Instagram’s success.
- An awesome app: An app that is simple to use and which makes photo sharing fun Link
- A great community of users: Today, Instagram has a community of millions of users
- VC funding: It got funded right from the beginning by VC funding, very essential to survival of a startup
- Location : Silicon Valley which is center of technological developments
- Proximity to internet giants like Google, Facebook was quite similar to auxiliary companies in automobile industry
- Ability to participate in communities where latest technologies are discussed
- Entrepreneurial culture of silicon valley
Is the story repeatable?
An ordinary entrepreneur outside silicon valley would find it difficult to replicate the success of Instagram. Here are a few reasons ( which applies to my country at least). But this is in no way to put down the hard work or ingenuity of the Instagram’s team.
- Lack of access to VC funding for risky projects
- Emphasis on job oriented environment which prevents people from taking risks
- Distance from Silicon Valley( physical proximity still matters for networking)
- Community of start-ups : not comparable to the silicon valley
What can an ordinary entrepreneur learn from the success of start-ups like Instagram?
- Successes like Instagram depends on multiple factors(as explained above). You might be lucky to have them work for you at the same time
- Concentrate on your user base rather than revenue first
- Design is the king. Pay your designer to provide a clean, good looking interface
- Remove clutter from apps. Too many features reduce usability of any software
- Align with leaders and their technologies. That way a smaller company may improve its chance of success
- Use existing technologies. A lot of social media companies allow you access to their database. Use the facility
- Be responsive and alert to what your customers/users are saying
- Do not worry about generating money initially. Build a great user community and then capitalize on it
Also please remember that not every business can get so many things right to be successful like Instagram. It takes years of hard work to get business success in most of the cases. Most of us will still need to slog, burn midnight oil, win over one customer at a time.
The business principles remain the same . Keep your head low, work hard and be patient.