Does Instagram’s success matter to an ordinary entrepreneur?

by Ashvini on April 17, 2012 · 12 comments

in My Personal Thoughts

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.

  1. An awesome app:  An app that is simple to use and which makes photo sharing fun Link
  2. A great community of users: Today, Instagram has a community of millions of users
  3. VC funding: It got funded right from the beginning by VC funding, very essential to survival of a startup
  4. Location : Silicon Valley which is center of technological developments
  5. Proximity to internet giants like Google, Facebook was quite similar to auxiliary companies in automobile industry
  6. Ability to participate in communities where latest technologies are discussed
  7. 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?

  1. Successes like Instagram depends on multiple factors(as explained above). You might be lucky to have them work for you at the same time
  2. Concentrate on your user base rather than revenue first
  3. Design is the king. Pay your designer to provide a clean, good looking interface
  4. Remove clutter from apps. Too many features reduce usability of any software
  5. Align with leaders and their technologies. That way a smaller company may improve its chance of success
  6. Use existing technologies. A lot of social media companies allow you access to their database. Use the facility
  7. Be responsive and alert to what your customers/users are saying
  8. 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.

About The Author


Laurel May 2, 2012 at 12:13 am

A great team of developers and artists, great marketing and word of mouth (plus the amazing app itself) all adds up to success. I’m sure that not every single person in the world could replicate the success, but I have no doubt it’ll be done again. I’m sure every mobile application developer in the world had their eye on the news when the $1 billion acquisition story hit the news.

Ashvini Kumar Saxena May 7, 2012 at 12:40 pm

Hi Laurel,
That is a consistent and clear path to success. However funding also plays an important role in the whole business. Let us see who’s next? :)

Sonia April 25, 2012 at 9:42 am

Talk about lucky. You can only wish to have been an employee along for the ride. Companies these days are very picky in their hiring process and rightly so. They want the best and they had some pretty innovative people on their team to create a product that not only provided value, and created a bigger want. I can’t say I “needed” Instagram, but I sure do like it.

What they also did was implement a community within their app where you could follow other users like so many other social apps that created conversation, likes and other like features. I remember hearing once that if you create a need and want people will follow. Not that it applies to everything idea out there, but I have noticed lately who you market it too also helps.

Companies like PicMonkey had 2 engineers that worked for Picnik, that branched off on their own after the purchase from Google and created PicMonkey. I can’t remember a single piece of marketing efforts except “word of mouth”. Once Mom bloggers caught on it spread like wild fire and now they have over 14+thousand followers. Why?

They picked up were Picnik left off and filled that void. The women love it and they made it better and bigger.

Ashvini Kumar Saxena April 26, 2012 at 4:06 pm

Yeah, I wish that I would have the same luck. But I am of the opinion that these guys worked very hard to be where they are today. They took risks and learned what needed to be done. I feel more aligned to Picnik guys than Instagram because the website they have created is awesome. Not that Instagram is not a great app but I like Picnik far better.

Also that shows the power of hiring great employees. Great employees + solid business strategy = $$$$ in future, isn’t it ?.
Thanks for your awesome comment once again Sonia :)

Simon April 21, 2012 at 12:58 am

Omg unprecedented indeed even with your reasons for why you think this happend its still very shocking i just cant get over the huge price they paid it doesnt make sense good on them but wow maybe facebook was just feeling rather generous as there pockets must be overflowing.

Ashvini Kumar Saxena April 26, 2012 at 4:09 pm

Hi Simon,
In my opinion, huge price was because of the huge customer base of Instagram. It was shocking for many. But in the end they made tonnes of money :)
Thanks for your comment

Andrew April 19, 2012 at 4:58 pm

very interesting post i really enjoyed it, thank you for sharing this post with us it is always good to learn new things.

Adrienne April 17, 2012 at 11:49 pm

I’m definitely no expert on start up companies that have products such as this but I would hope that other located outside of the Silicon Valley would be able to achieve such success as well.

I think that with so many wonderful apps popping up all around now they are a dime a dozen at the moment. That doesn’t take away from how good a lot of them are and perhaps the lack of backing.

I’ve always rooted for the underdog Ashvini. I still like to think that they can rise above.

Ashvini Kumar Saxena April 18, 2012 at 4:30 pm

Hey Adrienne,
Thanks for rooting for the underdog. Most of the entrepreneurs are underdogs anyway. I had heard from a few struggling entrepreneurs about this story and they were frankly feeling low ( because they are yet to achieve the success to that level). My post was to encourage them so that they keep working.
Another aspect is that funding may be very critical for tech companies to succeed. Not everyone can get it though. Silicon Valley is a great place to be in and to be a part of buzz.
Thanks for your comments once again :). Have a great day.

Aswani April 17, 2012 at 5:52 pm

Hi Ashvini, nice post. Instagram sale has created enough buzz on the internet and nothing surprises me much except the price tag which is incredible. $1B for an application which is just 2 years old… :O

Don’t know what made facebook to go with this deal but surely must have been a long term goal behind this purchase. No doubt, facebook is counting on its popularity but for how long considering users of the instagram not so happy with this deal. A huge uproar was created by the users of the same on Twitter just a few days back and I just came across this interesting discussion on Google Plus where user’s have reacted sharply over this sudden acquisition of instagram by facebook –

Well, good or bad…the deal is done and now, it would be interesting to see how facebook goes ahead with this purchase. Anyways, Instagram purchase surely has some lessons for the budding entrepreneurs as pointed out above in the post. Nothing succeeds like success and to be successful, you need to put your 100% and on top of it, it is your patience which pays off in the end..!

Ashvini Kumar Saxena April 18, 2012 at 4:37 pm

Hi Aswani,
I talked to a few entrepreneurs who are working quite hard to be successful(one is an app developer himself). Obviously success of Instagram is unprecedented. While it means that it is doable but also the fact that it might be difficult(not impossible) for any other app developer outside silicon valley to pull off.
However that need not deter an entrepreneur from working towards their goals. Patience and good customer service is still the key for long term win :)

Thanks for the link. This is another aspect of the situation which needs to be thought of in detail.

Aswani April 18, 2012 at 5:03 pm

Yes agreed..!

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