What Is Instagram and Why Was It Successful?

The story of Instagram’s explosive rise reads like a Silicon Valley fairy tale, with the company gaining staggering momentum within just a few short months.

The photo and video-sharing social media application took only eight weeks for software engineers to develop before it was launched on Apple’s mobile operating system in October 2010.

In less than two years, Facebook (META) had acquired the company for $1 billion in cash and stock.

But, like all good tales, the process involved many twists and turns, failures and successes, conflicts and synergies, and a dose of fortuitous happenstance.

Instagram KEY TAKEAWAYS 1. Instagram is a photo and video-sharing social media application that was launched in 2010 by Kevin Systrom.

Instagram KEY TAKEAWAYS 2. The first prototype of Instagram was a web app called Burbn, which was inspired by Systrom's love of fine whiskeys and bourbons.

Instagram KEY TAKEAWAYS 3. The Instagram app was launched on Oct. 6, 2010, and racked up 25,000 users in one day.

Instagram KEY TAKEAWAYS 4. From the beginning, the primary focus of the app was to feature photographs, specifically those taken on mobile devices.

Instagram KEY TAKEAWAYS 5. Just prior to Instagram's initial public offering (IPO) in 2012, Facebook acquired the company for $1 billion in cash and stock.

History of Instagram: In 2009, Kevin Systrom, a 27-year-old Stanford University graduate, was working at Nextstop, a travel recommendations startup. Systrom had previously worked at Google (GOOG) as a corporate development associate and interned at Odeo, a company that would later evolve into Twitter (TWTR).

Venture Capital Funding: A crucial turning point came in March 2010 when Systrom attended a party for Hunch, a startup based in Silicon Valley. At the party, Systrom met two venture capitalists from Baseline Ventures and Andreessen Horowitz. 

Venture Capital Funding: After showing them the prototype of his app, they decided to meet for coffee to discuss it further. After their first meeting, Systrom decided to quit his job and focus on Burbn.

Venture Capital Funding: Within two weeks, he had raised $500,000 in seed funding from both Baseline Ventures and Andreessen Horowitz to further develop his entrepreneurial venture.

Pivot to a Photo-Sharing Application: After Krieger joined, the two reassessed Burbn and decided to focus primarily on one thing: photographs specifically taken on mobile devices. 

Pivot to a Photo-Sharing Application: They carefully studied leading apps in the photography category at that time. For Krieger and Systrom, the Hipstamatic app stood out to them because it was popular and had interesting features that you could apply to photographs, such as filters. 

Pivot to a Photo-Sharing Application: However, it lacked social media-sharing capabilities; Systrom and Krieger saw potential in building an app that bridged Hipstamatic and a social media platform like Facebook.

Launch of the iOS App: The Instagram app was launched on Oct. 6, 2010, and racked up 25,000 users in one day.

Launch of the iOS App: At the end of the first week, Instagram had been downloaded 100,000 times, and by mid-December, the number of users had reached one million.

Launch of the iOS App: The timing of the app’s release ended up being fortuitous because the iPhone 4– featuring an improved camera–had launched just a few months earlier, in June 2010.

Series A Funding: After the rapid rise in Instagram's user base, more investors became interested in the company. In February 2011, Instagram raised $7 million in a Series A funding round. One of their investors was Benchmark Capital, which valued the company at around $25 million. 

Facebook Acquires Instagram:   By March 2012, the app’s user base had grown to approximately 27 million users. In April 2012, Instagram was released for Android phones and was downloaded more than one million times in less than one day.

Facebook Acquires Instagram:   At the time, the company was also close to receiving a new round of funding at a valuation of $500 million.

Facebook Acquires Instagram:   Systrom and Facebook founder Mark Zuckerberg had become acquainted through events held at Stanford, and the two had been in communication during the beginning of Instagram's rapid rise in popularity.

Facebook Acquires Instagram:   In April 2012, Facebook (now Meta) made an offer to purchase Instagram for about $1 billion in cash and stock; a key provision was that the company would remain independently managed. 

Facebook Acquires Instagram:   Shortly thereafter and just prior to its initial public offering (IPO), Facebook moved forward and acquired the company for $1 billion in cash and stock.

Instagram made a limited-feature website interface available in November 2012.

Facebook Acquires Instagram:   In June 2014, the company introduced an app for the Amazon Fire device, and finally, in 2016, it created an app that made it compatible with Microsoft Windows tablets and computers.

When Was Instagram Launched? Instagram was launched on Oct. 6, 2010, where it was initially only available for iOS. The app reached one million registered users after just two months, and a billion users by 2018.

How Did Instagram Become So Successful? Instagram's focus on photo sharing and commenting led to a strong degree of user engagement and word-of-mouth marketing as users encouraged their friends and family to join. Its simple interface and popular features also made it widely liked. 

How Did Instagram Become So Successful? This combination led users, who notoriously have short attention spans, to scroll through many posts and become addicted, in a sense, to using the app.

The Bottom Line While user growth has continued to increase since the Meta (formerly Facebook) acquisition, Instagram has made a relatively small number of changes to the app, sticking to its simple and intuitive user experience and core focus on photo- and video-sharing capabilities. 

Despite the high price tag of its acquisition, the company appears to have been a savvy investment on the part of Meta.

In 2019, the market research company eMarketer predicted that Instagram would reach 117.2 million users by 2021.

In 2018, Instagram was the second-most downloaded free app on the Apple app store (second only to YouTube's free mobile-device app).

By 2020, more than 1 billion people used Instagram every month.

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