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Instagram was one of the first apps to fully exploit our relationship with our phones, compelling us to experience life through a camera for the reward of digital validation. The story of Instagram is an overwhelming lesson in how the decisions inside a social media company—about what users listen to, which products to build, and how to measure success—can dramatically impact the way we live, and who is rewarded in our economy.
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behind the scenes with cofounders Kevin Systrom and Mike Krieger as they navigated what to do with their product’s power over our attention. Every decision they made had a dramatic ripple effect.
There is something powerful about that number—1 billion—in our society. It’s a marker signifying, especially in business, that you’ve achieved some unique untouchable status, graduating into an echelon that inspires awe and merits newsworthiness.
Reality didn’t matter as much as aspiration and creativity. The Instagram community even devised a hashtag, #nofilter,
the largest following on Instagram, at 322 million, is @instagram, the one controlled by the company. It’s fitting, because Instagram holds the utmost influence over the world it has shaped. In 2018, Instagram reached 1 billion monthly users—their second “1 billion” milestone. Soon after, the founders left their jobs. As Systrom and Krieger discovered, even if you reach the highest echelons of business success, you don’t always get what you want.
eliciting, because his obsessions were so varied, either fascination or eye rolls. He was the kind of person who would say that he wasn’t good at something he was actually good at, or that he wasn’t cool enough to do something he was actually cool enough to do, toeing the line between being relatable and humblebragging.
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returned with a smaller device, called a Holga, that only took blurry, square black-and-white photographs. It was plastic, like a toy. Charlie told Systrom he wasn’t allowed to use his fancy camera for the next three months, because a higher-quality tool wouldn’t necessarily create better art. “You have to learn to love imperfection,”
Most people never get the chance to join an iconic company in its early days. Systrom squandered both of his, choosing instead to do something much less risky. For him, after graduating Stanford with degrees in management and engineering, going to Google was basically like going to grad school. He’d have a salary with a base of about $60,000—paltry compared to the life-changing wealth Facebook would have afforded—but he would get a crash course in Silicon Valley logic.
decisions. It was the culture that drove homepage leader Marissa Mayer, who later became CEO of Yahoo!, to famously test 41 shades of blue to figure out what color would give the company’s hyperlinks the highest click-through rate. A slightly purpler blue shade won out over slightly greener shades, helping boost revenue by $200 million a year. Seemingly insignificant changes could make a huge difference when applied to millions or billions of people.
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By age 25 Systrom had received an introduction to how growth-driven Facebook was, how scrappy Twitter was, and how procedural and academic Google was. He was able to know their leaders and understand what drove them, which stripped them of their mystery. From the outside, Silicon Valley looked like it was run by geniuses. From the inside, it was clear that everyone was vulnerable, like he was, just figuring it out as they went along.
Systrom thought that what he lacked in technical ability—he didn’t actually know how to make an app, only a mobile website—he could make up for with his relative well-roundedness, which he hoped would help him come up with ideas that were more fun and interesting for regular people. He was learning to develop just through practicing,
He didn’t think about the long-term consequences of giving up his art to a company, making it available to the masses. Optimistic though he was for his new friends, he knew that most startups failed. Neither Rise nor the founders thought there was a downside to the fact that filters, when used en masse, would give Instagrammers permission to present their reality as more interesting and beautiful than it actually was.
Within the first day, 25,000 people were using Instagram. Within the first week, it was 100,000, and Systrom had the surreal experience of seeing a stranger scrolling through the app on a San Francisco bus.
crediting the app with perfect timing. It was born in Silicon Valley, in the midst of a mobile revolution, in which millions of new smartphone consumers didn’t understand what to do with a camera in their pockets. That much is true. But Systrom and Krieger also made a lot of counterintuitive choices to set Instagram apart.
And instead of inventing something new and bold, as potential Silicon Valley investors wanted them to, they improved on what they’d seen other apps do. They made a tool that was much simpler and faster to use than anyone else’s, taking up less of users’ time as they were out living the experiences Instagram wanted them to capture.
Instagram’s early popularity was less about the technology and more about the psychology—about how it made people feel. The filters made reality look like art. And then, in cataloging that art, people would start to think about their lives differently, and themselves differently, and their place in society differently.
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But pretending things were going more smoothly than they actually were was part of the job of being a startup CEO. Everyone needed to think you were on the right track. His posturing was perhaps analogous to the modern pressure Instagram would introduce—the pressure to post only the best photos, making life seem more perfect than it actually was.
like old Polaroids, transforming moments into memories, giving people the opportunity to look back on what they’d done with their day and feel like it was beautiful. Those feelings were validated with likes, comments, and follows, as the new users built new kinds of networks on the internet. If Facebook was about friendships, and Twitter was about opinions, Instagram was about experiences—and anyone could be interested in anyone else’s visual experiences, anywhere in the world.
The Hudson filter was based on the texture of the chalkboard in his kitchen, and now elements of his kitchen chalkboard were being shared the world over. Systrom was giving him public credit, at least. The CEO had to change the name of the Spectra filter because Polaroid owned the brand name. He renamed it Rise. Cole was touched when he found out from a TechCrunch post. Years later, he’d launch his own filter app.
At Twitter and Facebook, executives reasoned that it was legally safer to be as uninvolved in content policing as possible. If there were problems, users could report or resolve them themselves, and it wasn’t the company’s job to tell them how to interact with the product.
You followed them because you wanted to see what they saw and experienced and created. Not someone else. The founders would constantly need to defend this thesis, now that social networking was synonymous with virality.
Krieger had to interrupt their conversation at one point to reset the servers, because the teenage heartthrob Justin Bieber had posted again, causing them to crash. That was a fun problem to have, Van Damme thought. The designer became Instagram’s ninth employee when his daughter was just a couple days old. Most startups fail, he thought, but at least for now he had a job, redesigning buttons and logos on an app whose creators cared about style.
But it was $1 billion. One billion—a magic number, unheard of for mobile app acquisitions. Google had bought YouTube for $1.6 billion, yes—but that had been six years ago, before the U.S. financial crisis. Facebook didn’t do acquisitions like this. Everything they bought, they stripped for parts, keeping the founders and technology but killing the product. Was Instagram going to be killed?
One billion dollars, Reuters said, “was stunning for an apps-maker without any significant revenue.” Zuckerberg was “paying a steep price for a startup that has lots of buzz but no business model,” CNN echoed,
Systrom told Dorsey about the gratifying experience and explained that he couldn’t sell now. He wanted to make Instagram so big and important, it would be too expensive to be acquired by anybody. Dorsey said he understood. He introduced Systrom to Roelof Botha, a partner at Sequoia Capital, who started negotiating to put the venture firm’s money into Instagram. Systrom would tell his friends that Twitter never made a serious offer. In reality, they never offered him anything he wanted to take seriously. Only Zuckerberg understood what would appeal to Systrom: independence.
his engineers could make Facebook so entertaining and useful that it took up more and more of people’s time on their phones. And two, he could buy, copy, or kill competitive apps, making sure there were fewer opportunities for other companies to encroach on anyone’s Facebook habit.
Zuckerberg wanted to hustle. He was one of Silicon Valley’s greatest chess players, thinking several moves ahead. If Facebook took too long to negotiate, Systrom would start calling his friends and mentors. Zuckerberg knew, from his former employee Cohler on Instagram’s board, that Systrom was close with Twitter’s Dorsey. Zuckerberg didn’t have the friendship advantage.
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it was fair to base Instagram’s price off Facebook’s, he was concerned over the acquisition price tag. If he valued Instagram so highly, with its tiny team and no revenue, he would start a bubble in Silicon Valley, raising the price of every related company he might want to buy in the future. (He was partially right. In 2013, venture capitalist Aileen Lee came up with a name for startups with billion-dollar values: “unicorns.” At the time, there were 37. When she wrote an update on the rare breeds in 2015, there were 84. By 2019, there were hundreds. But if it’s a bubble, it hasn’t burst.)
Zuckerberg held the majority voting power in the company, the board’s role was merely to put a rubber stamp on his decisions.
not to be integrated—would become an important precedent in technology M&A, especially as giant companies got even gianter, and small companies like Instagram wanted to find some alternative to competing with them or dying. In the coming years, Twitter would buy Vine and Periscope, keeping the apps separate and the founders in charge, at least for a little while. Google would buy Nest, keeping it separate. Amazon would buy Whole Foods, keeping it separate.
Instagram’s perceived independence at Facebook would help Zuckerberg win some otherwise impossible deals with headstrong founders, especially in 2014, with the chat app WhatsApp and the virtual reality company Oculus VR. But mostly, the Instagram deal would give Zuckerberg a tremendous competitive advantage. One Facebook executive would later reflect on the relative importance of the deal: Imagine an alternate reality, in which Microsoft buys Apple while Apple is still small. That would have been tremendous for Microsoft. And that’s what Facebook got with Instagram.
Like everyone else, Kushner doubled his money in record time and made a name for himself in the process. So Kushner asked his sister-in-law, Ivanka Trump, to make sure the employees enjoyed themselves.
Instagram was coming of age in an industry that revered and empowered founders above all else. In the deal contract negotiated with Facebook, Systrom and Krieger are the only two Instagrammers described as “key employees.” The magic Facebook was paying for was theirs.
The company went public at $38 per share on May 18, giving Facebook a valuation of more than $100 billion, worth more than Disney or McDonald’s.
2012
The regulators were shortsightedly looking at the current marketplace and ignoring what Facebook and Instagram had the potential to be in a few years or even months.
Making money, in Zuckerberg’s opinion, is something to try only once a network is strong enough, so valuable to its users that advertisements or other efforts aren’t going to turn them off. Facebook’s users were comfortable with sharing their intimate data on the social network before they had any reason to question the site’s motives.
Instagram was also a threat to the thing Facebook wanted from its users the most: time on its site. Facebook was in fierce competition with any other network that people would choose to visit in a spare moment—anything that allowed people to see what was going on in other people’s
Once they turned down Twitter and raised the $50 million in venture capital from Sequoia, they were still, in the words of one investor, too hungry to eat. They probably needed ten times as many employees in order to grow fast enough to give those investors the hefty
Facebook was like a constant high school reunion, with everyone catching up their acquaintances on the life milestones that had happened since they’d last talked. Instagram was like a constant first date, with everyone putting the best version of their lives on display.
If Kelly was representative of the user base, Instagram had graduated beyond the frivolity of latte art and into matters of serious world importance, which Twitter’s Ev Williams had never thought it would reach.
Systrom said at LeWeb, the French tech conference, in June 2012. “The companies and brands that use Instagram—the best and most successful ones—are the ones where it comes across as honest and genuine.’’
they learned to adhere to a corporate philosophy more attuned to metrics than to cultural moments. Facebook wanted metrics—milestones like 1 billion users—so it could swallow from an even bigger fire hose of data on human interactions. The data could help improve the product so people would spend more time there, creating even more data through their posts and comments. Then the data would enable Facebook to sort people into smaller audiences that advertisers would want to sell to.
While Instagram was trying to give people new interests, Facebook was using data to figure out exactly what people already wanted, and then giving more of it to them.
Facebook automatically cataloged every tiny action from its users, not just their comments and clicks but the words they typed and did not send, the posts they hovered over while scrolling and did not click, and the people’s names they searched and did not befriend. They could use that data, for instance, to figure out who your closest friends were, defining the strength of the relationship with a constantly changing number between 0 and 1 they called a “friend coefficient.” The people rated closest to 1 would always be at the top of your news feed.
