Photo: @_nana on Instagram
For a lot of consumer startups, the business model seems to be “we’ll think of one later.” They focus on building a solid product first, attracting users second, and trust that the revenue will eventually follow.Instagram is a little bit different.
Cofounder and CEO Kevin Systrom told us that even though Instagram has had extreme growth — 13 million users in less than a year, with only 7 employees — he isn’t ignoring the business side at all.
I don’t think you should ever start a business and move in a direction where you can’t see it becoming a business….It was a concern from day one. I don’t think it’s healthy to ignore it. I look at our numbers every day and I see how much we’re spending, and I understand that goes up exponentially as you get bigger. So it’s on the top of my mind.
Also, he’s always thought that advertising would be Instagram’s revenue source, rather than something like subscriptions or add-on sales (of filters, for instance).
I haven’t thought very specifically what form it takes, I’ve thought very generally about the direction we’re moving….Those thoughts have crossed my mind, can people buy things from the app, or sponsored things in your feed or whatever. I don’t think we’ve landed on any one, but the good news is we add a million people every two weeks, that’s a big number. When you have a day part of someone’s time, there’s a big opportunity, especially as dollars shift off these traditional entertainment mediums and onto online.
Search ads is a very specific implementation of advertising. The question is, is there an opportunity beyond group buying, search advertising, to make a whole lot of revenue on the iPhone, on Android. I believe the answer is yes, that’s what we’re going after.