Instagram is the app that every mobile developer dreams of building.
Since launching last October, the photo sharing and filtering app for iPhone has gone completely viral, with more than 13 million downloads. It is now adding a million new users every couple of weeks, including celebrity users like Justin Bieber and Taylor Swift. Its runaway success has propelled cofounder and CEO Kevin Systrom into sudden fame in the tech world, landing him on lists like Fortune’s 40 Under 40.
And yet, Instagram has never spent a dime on marketing, and the company is still tiny, with only 7 employees working out of a space in San Francisco’s South Park neighbourhood.
We caught up with Systrom last week before Thanksgiving to ask him how he did it and what’s next for the company.
Here’s what we learned:
- There’s no trick to runaway success, but his passion for photography probably helped. “I was a photographer before I was a programmer….If you go on to my Flickr page, you’ll see a photo that looks like an Instagram photo, from about 2007. I’ve always been into taking my photos, cropping them square, putting them through a filter in Photoshop. We just reverse engineered how to do filters, now we opened it up to the masses.”
- It also helps to focus on making a popular activity better. “We took a very basic action that everyone does in the world, taking a photo, and we put some meaning behind it, some reason behind it. The reason is suddenly all your friends can see that photo immediately, in an instant. But also we make the photo more beautiful.”
- The company has never spent a dime on marketing. Build a great app — not just OK, but “cream of the crop” — and it will naturally rise to the top.
- Video is “definitely” somewhere in Instagram’s future. “I don’t want people getting stuck with the idea that Instagram is a photo-sharing company….I explain ourselves as a disruptive entertainment platform that enables communication through visual media….What’s not interesting to me is becoming a photo storage platform.”
- But first, they have to get their Android and Web apps done. Those are top priorities right now.
- He’s thought about revenue since 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.”
- The money will come from advertising, although he’s not exactly sure what form it will take. “When you have a big part of someone’s time, there’s a big opportunity, especially as dollars shift off these traditional entertainment mediums and onto online….The question is, is there an opportunity beyond group buying or 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.”
Here’s a transcript of our conversation, lightly edited:
Business Insider: How’s life? How’s business? You guys are up above 13 million users now right?
Kevin Systrom: It’s funny that you say that because you really can swap “life” and “business” in the same sentence. Life’s great. We’re growing like a weed, both in people joining the company and also in usage. We have over 13 million people now on the app. It’s been a crazy year. It’s unlike any social network trajectory in the first 12 months and we’re really excited to see where it goes.
BI: Why do you think the app took off so quickly?
KS: We took a very basic action that everyone does in the world, taking a photo, and we put some meaning behind it, some reason behind it. The reason is suddenly all your friends can see that photo immediately, in an instant. But also we make the photo more beautiful. It doesn’t take very much to convince people to do what they do every day anyway and then do it through you’re product. Really we’re just taking people and shifting them from taking photos anyway to taking them on Instagram.
But then, because of the encouragement through making photos beautiful, people are taking way more photos than they would have otherwise because there’s a reason to share them.
BI: But what advice would you give somebody to get that initial notice and get that spike in usage?
KS: It’s interesting because I’ve started to work more closely with startups trying to do exactly this, and a lot of people think it’s a marketing game. But really, if you build a quality app you will naturally rise through the ranks. I don’t know how many apps are in the App Store, but everyone knows a fraction of a per cent are really well done, quality, thought out apps. There are a lot of apps that are fun to use, they’re utility apps, they’re fine. But there are a fraction of apps that are in the cream of the crop. You just need to be in the cream of the crop to get noticed.
I think far too many people focus on how many emails can I send the user to get them to come back at the end of the week. If you build something beautiful and useful they will come back. And sure, you should also do those things, but I don’t remember the last email I got from Google saying “hey, you haven’t been back to our site in a while.”
There are gimmicks, paying for downloads and stuff. But we’ve never spent a dime on marketing. Great products sell themselves.
BI: What does your average user look like? Do you have a few “whales” who are taking tons of photos and then a bunch more casual users, sort of like Zynga with games?
KS: You can split it up into personas. There are definitely people who don’t take any photos but like photos and comment on photos. Like people who joined for Justin Bieber — a lot of them are there for one reason, and the reason is Justin. At the same time, there are people who subscribe to thousands of people and not only like and comment on their photos but take beautiful photos as well.
BI: You only have 7 employees, right?
KS: We’re going to be 9 pretty soon.
BI: What are you hiring for?
KS: Right now we’re hiring engineers and designers. That’s what we’re focused on. We’ve had a tremendous amount of luck in the last six months finding people that we really love to work with, and the team we’ve built is unparalleled for what we’re doing.
BI: What’s the kind of person you’re looking for? Fresh out of college? Lots of experience in mobile?
KS: Actually I really value passion for the product above experience. Right now, most of the people are within a few years, three to six years out of college. But that’s not necessarily true going forward. A lot of people coming aboard are a little more senior than that, and I’m totally cool with that. We just want to build a company that focuses on the love of Instagram.
BI: It doesn’t seem like you need to hire any marketing people.
KS: It’s funny, I was talking to somebody about getting a job as a growth strategist at a company and I started thinking to myself that’s the opposite of what we need right now. We need somebody [who can tell us] how do you deal with growth. At the same time, even though we’re growing at our peak over one user per second, we still need three or four times that to make us happy. That’ll require things like Web, things like Android, a concerted play on those areas.
BI: What is the next platform?
KS: The next mobile platform is definitely going to be Android and we’ve got some cool stuff coming, that’s all I can say.
BI: Are you going to target only the most recent version?
KS: You mean like Ice Cream Sandwich versus others? We’re going to try to be compatible with all modern phones. I don’t know enough, so I can’t comment to specifics, I’m not the guy who knows a lot about Android. But in our discussions, there’s always a tension between just supporting the latest or supporting a bunch of different ones. We’re going to try and support as many as we can.
BI: There was an interesting column recently at CNET, a developer told Rafe Needleman that it’s sometimes better to support limited platforms because you get more marketing support.
KS: The stronger point is not that Apple will give you preferential treatment, because I don’t think they do if you’re not on Android, it’s not that at all. The stronger point is the focus that comes from being on a single platform. We were able to iterate much more quickly than — I don’t think anybody even names any of our competitors anymore. One of the reasons why is we were able to focus on Android and really focus on the experience on the Apple platform. There will always be folks coming up with interesting innovative stuff, I’d never write anybody off, but focusing on iPhone really helped us take that market.
BI: So you guys see yourselves as a platform, right? I hear that from a lot of startups these days — everybody wants to be a platform.
KS: I don’t think platform means you support other people, necessarily. A platform is the base from which something big happens. In our case we’re an entertainment platform in the sense that there are people signing up like MTV, Burberry, folks like Taylor Swift and Justin Bieber. And why? Because it’s their channel to control their entertainment to their fans. Whether you’re a brand, whether you’re a big artist, or whether you’re me, just a photographer, it’s a platform upon which to broadcast. What we’re seeing is people spending more and more time on these things [picks up his iPhone] and this is where we’re consuming entertainment. Instagram is definitely becoming a new entertainment source for people day after day.
And right now we’re still images, right? Imagine what happens when in the future, this really becomes an entertainment platform. I don’t want to say this is an entertainment platform in the way TV is a platform because we’re not going to go producing content. That being said, you could see where professional producers do produce content, do produce photos of behind the scenes things — Audi produces gorgeous photos of all their cars and I’m sitting there and flicking through it and I’m addicted. That’s very much like people sitting down on a Friday night to watch their favourite show. It’s just a different platform, meaning it’s a different medium, and they’re consuming different kinds of content. But they’re engaged, they just sit there and they open it up every 10 minutes. That’s the kind of behaviour that unlocks the potential of a big advertising business.
BI: So that’s the opportunity — sponsorships, affiliates, advertising, something like that. Not subscriptions?
KS: I haven’t thought very specifically what form it takes, I’ve thought very generally about the direction we’re moving. I don’t think you should ever start a business and move in a direction where you can’t see it becoming a business. 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 big 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.
BI: When do you have to turn the corner and show revenue? You’re showing such fast growth I’m sure you could raise more money whenever you need it, and you have less than 10 people so that’s a slow burn rate, but when do you start looking at the business side?
KS: 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. It’s a good problem to have. I’m not sure there’s a specific time we need to turn on the faucet. It’s a progressive process.
We’re trying to figure out a lot of things before that. How do we build a team such that we can support partners? How do we build the technology so that every weekend we’re not stuck in the office trying to fix things from going out.
BI: What do you think of native apps for mobile phones vs HTML5 apps? I talk to some people who think HTML5 is the way to build one app that works on multiple platforms.
KS: I don’t buy it, mostly because we started off as HTML5.
What I don’t buy is just your statement. I totally buy HTML5. It’s great for some companies. For instance, I think it’s awesome for bigger brands who are not technology companies to invest in HTML5. It’s much more accessible, the refresh cycle’s much smaller, it’s just better for the organisation to spend their time doing what you do well. If you’re a larger brand, having the flexibility to do HTML5 is also great.
But to do what we do, there’s no reason why we should do it in HTML5….We were HTML5 when we were Burbn. But there were so many stumbling blocks getting it out to consumers, the second we went native it was the best decision we ever made. I think that’s true, for folks to have a strong consumer experience that needs to be completely polished. I don’t buy the cross-platform thing.
BI: What about writing in HTML5 and then wrapping it for each different platform?
BI: You mentioned a Web platform, what’s up with that?
KS: I don’t think there’s any reason people shouldn’t be able to consume photos on the Web. We just focused on mobile first.
BI: You also hinted at moving beyond photos into video?
KS: I’ve been mentioning this a lot lately because I don’t want people getting stuck with the idea that Instagram is a photo-sharing company. Instagram is a media company. I think we’re about visual media. I explain ourselves as a disruptive entertainment platform that enables communication through visual media. I don’t think it’s just photos. There’s a reason we don’t allow you to upload photos on the Web as albums. It’s not about taking all these photos off your DSLR putting them into an album and sharing them with your family. It’s not about that. It’s about what are you up to right now out in the real world, how can you share that with everyone. It’s about what’s happening out in the world. It’s about can I consume media from folks like Taylor Swift. That’s really interesting to people. What’s not interesting to me is becoming a photo storage platform.
BI: Facebook has that locked up.
Flickr has it, Shutterfly. We’re not in the business of making mugs with photos on them. That’s not our thing. So the reason I describe videos is it pushes people’s boundaries of what Instagram is. Video is definitely somewhere in our future.
BI: Video requires a lot more resources.
KS: Everything does. So does Web. We get six million visits a day to our Web site. Imagine us launching a Web site [for sharing], how much more infrastructure would we need? All of these things are commitments. We have to see where they make sense in our lifecycle?
BI: So do you want to stay independent as a company?
KS: You mean versus selling? I’m excited about what we’re doing, I love what I do every day I come in to work and get to work with my team, that’s what I want to do as long as possible.
BI: Are you a photographer?
KS: It’s funny, I was a photographer before I was a programmer. But in high school I basically got them to waive a bunch of science requirements so I could take more computer science. I got to college and decided I didn’t want to concentrate on computer science for some random reason. But I’ve always done photography, in the darkroom, and I’ve always really been into digital photography. If you go on to my Flickr page, you’ll see a photo that looks like an Instagram photo, from about 2007. I’ve always been into taking my photos, cropping them square, putting them through a filter in Photoshop. We just reverse engineered how to do filters, now we opened it up to the masses….
I’ve done all our filters except for a few. We worked with Cole Rise, one of our users, who did a fantastic job on Amaro, Rise, and Hudson. He did the first three on the list and they’re awesome, I use them 24/7. But we’re definitely itching to get new ones out there. We talked about doing limited Christmas holiday ones, or whatever, but we’re not Angry Birds Seasons or anything like that yet.
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