The story of Instagram’s explosive rise reads like a Silicon Valley fairy tale, with the company gaining staggering momentum within a few short months. The app itself took only eight weeks to develop before launching on Apple’s (AAPL) iOS, and within a year and a half Facebook (FB) had acquired 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.
In 2009, 27-year-old Stanford University graduate Kevin Systrom was working at Nextstop, a travel recommendations startup. Systrom had previously worked at Google (GOOG) as a corporate development associate and interned at Odeo, the company that evolved into Twitter (TWTR). Nextstop was later acquired by Facebook in July 2010.
Systrom had no formal training in computer science, but while working at Nextstop. He learned to code at nights and on weekends, and he built an HTML5 prototype called Burbn. Inspired by his taste for fine whiskeys and bourbons. Burbn was a multi-faceted app that allowed users to check in, post plans and share photos. Although at the time location-based check-in apps were all the rage, photo sharing was the most popular feature.
A crucial turning point came in March 2010 when Systrom attended a party for Hunch, startup based in Silicon Valley. At the party, Systrom met two venture capitalists from Baseline Ventures and Andreessen Horowitz. He showed them the prototype, and they decided to meet for coffee to discuss it further. After their first meeting, he took the jump, deciding to quit his job and focus on Burbn. And within only two weeks, he managed to raise $500,000 in seed funding from both Baseline Ventures and Andreessen Horowitz.
Mike Krieger Joins
The funding allowed Systrom to start building a team, and the first to join the eventual Instagram co-founder was Brazilian-born 25-year-old Mike Krieger. Also a Stanford graduate, Krieger had previously worked as an engineer and user-experience designer at social-media platform Meebo. The two knew each other from their time at Stanford and would later occasionally run into each other at San Francisco coffee shops.
Pivot to Photo Sharing
After Krieger joined, the two reassessed Burbn and decided to focus primarily on one thing – mobile photos. They carefully studied leading apps in the photography category. The Hipstamatic app stood out because it was popular and had interesting features such as filters to add to photos. But it lacked social capabilities, and the young entrepreneurs saw potential in building an app that bridged Hipstamatic and Facebook with its social elements. Systrom and Krieger made the difficult but critical decision of taking a step backward by stripping Burbn down to its photo, comment and like capabilities. At that time, they renamed the app Instagram, combining the words instant and telegram. With their UX skills, they worked tirelessly to improve the photo-sharing experience. They had a minimalist focus, requiring as few actions as possible from the user. After eight weeks of fine-tuning the app, they gave it to friends to beta test, fixed bugs and brought it to launch.
Launch of the iOS App
Instagram was launched on Oct. 6, 2010, and on that day, it became the top free photo-sharing app, racking up 25,000 users. In a post on Quora Systrom described the remarkable speed with which the app became popular;
“First off, we have to say that we never expected the overwhelming response that we’ve seen. We went from literally a handful of users to the #1 free photography app in a matter of hours.”
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. The timing of the app’s release was excellent because the iPhone 4 with its improved camera had launched just a few months earlier in June 2010.
Series A Funding