How to make $1 billion in two years: Instagram story

Как сделать  млрд за два года: Instagram story

How Several Stanford University Graduates Forced Tens Of Millions To Use Their Photo Publishing Service – Instagram

In the spring 2006 of the year Kevin Systrom stood behind the coffee machine at the Caffé del Doge in Palo Alto, when Facebook founder Mark Zuckerberg approached the counter. A year earlier, Zuckerberg had already dined with Systrom - he suggested that he leave his last year at Stanford, to develop a photo service for Facebook. Systrom then refused.

“There is nothing like that, to go to a startup and make a lot of money, so I decided to finish my studies first. It was much more important to me, - Systrom shrugs.. - Now I know, that that idea was successful, but I was wondering, what will I get myself ".

As a result, for Systrom, it all ended with the same, what he gave up then, - work on Facebook. Staying at Stanford, Systrom has developed an Instagram application, which Zuckerberg bought this year for $1 billion (share of Systrom, about 40%, принесла ему, respectively, $400 million). The amount is amazing, especially if you know, that the startup does not only have revenue, but also the models for obtaining it. At Instagram, whose age has not yet reached two years, still only 14 employees.

But Systrom has enthusiasm, which Facebook lacks after a failed listing, as well as a mobile platform - more than 85 million users, they posted 4 billion photos, and six new users join Instagram every second.

Internet giants are trying to squeeze their products into mobile applications, like an overflowing suitcase on an airplane shelf, and the Instagram photo network from the very beginning was mobile - fast, fashionable and elegant. Few thumb motions - and you can take a picture, edit it (using convenient filters) and put it on Instagram for everyone to see. A few more movements - and you can do everything, what Facebook is based on, including writing comments and putting "likes". “People love photography more than anything else., - says former Facebook commercial director Adam D'Angelo, who is now at the head of the Quora Q&A site (and also became one of the Instagram investors). - Therefore, if you are fond of photography, it's better in a way, than all the other Facebook features combined ".

Systrom once again confirms, that in the digital economy, an idea can turn into a billion dollar company in a matter of months. But such unexpected happiness almost never comes by accident.. Stanford University is "to blame" for Systrom's success story.

Systrom, lanky guy 195 cm, loved technology even before entering university. IN 12 years (now he 28) he messed with friends in his native Holliston (Massachusetts) over the AOL network using programs, which allowed him to control the mouse cursor on their computer and disconnect the network connection (their family's access to AOL was blocked due to these Bart Simpson antics). He attended Stanford early and set out to study computer science, but when he signed up for an advanced programming class in his freshman year, then realized, that is engaged in only one discipline of 40 hours per week and barely reaches the grade of "good": “I started to think, what, maybe, I won't make a computer scientist ". As a result, he graduated from the university with a degree in "scientific and engineering foundations of management". “Essentially, I was taught to be an investment banker ", He says..

Systrom has always been interested in business and startups; in his spare time he created websites, for example the Stanford analogue of the huge Craigslist bulletin board. Another site, Photobox, was intended for members of the student organization Sigma Nu, who could have posted photos from the last beer party there.

In his third year, Systrom went to Florence to study photography. He came to Italy with an advanced SLR camera, but the photography teacher replaced it with a Holga camera. This cheap plastic apparatus, produced in Hong Kong without any special design changes with 1982 of the year, has long become a cult and gained an army of fans, who like quirky square shots with soft focus and retro distortion. From Florence, Systrom applied for the elite Stanford Mayfield Fellows Program - a training workshop, which immerses students in the startup world and connects them with entrepreneurs and venture capitalists. Systrom received an internship at Odeo, founded by Ewen Williams., from which Twitter came out. Here he developed applications with a young engineer, Jack Dorsey., who soon founded Twitter and payments company Square.

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After graduating from university and working for a short time in the marketing department Google Systrom hired Nextstop, which developed the site of social travel guides. There he became a Silicon Valley-level programmer.. “I have acquired the skill, which could be useful to me, — говорит Систром. - Now, when an idea came to my mind, I could make it happen ".

He soon realized, what does the site want to do, that would combine his passion for photography with geographic registrations and social games, like the then-born Foursquare and Zynga, respectively. He talked about this plan, named Burbn after his favorite drink, at a meeting of venture capitalists at Madrone Art Bar, and his story was heard by Steve Anderson of Baseline Ventures. Anderson suggested $250 000 to launch the company (the same stake was made by Andreessen Horowitz) on one condition - Systrom had to find a second founder.

Systrom launches Burbn in the living room of his two-room apartment in San Francisco. He befriended Mike Krieger, native of Brazil, who graduated from the Stanford Mayfield program two years after Systrom and worked on his own project - the Meebo internet communication site. Once Systrom invited Krieger to download his new application for registration in geographic locations.. “I didn’t have much enthusiasm for applications, geographically based, but Burbn was the first, which I liked ", - says Krieger in an interview with Forbes. He was hooked by the ability to view photos of various events in the lives of his friends..

Как сделать  млрд за два года: Instagram storyA month later, Systrom invited Krieger to breakfast., to persuade him to quit Meebo and become one of the co-founders of Burbn. Krieger left Meebo and started getting a work visa to the United States.
On Krieger's first working day, Systrom announced, That Burbn Won't Survive - Foursquare Is Already Too Good. They had to create something completely new, and they decided to make Burbn a photography-only service, mobile-oriented.

“The iPhone was a novelty then, people created amazing things, and new patterns of behavior emerged, — говорит Систром. - It was an opportunity to create a new type of service, социальную сеть, which was not based on computers, but on mobile devices ".

The founders worked together for two weeks on a photo application., which they called Codename. Krieger made a client application for Apple iOS, and Systrom took over the server part. The prototype was an iPhone application with functions for chatting and commenting.. The result did not impress both of them.. Systrom was upset and decided to take a break..

And it was on one of the days of this difficult period that his girlfriend Nicole Schuetz asked, how one of their friends manages to post such amazing photos. Systrom answered: Filters. И тут вспомнил, how he filmed with a cheap camera in Florence. He spent the rest of the day in a hammock with a bottle of Modelo beer and developing the first filter for Instagram on his laptop., which is now known as the X-Pro II.

More filters were born soon, such as Hefe (by the name of the beer Hefeweizen, which he drank at work) и Toaster (in honor of the dog, which was owned by Digg founder Kevin Rose). Partners renamed their product to Instagram and handed out the new app to their friends, who started posting filtered photos on social media. Many of these people were very influential in the world of high technology - the service quickly gained popularity..

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Instagram gives low-quality phone shots a stylish look. One touch on the touchscreen can turn a banal sunset into a tropical postcard, make a half-eaten hamburger touching or induce nostalgia from a snapshot of an old bike. «Представьте, if Twitter had a Make Interesting button, and on Tumblr - "Make it smart", — говорит Систром. - Previously, most photo applications asked the user some questions. They offered him to be a producer and actor. Instagram takes over the preparation of the magic sauce ".

Having a recipe ready, Systrom and Krieger put Instagram on the App Store at midnight 6 October 2010 of the year. Users immediately flowed to them, and Systrom and Krieger rushed to Dogpatch Labs, to prevent servers from crashing. TO 6 in the morning a message about the new product was published by such online media, как Bits Blog и TechCrunch. Server load was at its limit. Systrom and Krieger worked 24 hours without a break, to keep the application running, - during this time the free application was downloaded 25 000 iPhone users.

"From that day on, our life has changed", — рассказывает Систром. Partners invited Adam D'Angelo from Quora, whom Systrom met with Zuckerberg at student organization parties at Stanford, and he helped bring Instagram to servers Amazon.com and scaling the platform. Within a month, Instagram had a million users. And now Systrom sits in the fourth row at the Apple conference and looks, how Steve Jobs presents his app to the public. They took the app to the world's largest tech scene, but the main focus was still the ongoing maintenance of Instagram servers, because the service acquired millions of new users.

We gathered at the Tradition cocktail bar with Systrom, Krieger and two old-timers, Josh Riedel and Shane Sweeney. It is hard to imagine, that these four, who are under thirty, in jeans and shirts, run a high-tech company worth $1 billion. But when Krieger says, that the picture he took of the menu in the bar has not yet received a single "like" (at 177 000 readers' response is usually instant), over glasses of bourbon, the MacBook Air materializes, Verizon hotspot and stack of iPhones.

Как сделать  млрд за два года: Instagram story

 

Krieger fiddles with programming code on his laptop, at this time, the rest communicate with Instagram engineers via Facebook chat. They fail and get to work. After a few minutes, the problem is resolved, gadgets put aside and order another glass. “This is our child, - explains Systrom. "He keeps us awake at night and wakes us up early in the morning.". Company rules require, so that engineers always carry laptops with them. They had to sit down at computers during birthday celebrations, romantic dates and weddings. Krieger once dined out of town at an eco-restaurant, when the system crashed. He began to frantically rush about in search of a place with a stable wireless connection and finally found, where the net is caught with at least one stick - in the chicken coop.

Whistle with servers, probably, End, when the deal with Facebook closes - the parties have yet to receive FTC approval - and Instagram can rely on Zuckerberg's robust network infrastructure. Systrom says, that he pledged not to disclose the details of the deal with Facebook, until it is approved by the regulator. But he still said, that the takeover took place in April, after he returned from vacation in the UK. On that momentous Wednesday, Instagram received $50 million in the second round of raising capital from venture capital investors, including Greylock, Sequoia и Thrive Capital, who rated the company in $500 million. On Saturday, Zuckerberg invited Systrom to his home in Palo Alto. This time Systrom accepted Zuckerberg's offer. By Monday, a deal was made for $1 billion dollars, including $300 million in money.

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Acquisition Instagram, companies, who hasn't earned a dollar yet, caused hysteria in many media: "Soap bubble!"But insiders spoke in a whisper: "Profitable acquisition!"" The company is worth much more; I think, this is a great deal for Facebook, - says D'Angelo from Quora. "Probably.", Facebook was very afraid, that someone else might acquire Instagram or that the service will become a social network. In fact, everyone has already adapted to using this service for uploading photos., it is impossible to entice them. The network is already built. Too late".

This kind of shopping usually means, that for the founders the game is over, but in the case of Instagram Systrom and Krieger, probably, останутся. Unlike other companies, which Facebook quickly absorbs, Instagram, as Zuckerberg publicly promised, will be independently governed by Systrom. Systrom and Krieger will be able to use the power of Facebook, to scale Instagram and make the service more solid. Their goal is to transform Instagram from a mobile app for posting pictures of puppies or pizza to a media company., which will communicate by means of photography.

«Представьте: можно показывать, what happens in the world, using images and, probably, other means, every person, who has a mobile phone in his hands ", — говорит Систром. Ideally, Instagram will become a window to the world., which will show live, what is happening around the world, e.g. street protests in Syria or the sideline of a soccer field during a match, - and at the same time will fit in your pocket. "I think, they have opportunities like Thomas Edison, - says Joshua Kushner of Thrive Capital. - In less than two years, and you can go to Instagram and see in real time, what happens in any part of the world. It will change the world ".

But before Instagram changes the world, much remains to be done. Only four months ago, a version for Android was released - and Systrom admits, that in the current version it is too difficult to search for new users, look, what's going on around, follow the comments and find your old photos. Besides, he intends to create a web version of Instagram (there are already several clones). And Instagram will certainly continue to expand its user base to several hundred million users., to become the eyes of the whole world.

Besides, revenue problem remains. Regardless of, who will manage Instagram, one day Facebook will demand monetary results from the service. As long as Systroma doesn't care. «Я думаю, visual formats are very attractive to advertisers. If you follow Burberry or Banana Republic accounts, it is seen, that their Instagram posts are actually ads, but they are beautiful anyway, — говорит Систром. - We are now focused on growth, but not on that, how to squeeze a dollar out of an advertiser ".

Systrom still lives in the old two-room apartment and does not live very luxuriously. Recently, the guys from Instagram invited me to an old army bowling alley in Presidio Park to celebrate the birthday of one of the employees.. Four Instagrammers and I fit into a black BMW Systrom 2002 Year of release, который он купил, while still working at google. The navigator in the car is broken, and the owner of the state in $400 million almost lost, driving to the Golden Gate Bridge. “If you don't think about money, you can keep your sanity, He says.. "But in the long run, money can drive you crazy.".
Read more on Forbes.ru:http://www.forbes.ru/tehno/internet-i-telekommunikatsii/131723-kak-sdelat-1-mlrd-za-dva-goda-istoriya-sozdaniya-instagram

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