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  • Raghav Sand

10 Years of Instagram

In 2009, Kevin Systrom, a 27-year-old Stanford University graduate, was working at Nextstop, a travel recommendations startup. He developed a prototype of a web app called Burbn, which was inspired by his liking for whiskey and bourbon. With the Burbn app, users were able to post photos and check-in. Systrom had previously worked at Google and interned at Odeo (a company that would later evolve into Twitter). He had no formal training in computer science and learned to code on the nights and the weekends while working at Nextstop.

Mike Krieger(L) and Kevin Systrom (R)

Venture capital funding

In March 2010 when Systrom attended a party for Hunch, a startup based in Silicon Valley, he met two venture capitalists from Baseline Ventures and Andreessen Horowitz. After showing them the prototype of his app, they decided to meet for coffee to discuss it further. After their first meeting, Systrom decided to quit his job and focus on Burbn. Within two weeks, he had raised $500,000 in seed funding from both Baseline Ventures and Andreessen Horowitz to further develop his entrepreneurial venture.

Seed funding allowed Systrom to start building a team of people to support his venture. The first to join him was 25-year-old Mike Krieger, who had previously worked as an engineer and user-experience designer at the social media platform Meebo. The two knew each other from their time as students at Stanford. After Krieger joined, the two reassessed Burbn and decided to focus primarily on one thing: photographs specifically taken on mobile devices. It was at that time that they renamed their app Instagram, combining the words instant and telegram.

Launch of the iOS App

Instagram app was launched on Oct. 6, 2010 and had 25,000 users in one day. 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. Apple had released iPhone 4, their flagship handheld device, with an improved camera and all this played out well for Instagram.

Series A Funding

Instagram’s rising user base made investors interested in the company. In February 2011, Instagram raised $7 million in a Series A funding round. One of their investors was Benchmark Capital, which valued the company at around $25 million. Around this time Twitter and Facebook were also showing intent to become investors.

Facebook Acquires Instagram

In April 2012, Instagram was released for Android phones and was downloaded more than one million times in less than one day. In April 2012, Facebook made an offer to purchase Instagram for about $1 billion in cash and stock; a key provision was that the company would remain independently managed. Facebook had the intent to expand the social media empire and just prior to its initial public offering (IPO), Facebook moved forward and acquired the company for $1 billion in cash and stock.

Billion Active Users per Month

Instagram achieved the landmark figure of one billion (100 Crore) average monthly active users in June 2018. Initially, the growth in user base from 100 million (10 Crore) to 200 million users took thirteen months, but after that each 100 million was surpassed in less than 12 months time. Instagram clocked the leap from 800 million to a billion users in nine months. All this exponential growth made it impossible for advertisers to overlook the impact of Instagram’s reach and sale conversion potential.

Chart: The Know-How Journal; Source of Data: Company Report

How Instagram makes money

Instagram generates revenue from ads. Instagram introduced paid advertising in 2013. It has various ways for placing ads in the feed of a user. The ads get filtered based on user interest, age, gender and browsing history. Targeted ads can be seen in the form image, video, carousel. Ads appear with a call to action button and usually have a hyperlink of the site of advertiser. Instagram’s parent company Facebook does not divulge the details ad revenue. According to Facebook financials, 98% and 97% of all revenue, in 2017 and 2016, respectively, came from advertising.

Democratization of Art

Instagram has proven to be a platform for creators and has made visual / audiovisual expression accessible to anyone who has access to an internet enabled mobile device. This level playing field and ease of use has contributed in quick and vast adoption.

Instagram Logo Over the Years

Clockwise from Top Left: 2010, 2010-11, 2011-16, and 2016-Present

Benefits for Business

Instagram users will spend an average of 28 minutes per day on the platform in 2020. More than 200 million Instagrammers visit at least one business profile daily. Engagement with brands on Instagram is 10 times higher than Facebook, 54 times higher than Pinterest, and 84 times higher than Twitter. The benefits of Instagram for business are advanced targeting options, trackability of campaign, ability to reach untapped customers, and brand building.

Instagram and the coming decade

The social media ecosystem is a dynamic and constantly evolving space. There are new entrants that attract and engage users, and we have seen established platforms get dethroned. Evolution of features and services is vital, and capturing the imagination of users positively has no substitute. Instagram has a challenging decade ahead and complacency has no room in it.

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