
Instagram’s CEO - quanganhdo
https://stratechery.com/2018/instagrams-ceo/
======
mooreds
This is a sobering look at what it takes to build a business vs a product (vs,
even smaller scale, a feature).

You have to be willing to put in the long hours (err, years) and the
schlepping to do all the business-y stuff:

* distribution

* monetization

* back end systems for admin users

* sales channels

etc, etc

Or, you can cash out and assimilate, err integrate, with a larger company that
has done that hard work and lose control of your destiny. That's OK, most of
us don't have full control of our destiny, and building product can be more
fun. It's just a choice you should make with your eyes wide open.

I will say that I think he dismisses Snapchat's founders too quickly. Yes,
they've been struggling, but they are trying to build a business rather than
just integrate with an existing conglomerate.

It will be very interesting to see if Systrom et al can build another product,
and if so, if they will try to build a business as well.

~~~
eldavido
I am a daily reader of Stratechery. It's a very "MBA" publication: the
emphasis is always on strategy, distribution channels, markets, sales and
marketing, etc.

It's a soberingly different worldview than product-obsessed,
hacker/maker/developer-centric worldview you get on HN a lot of the time. HN
definitely skews toward the entrepreneurial/business end of software, but
there's still a real emphasis on building great products, talking to users,
and faith in the idea that in the long term, the best product will win.
Whereas the Stratechery worldview is more like, "figure out sales and do
enough of that engineering mumbo-jumbo, and everything will fall into place".
I think there's more truth to this than is commonly acknowledged on HN.
Eng/product isn't always the center of the damned universe.

I find both views important. I think the best products do tend to win. But
reading stratechery has also given me an appreciation for the difficulties
inherent in fighting an entrenched competitor, and bootstrapping distribution
(how customers discover/use/buy something) from scratch.

On the other hand, Ben (stratechery author) says almost daily, "It's not the
technology that matters, it's the strategy". I don't think that's right. A big
talking point that comes up over and over with Instagram was how well-built
the app was. There was genuine craftsmanship in terms of usability,
performance, and a lot of other things that made it a joy to use. That
matters.

~~~
subdane
Also a daily subscriber to Stratechery. Ben (Zuck?) under-indexes on the
feeling of good will associated with a good product experience. But I agree
that we over-index on it here on HN. IG won on speed, usability and UX over
early competitors like Hipstamiatic and Flickr. But for sure the network was
the addictive glue that brought users back, new users in and made the entire
product grow. FB feels like the opposite experience to me - crappy product
decisions, bloated UX, bad will. My best guess is FB pushed IGTV on Mike and
Kevin. They did their best to implement it, but it feels tacked on, like a FB
feature, and it became clear that more and more feature pressure was going to
be put on the product until it too became bloated and incomprehensible. I
don't think Ben sees this, but the poor product choices (in deference to
business and strategy) will pile up and the vein will collapse, just as it is
starting to do in FB's main product. IG had a good run, it's hard to imagine a
future where it gets better from here.

~~~
cpeterso
An example of how little UX can matter:

Facebook ran an experiment where they intentionally crashed their Android app
to discover the threshold at which users would give up and go away. But
someone familiar with the experiment said: “The company wasn’t able to reach
the threshold. People never stopped coming back”.

[https://www.theguardian.com/technology/2016/jan/05/facebook-...](https://www.theguardian.com/technology/2016/jan/05/facebook-
deliberately-breaking-android-apps)

~~~
obmelvin
Isn't that sort of contradictory? The rest of the UX is so great that people
want to use it despite the crashing.

------
1290cc
They traded their company for hundreds of millions of dollars. Good on them
for turning a product into something that was so lucrative for FB and a real
enjoyment for so many people the world over. I think it can't be understated
how Instagram has become a pillar of so many brands and online businesses
today.

But in reality their departure is really part of the business of software, the
founders sell out, become exceedingly wealthy. After a few years the
disillusionment with being part of a corporate machine (and not in control)
sets in and they quit to spend time on their burning man floats. Its always
been this way and theres nothing wrong with that.

I think many of us would do exactly the same given the option of struggling
for a decade to profitability or a $10m+ exit with a comfortable VP level
role.

I find it interesting that Instagram would _want_ to include more adverts, as
I find myself drawn to brands/interests without the help of annoying ads.

~~~
TAForObvReasons
At the end of the day, as the article correctly points out:

> Letting Facebook build the business may have made Systrom and Krieger rich
> and freed them to focus on product, but it made Zuckerberg the true CEO

Instagram's decision to include advertisements is best understood from
Zuckerberg/Facebook's view. Even if the local view is that IG adverts are
negative, they are likely accretive from the perspective of the entire
Facebook enterprise.

------
krn1p4n1c
Seems like they didn't know when to leave. Once they sold it was no longer
their baby and should have started working on an exit strategy. It becomes a
contest of egos.

On the technical side, FB's methodology with acquisitions seemed the most
rational. Rather than sucking the new company in they embedded PE's in there
for the purpose of giving the tech teams a fast track to using FB resources.

~~~
billmalarky
To be fair, they also had $700 MM in FB stock (now worth $4b according to the
article), so there was incentive to help instagram succeed at FB.

~~~
kbenson
I've always wondered about this. How much inventive is that? When the person
thinks "if I work really hard and this, I'll increase my huge pool of money
from an amount I can't easily spend given the rest of my life to an amount
almost six times as much!", does that really resonate?

It's not like it's the same as $700 to $4,000, or even from $7,000,000 to
$40,000,000. There are things you can buy to spend most of those amounts, but
those are things it's not really worth buying multiple of (e.g. houses, super
yachts), so at the point you have close to a billion dollars, what does
another billion buy you, besides bragging rights?

I imagine there's some impetus to stick around because you want to see what
you built succeed, but at some point I imagine you realize it's not really
yours anymore, so why not leave and do what _you_ want, instead of what other
people want you to do? I mean, you literally have "fuck you" money.

~~~
JacobDotVI
I'm not sure about the psychology of incentives angle, but this old post from
reddit shows the monumental difference in wealth between $700M and $4B:

[https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_i...](https://www.reddit.com/r/AskReddit/comments/2s9u0s/what_do_insanely_wealthy_people_buy_that_ordinary/cnnmca8/)

~~~
beenBoutIT
Reddit's unfriendly block-everything popup reminder for National Voter
Registration Day got me wondering, does anyone know how effective these types
of popups are? The less-obtrusive popups that allow you to still see whatever
you came to the site for seem better IMO, but I'm curious if they're less
effective.

------
mathattack
Very hard to second guess such a well written article.

Are there instances where the thesis that “folks who outsource the business
side to the acquirer” stay? Salesforce seems good at keeping acquirees but
enterprise is different. The acquired companies come with their own revenue
and field sales.

~~~
wgerard
> Are there instances where the thesis that “folks who outsource the business
> side to the acquirer” stay?

Hsieh? I mean, I don't know too much about the inner workings of Zappos but I
find it hard to believe that the FB->IG relationship is significantly
different from the Amazon->Zappos one.

Then again maybe he's just the exception that proves the rule.

~~~
AndrewKemendo
_I find it hard to believe that the FB- >IG relationship is significantly
different from the Amazon->Zappos one_

Why? Zappos was minting money and sustainable in their own right well before
the acquisition. IG had no datapoints showing they could sustainably make
revenue when they were acquired.

~~~
wgerard
> Why?

Hmm, I guess fundamentally I find it hard to believe that a large corporation
would acquire a smaller one just to let them run completely independently - it
just seems counter-intuitive unless the acquirer is a holding company,
basically.

It definitely also doesn't seem like Amazon's jam. Twitch seemed to have a
pretty large upward trajectory (and path to profitability) right around the
time they were acquired, and Amazon's still clearly guiding at least some of
those major decisions.

~~~
sangnoir
> Hmm, I guess fundamentally I find it hard to believe that a large
> corporation would acquire a smaller one just to let them run completely
> independently - it just seems counter-intuitive unless the acquirer is a
> holding company, basically.

I don't find it hard to believe - it is a perfectly valid defensive move to
contain a potential competitor. What if an independent Zappos decided to start
selling everything, not just shoes? Also, it might provide an internal
'skunkworks' where Amazon finds lessons applicable to the larger organization
without killing the golden-egg-laying goose. It's quite a reasonable way of
self-disrupting.

------
matchagaucho
It's easy to second guess... _" if only they'd hung there, the $100B valuation
today would be theirs"_.

But how many first time entrepreneurs would turn down a $1B offer after 2
years of work?

Guaranteed the writers of these articles have never been in that position.

~~~
enitihas
I think Zuckerberg refused a 1B $ offer from yahoo.

~~~
overcast
Zuckerberg wanted power, not money, that's the difference. Only a fool turns
down a billion dollars. That's live the rest of your life doing whatever the
hell you want money. Holding out for more billions won't change that.

~~~
rokhayakebe
What if what you want to do for the rest of your life is run the company the
way you see it fit for as long as you want?

~~~
overcast
That's fine, also not about more money.

------
srinathkrishna
Ben Thomson is one of the best folks writing about the business of tech. Such
lucid writing and even someone who's fairly early on in their careers will be
able to understand what's going on.

~~~
pas
Usually his essays are information dense, but this was a bit of a let down. It
would have been a fine tweet though.

And the constant amazement at the IG founders' extraordinariness is very
tiring. (They are obvioulsy not dumb, but they mainly got lucky, as it's not
like there were no other apps with photo taking and filters trying to make it
big in/on the Apple App Store at the time.)

------
everdev
Not a positive trend for FB considering the What'sApp founder quit in April:
[https://techcrunch.com/2018/04/30/jan-koum-quits-
facebook/](https://techcrunch.com/2018/04/30/jan-koum-quits-facebook/)

Giving a single person full control of a company is great when they're on the
right track. These have to be warning shots to employees and investors though.

~~~
mooreds
It depends. Do you still need product geniuses when you have distribution and
monetization nailed?

~~~
briandear
Salesforce proves that you don’t.

~~~
qdigital
Consumer tech is a different beast though and subject to stronger reactionary
market forces and whiplash vs enterprise.

------
m-p-3
> Facebook had agreed to let it run independently as part of the acquisition
> deal.

Sounds nice on paper.

> It is about finding and developing a business model that lets you determine
> your own destiny.

But when you sold the business to Facebook, you ultimately agreed to forfeit
your ability determine your own destiny to obtain the ability to use their
vast resources.

------
vezycash
Seeing as established giants can just kill a start up by copying them, I'm
left to wonder. Could Snapchat have patented/trademarked Stories?

~~~
gm-conspiracy
...and then litigate against Facebook for 8 years?

Or, license the patent, but why wouldn't Friendster have done the same?

------
tootie
I know I'm just being a grump, but I find it baffling that these businesses
are so valuable.

~~~
gm-conspiracy
It is the new television. Advertisers need to reach eyeballs.

------
rajacombinator
What a silly article with a preposterous attempt to define “CEO.” IG would
have had access to unlimited funding if they wanted. I’m sure they were under
a lot of pressure from FB to sell when they did, but it was a clear blunder.
And one of Zuck’s best moves as CEO. The train had already left the station at
that point and IG could have been sold for $20 billion a year or two later.

~~~
pas
Who knows. Startups are require very high degree of focus, long hours, etc.
not everyone can do that for just one more year.

------
Yhippa
> Controlling one’s own destiny, though, takes more than product or
> popularity. It takes money, which is to say it takes building a company,
> working business model and all.

How true this is for life in general.

------
jenks
This article does a great job illustrating how it is easy to have IDEAS, but
its hard to develop them to a point where they are bold enough to work yet
feasible enough to where they're worth working on. Instagram never would have
done stories if they were concerned about how a large group of users would
think that they are:

> entirely stolen from snapchat

> a total sellout

but look what a bold idea and strong leadership brought to instagram!

------
tardo99
Instagram is very successful. But, I think people shouldn't lose sight of the
fact that it's turned a substantial fraction of our teenage and 20-something
population essentially into zombies. I believe it is a significant social
negative.

~~~
emtel
Hysteria. Do you know any teenagers? I have a teenage daughter. She's not on
instagram, but most of her friends are. They have rich, full lives, are
engaged at school, spend tons of time together in person, play sports,
decorate each other's lockers on birthdays, etc.

Is instagram a net negative? Maybe. Are they zombies? No.

~~~
tardo99
I realize the plural of "anecdote" is not "data," but more than once I've
watched 20-something women spend hours on end swiping through Instagram and
commenting on photos. One particular time I sat on a train in Europe for 4
hours while a woman did that the entire time. Wall to wall. I respect the fact
that you have countervailing experiences, but I do think you're
underestimating the negative impact here.

~~~
jarjoura
Meh, just a decade ago those same women would have been flipping through Vogue
and Cosmo. Media has always been a net negative for female body issues and
relationships. At least with Instagram for the first time, they can chose to
follow more enlightening things. Also seems far more empowering to allow
comments on photos.

------
orliesaurus
Great article, this is how I feel about Instagram personally:

\- Great app who turned a camera phone into a powerful camera for those who
couldn't afford one of those expensive Canon/other brands of good cameras.

\- Democratizing photography made phone vendors spend more time build better
camera, we're at a point where cameras on certain phones are as a good as
stand-alone cameras for photography.

\- Filters have been around forever but with filters in instagram a whole
generation became addicted to what they're able to do - turn a simple picture
in a more interesting picture. To the point where people had to start create
the #nofilter hashtag. Snapchat took the filters to the next level or rather
the next iteration and also made itself a name because of them.

\- Instagram also has it's darkness too: some people say you can get depressed
if you browse instagram too much, seeing all those happy pictures of delicious
food, beautiful looking humans, cars, paradise-like places, etc. It sounds
crazy right? :shrugemojigoeshere:

Short aside: Friends of friends who used to work in the same building with the
founders of Instagram told me that on the night of their launch they stayed up
till the early morning hours to fix their server issues because their initial
instagram app was such a success! Honestly, you can't get more real than that
- almost like a movie!

Thanks instagram co-founders for your creativity throughout the years:
Although copying most of Snapchat's features wasn't a great move, it was a
business decision that worked really well for your userbase..I can smell that
being a very Facebook thing to do. I remember Snapchat turning down $3B
acquisition offer, I guess that move really showed how much FB wanted
Snapchat's features.

Back to Instagram - were the co-founders good businessman? I don't know,
instagram pre-acquisition was very cool and ad-free. Now it's ad-ridden and
almost an annoyance. Every 3rd post/video/story has ads on it. Blocking those
ads is a pain (I still haven't found a universal workaround since ad-blocking
doesn't work as well). Another reason why I don't use FB's app.

You can smell the FB influence on Instagram far 10 miles, I would also feel
sad to see my own creation being taken over by a bunch of product managers who
come from the company who acquired my app because they need to "ad-ify all the
things".

Finally, I think instagram is the only app I use on the daily, every single
day (more than Uber/Lyft, more than Spotify and as much as Twitter but not as
much as Chrome) ! Hope they can find something cool they're passionate about
and build the "next" Instagram, even if it's not a camera-app!

~~~
mandeepj
> Snapchat turning down $3B acquisition offer

I think it was $30 B

[https://techcrunch.com/2017/08/03/google-buy-
snap/](https://techcrunch.com/2017/08/03/google-buy-snap/)

~~~
orliesaurus
Yeah I missed a zero in there - a big zero it seems, sorry!

------
tschellenbach
I started using Instagram to publish to Facebook back in the days mainly
because Facebook's mobile upload functionality was buggy and often failed to
upload.

------
rakibtg
Doing a misjudgment here but the fact is "Companies like facebook don't need
founders, they will eventually make the product that people might use in
everyday life, they will do it anyhow; by either copying that product or to
buy it. Remember that the 'poke your friend' feature is only unique from
facebook everything else is someone else's things" this evil face of facebook
will hurt more and more companies day after day and in a result a chain
reaction that will affect the life of general people.

------
ape4
Slightly off topic is Instagram's new dating app. Will be interesting to see
how that plays out.

~~~
aylmao
It's Facebook's and it will live in the Facebook app, not Instagram.

------
teknopurge
that really is a refreshingly well-written article. well done OOP.

------
indiesolver
tl;dr : Zuckerberg - Instagram’s real CEO (from the author's "The difference
from Zuckerberg — Instagram’s real CEO — is stark")

~~~
teagee
Systrom and Krieger built Instagram the product, Zuckerberg built Instagram
the business

~~~
disgruntledphd2
Sheryl Sandberg, a really good sales team, and a bunch of shit-hot engineers
in ads built IG, the business.

Zuckerberg tends to avoid monetisation, leaving that to Sales (i.e. Sheryl)
and Ads.

~~~
mandeepj
Sorry, you got it wrong.

Sheryl is not in to sales. And, zuck is all about business but he don't think
about monetisation until that product have at least a billion users [1].

The real person behind instagram's monetisation success -
[https://finance.yahoo.com/news/meet-man-helped-facebook-
brin...](https://finance.yahoo.com/news/meet-man-helped-facebook-
bring-153034992.html)

[1] - [https://www.businessinsider.com/zuckerberg-products-
need-1-b...](https://www.businessinsider.com/zuckerberg-products-
need-1-billion-users-2014-10)

~~~
disgruntledphd2
No offence, but Sheryl heads up sales and ops (the head of Sales, David
Fischer, reports to her), and will go visit big clients to sell them on FB
ads/new products (of which IG was a good case).

I'm aware that Mark (he doesn't like zuck anymore, apparently) thinks that,
but he focuses on product much much much much more than monetisation (there's
an apocryphal story that suggests he said that ads weren't part of his vision
for FB to an internal sales conference in about 2009-10).

Finally, I would credit the engineers in Ads a whole lot more than Mr Weil (to
my recollection, all of the stuff that ended up making IG money was in place
before he joined).

Source: worked for FB for a long time.

------
raheemm
In the short-term, Zuckerberg maybe the CEO, but if he keeps prioritizing ads
over product (which he has done with FB prod/privacy), then the long-term
maybe dicey.

Just as content is king, so product will always be king. The ads will follow
whoever has the best product, and hence user attention.

~~~
dragonwriter
> if he keeps prioritizing ads over product

Ads are the product that Facebook sells

------
jhabdas
For those who covet money titles are more important than to those who covet
building great products for users. As a product leader offloading your money
challenges into the hands of VC funding is a surefire way to turn vision into
greed and slowly destroy one's creative product vision.

~~~
joejerryronnie
Or, it could be the only way to get a great product out of your basement and
into the hands of millions of users. It's a tough balancing act but TANSTAAFL.

------
projectramo
"Still, as good as the Instagram Stories product was, it is difficult to
overstate the built-in advantage that came from Instagram’s larger network,
and impossible to overstate the importance of having a shared advertising
backend with Facebook. To put it another way, Instagram’s two biggest
advantages relative to Snapchat, or any other competitors that may arise,
didn’t have much to do with product — Systrom’s speciality — at all."

But the first advantage he mentions -- the size of the network -- is a direct
result of the product. The point of a good product is to get people to use it
which is what grows the network.

~~~
luckydata
A direct result of another product, Facebook's.

