No FILTER

BY SARAH FRIER

Three Sentence Summary

The evolution of Instagram shows how decisions in a social media company - product design, which users to listen to, success metrics - can impact on the way we that we all live and unleash unintended consequences that even the creators of social media networks do not anticipate. Instagram enjoyed success because it leveraged our smartphones, used the strength of existing social media networks and was designed with the awareness of what had gone wrong for them. While Instagram's acquisition by Facebook for $1bn (in reality $700mn) was regarded as ludicrously over-priced at the time, Zuckerberg's decision to buy has been overwhelmingly vindicated and the episode demonstrated the failure of regulators to understand how value is created in social media networks.

WHAT DID I THINK?

A gripping tale of unintended consequences. Systrom is characterised as a thoughtful leader who appreciates the beauty in life and built an app to capture this beauty. Scale this ability to hundreds of millions of people and suddenly a whole host of behaviours and consequences are unleashed: bodily and architectural aesthetics all designed to be “Instagrammable”; personal influencers; and pressure to appear perfect or more interesting than reality.

Zuckerberg comes across as a strategic leader who outfoxed and outthought all his rivals, but who in prioritising Facebook’s growth at all cost has perhaps won pyrrhic victories (even if his wealth and influence has increased stupendously).

The question I wanted to ask after reading this was: what does Kevin Systrom think of his creation?

Instagram has been a democratising force in terms of allowing people to share their lives, but just looking at the app today even briefly is akin to walking down a boulevard of advertising billboards.

How strongly I recommend it: 9/10

NOTES

Running Personal Media Companies

• More than 200 million of Instagram’s users have more than 50,000 followers, the level at which they can make a living wage by posting on behalf of brands, according to the influencer analysis company Dovetale. Less than a hundredth of a percent of Instagram’s users have more than a million followers. At Instagram’s massive scale, that 0.00603 percent equates to more than 6 million Insta-celebrities, a majority of them rising to fame through the app itself. For a sense of scale, consider that millions of people and brands have more Instagram followers than the New York Times has subscribers. Marketing through these people, who are basically running personal media companies.

Hyper-Connected Silicon Valley

• Instagram's founder, Kevin Systrom is likely one of a handful of people who turned down the opportunity to work at Facebook and Twitter at a very stage of their existence:

  • Zuckerberg wanted to add photos to the Facebook experience, beyond the singular profile picture and approached Systrom to build the tool. He declined.

  • Systrom interned at Odeo, a marketplace for podcasts. He sat next to Jack Dorsey, a new engineering hire. When Odeo launched a status update product called Twtter with Dorsey as CEO he approached Systrom to join. He declined.

• Jack Dorsey's first angel investment was Burbn, in which he invested $25k (he had been forced out of Twitter)

Building and Designing

• Scarcity: The photos would be square, giving users the same creative constraint for photography as Systrom’s teacher in Florence gave him. It was similar to how Twitter only let people tweet in 140-character bursts.

• Manufactured coolness and exclusivity by inviting people they thought would give the app the right feel and make people want to get on the app.

• Tried to do one thing - photography - really well.

• Benefited from the weaknesses of rivals. Facebook was crowded with features and anytime someone added a photo from their phone to Facebook, it would join a default album called Mobile Uploads.

• Used strengths of other people and companies. Instagram was the crown jewel of Apple’s app store, later featured onstage at iPhone launches. It became one of the first startups to thrive on Amazon’s cloud computing.

• Emphasis on community: “Anybody can build Instagram the app,” he said, “but not everybody can build Instagram the community.”

• As Siegler wrote for TechCrunch at the time: “Step one: obtain a ton of users. Step two: get brands to leverage your service. Step three: get celebrities to use your service and promote it. Step four: mainstream.”

• Making money, in Zuckerberg’s opinion, is something to try only once a network is strong enough, so valuable to its users that advertisements or other efforts aren’t going to turn them off.

Unintended Consequences

• Social media isn’t just a reflection of human nature. It’s a force that defines human nature, through incentives baked into the way products are designed.

• Companies try to intuit what a good measure of happiness for their users might be and, by building their sites to prioritize those metrics, manipulate their users over time.

• Now that the products are adopted by a critical mass of the world’s internet-connected population, it becomes easier to describe them not by what they say they are, but by what they measure: Facebook is for getting likes, YouTube is for getting views, Twitter is for getting retweets, Instagram is for getting followers.

• Instagram

  • Neither Rise nor the founders thought there was a downside to the fact that filters, when used en masse, would give Instagrammers permission to present their reality as more interesting and beautiful than it actually was. That was exactly what would help make the product popular.

  • Instagram was like a constant first date, with everyone putting the best version of their lives on display... The effect would depress some of the early Instagram employees, who had wanted so badly to build a community centered around the appreciation of art and creativity, and instead felt that they had built a mall.

  • But because of the high bar for posting, the rate of posts per user was on the decline.

  • Everyone with a blue checkmark, after realizing that their comments would be prominently displayed, had an incentive to comment more... [enabled] "growth hacking."

• Facebook

  • Facebook had wanted to beat Twitter, and so had encouraged more news publishers to post on the social network. The plan worked. Their users were discussing the top news, which in the U.S. was the election. But now Facebook was under fire for what users read, and for the fact that the network’s ultra-personalization meant each user saw a slightly different version of reality. People weren’t posting as many personal updates as they had in years past. Instead, they were taking quizzes about which Harry Potter character they were most like, and wishing their distant contacts an obligatory “Happy birthday!” because Facebook reminded them to. And they were having conversations it would be easy for anyone to join—about politics.

• Youtube

  • On YouTube, the site’s algorithm gradually started to reward creators according to watch time, thinking that a longer time spent on a video meant it was engaging enough to be displayed higher in searches and recommendations. In response, those seeking fame on the site stopped making short skits and started making 15-minute makeup tutorial videos and hour-long debates about video game characters,

Facebook on Instagram

• Zuckerberg realized this wasn’t just an app for people to post pictures of their meals, but a potentially viable business. The hashtag system for organizing posts by topic made it almost like Twitter, but visual, so you could see what was going on with a particular event just by clicking. He also saw that even though the app had a mere 25 million registered users, compared to Facebook’s hundreds of millions, businesses were already using Instagram to post photos of their products, and their followers were actually interacting and commenting.

• Move fast: Zuckerberg knew, from his former employee Cohler on Instagram’s board, that Systrom was close with Twitter’s Dorsey. Zuckerberg didn’t have the friendship advantage. But the faster he made the deal, the less likely Systrom was to call someone who would give advice unfavorable to Facebook—or a counteroffer.

• The structure of the Instagram acquisition—a company purchased not to be integrated—would become an important precedent in technology M&A, especially as giant companies got even gianter, and small companies like Instagram wanted to find some alternative to competing with them or dying.

• Analysts would later say that approving the acquisition was the greatest regulatory failure of the decade.

Systrom as a Leader

• Emphasis on learning by doing.

  • Built random tools like a service called Dishd for people to rate meals instead of restaurants.

  • Built Burbn, which let people say where they were, or where they planned to go so their friends could show up.

• Systrom tested his partnership with would-be co-founder Krieger by coding little games that would never be released, including one based on the prisoner’s dilemma, a political game theory that explains why rational people might not cooperate even when they should.

• Exclusivity as a sales tactic: “I’m only inviting three angel investors into the deal,” he said. “It’s you [Chris Sacca], Jack Dorsey, and Adam D’Angelo.” D’Angelo was the founder of Quora and previously the chief technology officer of Facebook.