How Instagram Started: Forming a Partnership
The story of Instagram inadvertently started when its soon-to-be co-founders met while studying at Stanford University. Interestingly, Systrom and Krieger barely knew each other at the time and wouldn’t become close friends until years later.
Before attending Stanford, Systrom had already worked in a company called Odeo. This would later develop into what is now known as Twitter. He had also shared a desk with Jack Dorsey — the current CEO and co-founder of Twitter.
Even though neither founder studied coding or computer science at Stanford, they both experimented with coding independently as a hobby.
After university, Systrom worked in a tech startup. In his free time (i.e., during nights and weekends), he learned how to code. As a young child in Brazil, Krieger followed a similar path. He would often “experiment with HTML coding” and see what type of projects he could make.
The two reunited in a small cafe called “Just For You Cafe.” Even though specific details haven’t been provided — particularly in relation to how the topic of Burbn came up — what we do know is that the two hit it off relatively quickly.
In an interview, Krieger has stated how he was “instantly interested” and told Systrom that if he was ever serious about going through with his idea, he would want to “have a conversation” about it to discuss the logistics.
The Birth of Burbn: A Prerequisite to Instagram
If you are wondering what Burbn is, you are not alone. Similar to the founder(s) of Facebook and Amazon, Systrom and Krieger had to persevere through a few failed business projects before eventually developing the “unicorn” success story that is Instagram.
Similar to current social platforms, Burbn allowed its users to “check-in” their location, post pictures, and make other social interactions.
In March 2010, Systrom “mingled” in a bar full of venture capitalists in order to convince them to invest in his idea. The first notable figure that agreed to invest in Burbn was Steve Anderson, who allocated $50,000 towards the idea. This led to a domino effect among other investors, as they wanted to ensure that they would not miss out on a potentially profitable business opportunity.
This meant that the capital generated multiplied to $250,000, and then — with the assistance of the venture capital firm Andreessen Horowitz —increased to $500,000, all within the first two weeks.
Despite generating a sufficient amount of capital, Burbn proved to be a massive failure. This was because it was deemed to be too complicated and too similar to several other already established apps.
Burbn’s failure can serve as a testament to the fact that if your business idea does not address a certain market demand, it is not going to work regardless of how much money you invest in it.
Burbn peaked at around 100 users, and, unfortunately, both Systrom and Krieger realized that it was not going anywhere. This was a critical point in the history of Instagram. The founders had approximately $495,000 left and two options.
- Pivot towards a different idea that may work
- Keep pushing Burbn
They decided to first identify what was wrong with Burbn. To do this, they went straight to Burbns’ users. Instead of asking why more people were not joining Burbn, the entrepreneurs chose to ask why the people that use Burbn actually stay on the platform. This allowed them to identify which parts of Burbn were unnecessary and could be voided and which parts should be enunciated more directly.
Most of the Burbn users at the time noted that they weren’t really interested in the check-in feature but enjoyed being able to communicate through images with their friends. Consequently, Burbn was changed to only include:
- Uploading photos
The name was also changed to “Instagram,” a testament to the fact that users would use it to send a type of “instant telegram” through photographs.
Instagram: An Instant Success Story
Following the changes made to Burbn, Instagram launched on October 6, 2010, and saw virtually instant success. According to Systrom, the changes made only took eight weeks to be implemented, but they were supported with over a year’s worth of work.
Instagram quickly hit user milestones, amassing:
- Over 100,000 users in its first week
- Over 1 million users in its first two months
- Over 30 million users in its first 18 months
The two entrepreneurs credited their exceptionally fast success to the managerial approach that they developed. This aimed to remedy existing problems rather than finding problems for already made business solutions.
According to Systrom, this mentality is what set them apart from the countless similar apps that existed at the time: “There were a lot of checking apps, there were a lot of planners and meet up things and group chat things, but there was no solution for posting great photos to, like, lots of friends at once.”
Another great approach that the founders adopted that allowed Instagram to thrive was requesting feedback from their friends and family. For example, Systrom reportedly asked his wife whether she was excited about the new app he was developing. Even though she was, she replied that she didn’t think she was going to be using it because her photos “weren’t that good.”
Even though this initially confused Systrom, that conversation allowed him to identify a need to implement filters into Instagram, which he did independently later that night — making X-Pro II.
He then went to a nearby taco stand where he took a picture of his dog in order to test his newly made filter. This picture can still be found on Instagram today.
To some extent, this allowed Instagram to provide users with low-level mobile cameras with a way of taking and uploading high-quality photos. This set it aside from both Twitter and Facebook at the time.
Getting Acquired by Facebook
In March 2011, Twitter CEO Jack Dorsey announced that he was very interested in Instagram. Dorsey offered $500 million in stock, but Systrom and Krieger declined in order to keep Instagram an independent company.
Just one year later, Instagram had amassed over 27 million users. It was also finally made available for Android users (April), which introduced an extra 1 million users in less than 24 hours.
This meant that Instagram was valued at $500 million — less than 18 months after its launch.
The platform had also begun to attract several notable celebrity names, including:
- Snoop Dogg
- Justin Bieber
- Barack Obama
- Mark Zuckerberg
Mark Zuckerberg is perhaps the most important figure, as he had reportedly identified a similar trend in Instagram to what had happened in Facebook and wanted to become involved with the platform’s future.
Later that year, Facebook acquired Instagram for $1 billion. Besides the huge monetary benefit at the time, both Systrom and Krieger were happy to sell Instagram to Facebook because they believed it could allow Instagram to reach “even higher potentials even more quickly.”
Retrospectively, this was likely the case, with Instagram’s net worth estimated at around $102 billion as of 2021.
Development of Instagram and Logo Changes
Instagram has not changed much since the Facebook acquisition, although it has become a more all-inclusive platform. For example, it has introduced:
- Instagram Stories
- Instagram Live and Reels
- Instagram Messaging
- The ability to upload more than one photo or video in each post
- The ability to upload larger files
The Instagram logo has also been changed three times. Initially, it was designed by Systrom in 2010 as a polaroid camera with a rainbow stripe. This was meant to symbolize Instagram’s purpose (i.e., communication through photography).
The two co-founders agreed to change this in the same year, however, and decided to hire a professional logo designer called Cole Rise.
The new logo was inspired by the Bell & Howell camera of the 1950s and was well-received. It did receive a few modifications until it was controversially changed in 2016, but these were very mild:
- “Insta” instead of “Inst” on the camera logo
- Slightly larger rainbow stripe
- Slightly larger lens on camera logo
Instagram’s update in 2016 adopted a much more “minimalist” approach and has not changed since.
Even though most users viscerally disliked the introduction of the new logo at the time, it turned out to be a very profitable business move as it generated huge publicity for the company.
Lessons From Instagram’s Story
If you had developed Burbn and had around $495,000 available, what would you do?
The history of Instagram is a perfect example of why you should never stick to a business idea that is not working, and why it is extremely important that you are able to assess:
- What works in your business
- What doesn’t work in your business
- What consumers want to see
This will allow you to extrapolate what changes you should implement in order to become profitable.
Frequently Asked Questions
Can I make money on Instagram?
Yes, and you do not need as many followers as you probably think. You can make money on Instagram by:
- Making sponsored content
- Becoming an affiliate
- Using Instagram as an online store
For more information, take a look at our How Do I Make Money on Instagram guide.
What is the most common age demographic on Instagram?
As of July 2021, most Instagram users are between the ages of 25 and 35 (16.4% of men and 15.7% of women).
This is closely followed by users between the ages of 18 and 24 (15.7% of men and 14.2% of women).
The rarest demographic is users over the age of 65 (1% of men and 1.3% of women).
Should I use Instagram to advertise my business?
Just like Facebook, LinkedIn, and several other social media platforms, advertising on Instagram comes with several advantages.
Its most significant one is the fact that advertisers can target consumers extremely specifically. For example, they can direct their ad to only be shown to:
- Users of a certain age
- Users of a certain gender
- Users in a given location
- Users with specific interests
Whether you should use Instagram for your business will depend on your targeted consumer demographic, however. As we delineate in our How Instagram Ads Work guide, Instagram is best suited for businesses that target young adults, as they make up the vast majority of their users.
How can I start my own business?
If you are thinking about launching your own startup, you will need to identify:
- Your business idea
- Your business plan
- Your business name
- Your business location and entity structure
- How you will get funding
It is important to plan out what type of business you will be operating from relatively early on, as each entity involves different formality requirements.
If you’re ready to get started, check out our How to Start a Business guide to find everything you need to know about starting your own company.
Who runs Instagram now?
After Systrom and Krieger left Instagram in 2018, Adam Mosseri assumed the role of “head of Instagram.”
According to Facebook, this role involves hiring new executive teams and overseeing “all functions” of the global company.