Instagram’s story reads like a fairy tale. The app took only 8 weeks to develop before it was launched in 2010 and had amassed 1 million users in the first two months. The number of users increased to 10 million within a year and 1 billion by June 2018.

Burbn

The year is 2009, and Stanford University graduate Kevin Systrom is working at the travel recommendation start-up Nextstop. Systrom, a connoisseur of Kentucky whiskeys, developed a mobile app called Burbn in his spare time. 

The app lets users check in at certain locations, post pictures of meet-ups with friends, and earn points for socializing. In March 2010, Systrom had a chance encounter with venture capitalists at a function for Silicon Valley start-up Hunch. After meeting with Andreessen Horowitz and Baseline Ventures, Systrom received $500,000 in seed funding and quit his job to focus on Burbn full-time.

Once released, Burbn’s myriad features confused users and the app was unsuccessful. Systrom stuck at it, however, and hired Programmer Mike Krieger to help him analyze how Burbn’s users were interacting with the platform. The pair found that while most did not care for the check-in feature, they did love the ability to share photos with others.

Burbn becomes Instagram

Based on this and the fact that Burbn was too similar to platforms like Foursquare, Systrom and Krieger renamed the app Instagram. The simple, photo-sharing app for mobile devices was named after a portmanteau of “instant camera” and “telegram”. 

Instagram’s development was based on two primary competitors. Hipstamatic had popular features but it was hard to share photos there. On Facebook, it was much easier to share photos – but the platform’s iPhone app features were poor in comparison.

Systrom and Krieger saw an opportunity to slip in between the two and build an app that made social photo-sharing simple. They discarded all of Burbn’s unnecessary features except the ability to upload photos and like or comment on them.

Launch and subsequent funding

Instagram was launched for iOS on October 6, 2010, and some 25,000 users joined on the first day. Hashtags were introduced in January 2011, with the founders encouraging users to ensure they were both specific and relevant to make photos stand out to like-minded individuals. 

The platform secured a Series A funding round worth $7 million in February. The round, which valued the company at $25 million, involved investors such as Jack Dorsey and Benchmark Capital. Series B funding worth $50 million followed in April 2012, as did the first version for Android devices. 

Various features were added in the Version 2.0 release of the app. These included optional borders, instant tilt-shift, one-click rotation, and high-resolution photographs.

Facebook acquisition

Four days after the Series B round of funding and with the company valued at $500 million, Instagram was acquired by Facebook in a $1 billion cash and stock deal. The deal was finalized in September 2012 after approval from both the Federal Trade Commission (FTC) and Britain’s Office of Fair Trading.

At the time of the deal, Zuckerberg noted that Facebook was “committed to building and growing Instagram independently.” In any case, Systrom earned around $400 million from the sale. In the years that followed, Instagram adopted a more minimalist look and added various other features such as stories, videos, direct messages, and IG TV. 

Key takeaways:

• Instagram’s story reads like a fairy tale. The app took only 8 weeks to develop before it was launched in 2010 and had amassed 1 million users in the first two months and 1 billion by the middle of 2018.
• Kevin Systrom developed the predecessor of Instagram in 2009. Then known as Burbn, the app enabled users to share photos and locations with others and earn points for hanging out with friends. Ultimately, however, Burbn had too many features and users found its purpose confusing.
• When Systrom secured $500,000 in seed funding, he hired programmer Mike Krieger to help him analyze how users were interacting with the platform. The pair identified that the popularity of the photo-sharing feature justified building a standalone app later known as Instagram.

Read: Instagram Business Model, Who Owns Instagram.

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