Entrepreneurship Grows Instagram into Billion-Dollar Company
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It's a classic Silicon Valley Cinderella story.
Young entrepreneur builds a social networking start-up. Media buzz and celebrity fans follow. Young entrepreneur sells start-up now known universally as Instagram to Facebook for $1 billion. That's a billion with a "B."
In just 18 months, 28-year-old entrepreneur Kevin Systrom built what he calls a “social tool for social life on the go” and garnered a following of more than 30 million users on Apple’s iPhone. The LA Times reports on how Systrom built a social network (which has never made money) into a profitable enterprise.
Instagram is a photo-sharing social network that operates on mobile devices. Users take a picture with their phone, edit the image as desired using the program’s capabilities and then upload that photo to share with those in their network. The application was initially offered on Apple’s app store and is today also available for Google’s Android operating system.
Like many successful entrepreneurs, Systrom always believed his idea would be a success and was passionate about seeing it come to fruition. He began working on his photo-sharing idea while an undergraduate student at Stanford University. The final product was built in eight weeks, and within 24 hours, it had 25,000 users; in less than 3 months, the number of users climbed to 1 million. By February 2011, users were uploading nearly 300,000 photos a day, and in the 9 months since the program launched, total uploads reached 150 million.
"Today, we see 1.3 million photos uploaded every single day – that's 15 photos per second. To say that we're excited and humbled by the initial success of Instagram would be an understatement. I believe it marks the beginning of what's to come. We're one of the fastest growing social networks in mobile."
Given the response, Instagram raised $7 million to add to its initial $500,000 in seed money. It also drew the attention of the social networking giant Facebook, which tried to buyout the growing company in its early days. Systrom, however, remained focused on his entrepreneurial goals and was convinced he could build the San Francisco company with just 13 employees into a business worth $1 billion.
In refusing to sell early, Systrom continued growing the Instagram following, which grew from 25,000 to 1.75 million users by February 2011. As a result, Systrom was able to sell his small business for hundreds of millions of dollars more than Facebook first offered.
Read more about how Systrom’s entrepreneurial focus helped him build a billion-dollar company.