How two whizz-kids made a billion dollar app in 551 days

Two years ago, Instagram didn't exist. It still hasn't made a penny in profit. So why did Facebook just have to have it?

It's all a question of momentum. That's the difference between the millions of online ideas that simply melt away and the handful, like Instagram, which keep rolling and growing until they deliver the life-changing pay-day of which every start-up founder dreams.

The photo-sharing network first appeared on Apple's App Store on 6 October 2010. It was the same day David Cameron first addressed a Tory conference as Prime Minister. But whereas the Prime Minister's fortunes have been mixed in the short time since, Instagram's rise has been relentless. It had a million users within two months. And it has kept expanding since.

Thanks to Facebook's $1bn (£630m) buy-out, Kevin Systrom and Mike Krieger have become vastly wealthy overnight while still in their 20s, but their discovery of such a winning formula was a drawn-out process. On the road to honing the Instagram app, they left behind a series of failed projects. Mr Krieger worked on an app that aimed to counter Seasonal Affective Disorder (SAD) by offering sufferers the rays of sunshine in photos posted by users living in warmer climates.

Meanwhile Mr Systrom, who had formerly worked for Google, set up a location-based web service called Burbn, which didn't go exactly according to plan. Burbn never got past a few hundred users, but it allowed Mr Systrom – who, according to the website TechCrunch, raised $500,000 in seed funding for the project – to develop his programming skills, just as the sunshine project was an essential learning curve for Mr Krieger, an engineer and user-interface designer.

Those users who had signed up for Burbn mostly used it to upload photos of their visits to bars and cafés. Mr Systrom recognised that he was on to something and Burbn duly became the skeleton model for Instagram. The Instagram app allows users to take photos using a variety of filters, with names such as "Toaster", "Lord Kelvin" and "1977", giving their images a distinctive retro look. The formula has proved globally popular. Crucially, the pictures can be shared across a host of social-media sites, from Facebook and Foursquare to Twitter and Tumblr.

By last June, the app had five million users and it has added to that number at a rate of about two million a month. The surge in interest was fuelled by celebrity endorsements from Justin Bieber, Kim Kardashian, Snoop Dogg and then Barack Obama, who all took out accounts. Bieber in particular was a huge driver of traffic from his army of 20 million followers.

When the Facebook founder Mark Zuckerberg clinched his $1bn purchase of the 18-month-old start-up this week, Instagram had a user base of 30 million updating five million photos every day.

The size of the deal brought gasps of astonishment even in a world that has witnessed the buyouts of MySpace (bought by News Corp for $580m in 2005), YouTube (bought by Google for $1.65bn in 2006) and The Huffington Post (bought by AOL for $315m in 2011), Facebook's reasons soon became clearer.

Until last week, when it released an Android App, Instagram was only available on Apple devices. The development has given the application an even greater momentum. Within 24 hours of being available on Android it found one million new users. After six days it had registered five million Android downloads.

So, does the Instagram deal herald a new dot.com boom? Probably not. Mr Zuckerberg, who will allow Instagram to remain as a separate brand, was making his first major acquisition. Among start-ups in the UK, Mind Candy – the company behind the Moshi Monsters brand – seems best-placed to enjoy a big pay-day. But the market remains cautious. Instagram might be worth $1bn this week. But it could turn out to be a fad.

Life and Style
ebookNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Gadgets & Tech

    Guru Careers: Software Tester / QA Engineer

    £23 - 28k (DOE) + Benefits: Guru Careers: A Software Tester / QA Engineer is n...

    Guru Careers: C# Project Team Lead

    £55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

    Guru Careers: Graduate Editor / Editorial Assistant

    £16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine