San Francisco start-up Instagram made big news this month when it was acquired by Facebook for a price tag of $1 billion.
Instagram is still a young company, having launched its photo-sharing mobile app for iPhone in October 2010, but it has rapidly grown in popularity and valuation during this short period of time. Its user base jumped from zero to more than 30 million, and its US visits totaled 10 million, rising 1000 percent between December 2011 March 2012. Just before the Facebook acquisition, Instagram closed a round of venture capital financing, valuing the company at $500 million.
Overnight, Instagram has become a case study in mobile strategy success. Other companies are now looking to learn from Instagram’s smart growth decisions and well-timed executions.
1. It stayed focused.
Many mobile apps try to do too much and end up failing. Instagram had a brilliantly simple idea: creating an app to make it easy for users to capture and share beautiful images. It didn’t get distracted by adding all the bells and whistles imaginable to its app. Instead, it focused on delivering a straightforward and well-designed product that users were eager to adopt. The takeaway for other companies is to create a mobile app that does one thing (and does that one thing better than anybody else). Additional features are often best implemented after product launch in incremental updates.
2. It chose the right platform.
Instagram came onto the scene at an opportune time, as smartphone use was skyrocketing and mobile apps were proving more popular than ever. The company planned its mobile strategy shrewdly, releasing and perfecting only an iOS app initially and allowing it to gain a loyal following of iPhone users. Instagram waited until the timing was perfect — after the app had become a phenomenon among iPhone early adopters and influencers and Android reached 50 percent mobile market share — before releasing an Android version of the app.
3. It focused on data, not monetization.
Instagram made a smart decision by not searching for a way to monetize it from the beginning. Instead, it made its top priorities building its user base and creating an app with exceptional functionality and design. With each Instagram picture a user takes, the app captures a significant amount of data, including location, time of day and other information collected by the smartphone. This piece of the mobile product design put Instagram in a desirable position for Facebook, which can leverage the data for monetization in the future. Though Instagram has no revenue model right now, Facebook seems to think that its valuable user data will be worth the $1 billion cost in the long run.
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