Please Don't Try to Build the Next Instagram (article)

I really like this article. Instagram had no 'business model' before Facebook came in and bought it for $1 billion. Facebook doesn't seem to care simply about profitability, they only seem to care about the power of social media. But is it really that powerful?

Tech Bubble 2.0, anyone?

I think instagram is an area where it is very easy to lose users. Some other entrepreneurs roll out some other better/great social media tool and the masses will respond.

I would be willing to bet that zuckerberg will make some sort of crappy update and ruin the whole experience lol just like the new facebook timeline which sucks haha.

The-J said:

Please Don't Try to Build the Next Instagram (article)

I really like this article. Instagram had no 'business model' before Facebook came in and bought it for $1 billion. Facebook doesn't seem to care simply about profitability, they only seem to care about the power of social media. But is it really that powerful?

Tech Bubble 2.0, anyone?

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seems like a negative article to me.

How is this a tech bubble? They have a good product that people love and hundreds of mullions of habitual users... that means cash my friend..

But Instagram has no sustainable revenue model. I mean, they will have one by the time Facebook is done with them (I trust Zuck's intuition on this one), but the business itself is far far FAR overvalued, if you simply look at the evidence. Yes, millions of users use it and its potential is HUGE, and I'm not saying that the purchase was a bad decision (hey, Google bought Youtube for some billions of dollars and they integrated it with Adsense/Adwords, making them giant sums of money; not to mention the deals they struck with the record labels and TV producers. Not sure if the money they made covers the cost though), but I am saying that any "entrepreneur" who thinks that they could possibly make it big by creating something like this is placing a horribly unlikely bet.

The "Tech Bubble" part was in reference to the $1 billion, being massively inflated.

The-J, you are right. Instagram doesn't need a business model, because Facebook has one already.

Instagram was bought by Facebook because it had attracted a lot attention due to huge valuation during a venture capital financing round. I understand that the Instagram founders were extremely well connected in Silicon Valley, in the sense that they could pick their investors.

So it would be a mistake for new startups to attempt to try the same thing as Instagram and expect to make a huge sum at the point of acquistion. Building a business that is designed to be profitable on its own is a better option.

I am betting there is a social media bubble forming.
it will happen over the next several years.
as more instagram type sites explode and investors mistake users for profit.

its still early in the app space, and social media.

some cool bubbles will form. I wonder how I can profit from the collapse...

I think that the article was pretty negative. I don't think there is anything wrong with trying to start "the next Instagram". If it nets someone several hundred million dollars, I won't be hating like people are right now.

what is wrong with trying to start the next instagram. Google started out trying to be the next yahoo, or lycos, or magellan. I think the problem is a lot of business dont have that exit strategy in mind. If you start a business and you dont see making bigger money by selling it to a bigger player then why are you in business. I could be wrong but please understand I hope my business becomes the next instagram 1 billion not only puts you in the fastlane. It puts you in a private jet also, sky's the limit baby.

I tend to disagree with the sentiment of the article. It seems as though they are discouraging entrepreneurship. When they formed, im sure their plan was to be bought out (or at least monetize), but I'm sure they didn't fathom Facebook would be the buyer. There are a lot of sites that could have benefited from the users base they had, hell, they could have implemented a e commerce digital camera store on the site that would have made them a bunch of $$$.

From my experience getting users is the hardest part, its all downhill from there as far as making money off of them and since they understood that they didn't bother with monetizing it until there was a HUGE following. I think it paid off and now its time to :icon_super:

I think you guys are missing the point of the article. Of COURSE they aren't discouraging entrepreneurship and of course people need to have an exit strategy in mind. However, the article is advising against people who think that building a business with no revenue model will get them VC funding... heads up, it WON'T. Number of users do not always equal money. Just because your business has 'potential' doesn't mean VCs will invest in it. They will invest in it if it has results. The reason Facebook bought it is because they are in the business of making money off of sheer volume of users. Nobody is bashing Facebook here. Nobody is bashing anybody here. It's just saying that stories like Instagram are extremely atypical of even highly successful entrepreneurs and to try and do what they did is simply a crapshoot.

The-J, your analysis is totally correct. If people want to be the next Instagram, they might just as well play the lottery. Odds are far better, participating is cheaper.

I think you guys are missing the point of the article. Of COURSE they aren't discouraging entrepreneurship and of course people need to have an exit strategy in mind. However, the article is advising against people who think that building a business with no revenue model will get them VC funding... heads up, it WON'T. Number of users do not always equal money. Just because your business has 'potential' doesn't mean VCs will invest in it. They will invest in it if it has results. The reason Facebook bought it is because they are in the business of making money off of sheer volume of users. Nobody is bashing Facebook here. Nobody is bashing anybody here. It's just saying that stories like Instagram are extremely atypical of even highly successful entrepreneurs and to try and do what they did is simply a crapshoot.

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I can't agree with this more. I recently came across this issue and I struggled with it for months, looking back I am not sure why. The answer is really easy.

I basically had three main choices:

1) I could charge all users
2) I could give it away for free and try to build a user base.
3) or I could sort of do both at the same time.


The second option (to give it away for free and build a user base) is very tempting. After all, we see companies like Instagram and 4square getting these crazy valuations. I'm sure that there are some companies that are in the same boat as instagram that are being bought out for millions and just not getting the publicity. I don't think that this is an unrealistic goal at all.

But it's all about the money. Time is money and I'm not planning on waisting my time with wishful thinking.

The first option also looks nice, but in some instances it could possibly stunt growth or lead to slow growth, I think it depends on the business and the market. I for one, have never used instagram and I never would have paid for it. But some people would. So maybe it is good that instagram didn't charge.

I am striving for something more middle. The factor that I keep in mind is that I want to get profitable as fast as possible, so that I can still do what I want to do and keep my company flexible enough for whatever may come in the future. Too many people don't focus on getting profitable. But at the same time, so many focus too much on becoming profitable. And that in itself is a stunt factor to potential growth.

I am betting there is a social media bubble forming.

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I agree with this. If you look at the internet it's becoming a giant social network. Sites are linking to Facebook, Twitter, and everything else like crazy. Sites are using their own blogs, message boards, and so on. Google is on the verge of changing the way that they show results to make the results more personal. Bing is trying to incorporate Facebook into their searches. Facebook even changed for the Timeline for a major reason, they didn't just change for the hell of it. Big tech companies (and non-tech companies) have stake in the mainstream social media. Sites like Twitter have changed the way that people communicate in the middle of a Crisis. And social media is a tool that is used in just about every single industry. The internet has become a major avenue for sharing, innovation, knowledge transfer, and maybe it is even helping with this whole globalization thing. The internet has defiantly changed over the last ten years and it makes me very happy to see this change as I build my own social network. Some people may say that the market is saturated, but I see gold.

And as technology becomes more fused with our lives, will the bubble ever pop? Well, maybe if a huge solar flare turns off the lights....

This article is garbage, I am sure lots of great ideas never come into existance because people take this attitude. What a limiting attitude, go for it. Obviously not the same one,

damien275x said:

This article is garbage, I am sure lots of great ideas never come into existance because people take this attitude. What a limiting attitude, go for it. Obviously not the same one,

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You missed the point. Creating a business that has NO REVENUE IS A BAD IDEA NO MATTER HOW YOU STACK IT. Now, if you build a non-profit project and you HAVE the money already, that's different. Banking on a big sale is like taking a lottery ticket.

Creating a business with no upfront revenue stream isn't a bad idea. Providing the value first, the money will come later. Look at twitter/youtube.
Twitter just started doing advertising.

I'm not sure whether this is a bubble or not, but best to get in before it's too late.

1PercentStreet said:

I'm not sure whether this is a bubble or not, but best to get in before it's too late.

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I am sure its a bubble, social media is way overvalued, but I agree completely, why not grab some of the cake before its all gone, if you have the capital to spend on developing an idea of course, don't bet your house on it

Gambling a mortgage over this sort of business is a little high risk for most people. Only if you have the cash to invest. Scared money is lost money.

1PercentStreet said:

Gambling a mortgage over this sort of business is a little high risk for most people. Only if you have the cash to invest. Scared money is lost money.

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Mike39 said:

I am sure its a bubble, social media is way overvalued, but I agree completely, why not grab some of the cake before its all gone, if you have the capital to spend on developing an idea of course, don't bet your house on it

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We're saying the same thing

I know, I know haha. Was just agreeing with you.

I know a few people that have actually done things like that.

1PercentStreet said:

Creating a business with no upfront revenue stream isn't a bad idea. Providing the value first, the money will come later.

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Personally, that's sounds like a terrible idea to me. If you make it, they won't always come. Maybe, I'm too risk adverse, but I always like to think of at least 2 different ways I can make money off an idea. Does this mean I'll actually implement these strategies for sure? No, the point is to know that there are "realistic" ways to make money with this idea. No use in creating something, only later to realize you can't really earn any or much money off of it.

I'm not the average person, not saying I'm better or worse but I am young and can mentally take more risk then others older then me.
I worked for the money as my focus(and it was fun after a certain level) but I don't need to focus so much on paying the bills anymore as I have it covered so for me personally, I look for scalability and value it provides. Then again, they do say size doesn't matter.

Everyone has their own opinion though and I respect yours

Fisherman said:

seems like a negative article to me.

How is this a tech bubble? They have a good product that people love and hundreds of mullions of habitual users... that means cash my friend..

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Sorry to say but your comments are ridiculous.

Who cares if it positive... its true.

PatrickP said:

Sorry to say but your comments are ridiculous.

Who cares if it positive... its true.

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Why are you attempting to carry an argument from another thread here? Your comments do not even make sense, and following me around like a lost puppy is pointless... just like your comment above..