The Instagram digest:
- Simple business model: photo sharing from the iPhone
- With a twist: organize photos across users by tags (like Twitter)
- Perfect user experience: easy to use, fully integrated, no bugs
- Use off-the-shelve technology: Amazon cloud, Ubunto, Postgres, and other open source
- Hire the right effective team
- Nurture the network effect
- Move fast, spent lots of money, and do not worry about a revenue or profit model
The last item is a lot like in the old dot-com days. Building size by moving fast, spending lots of money, without having a viable revenue or profit model still appears to work well in the “craze” areas like social. This is a bit against the general business 3.0 trend of companies moving slower with solid business models.
Why did Zuckerberg spent $1b for less than 10 developers and generic software and a business model which is neither new nor unique nor easy to protect? Well, this is a very good question. Here are some guesses:
- People are tired of Facebook. Facebook is mainly photo sharing. Mark was scared that his fad is ending and people shift to the next shiny thing.
- Nice PR ahead of the IPO. $1b does not hurt them much and for sure gets them attention.
- Wants to move lightspeed on better mobile integration.
Here is a good summary on Instagram's technology.