Please Don’t Try to Build the Next Instagram : Under30CEO Please Don’t Try to Build the Next Instagram : Under30CEO
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Please Don’t Try to Build the Next Instagram

| April 15, 2012 | 15 Comments

2 years of work…  $1 billion payout…

In an instant, this became the dream of thousands of young, enthusiastic entrepreneurs.  Instagram was founded in 2010.  They built a relatively simple photo sharing application, gained traction, raised capital, continued to grow, found a buyer (Facebook) at just the right time, and cashed out big time.  Sounds easy right?

There are now thousands of young entrepreneurs saying, “all it takes is one big hit, let’s create the next Instagram!”

There are a few reasons that I am begging you NOT to try to create the next Instagram.

1.  Gaining Traction is Not Easy Nor is it Guaranteed – Instagram was able to gain traction early, and in this fast paced world of consumer technology, a graph demonstrating hockey stick growth is everything.  The problem is, gaining the kind of traction that Instagram was able to do is not easy, and it isn’t done simply through hard work.  You can’t gain traction through a Techcrunch article.  You can’t gain traction simply by raising capital.  In order to attain hockey stick growth everything has to come together just right, like it did for Instagram.  I believe that Instagram’s traction/exponential growth in the photo sharing market is what ultimately allowed the company to attract investors and attract a buyer.

For further reading:  I love this post by Brendan Baker from AngelList about how to communicate traction to investors.

2.  What if There is No Buyer – Another reason why I believe you should not try to replicate the Instagram model is simple.  What if there is no one willing to buy your company?  If Instagram was not purchased by Facebook or another company, I don’t think they would have been in business in 5 years.  At the time of acquisition, Instagram had no business model.  They didn’t generate a single dollar in revenue.  This is clearly an unsustainable model.  In the case of Instagram it all worked out, but there are countless other companies who have started to grow, had no business model, no buyer, and couldn’t raise another round of investment, so they were forced to shut their doors.  This is an incredibly risky way to start a business, and I wouldn’t recommend it unless you can afford to lose everything.

3.  Timing is Everything-  Finally, I don’t think you can set out to duplicate the success of Instagram, because you can’t duplicate their timing.  At any minute, 2008 can happen again.  At any minute, the market can collapse and angel investment and VC dollars can dry up completely.  At any minute, the market can change and potential buyers like Facebook, Google, and Microsoft can halt all acquisition activity for months.  Unless you are willing to risk everything, then make sure that your business can withstand a market downturn that could delay your plans for months or even years.Bottom line: 99.9% of businesses can’t do what Instagram did. I urge you to focus your efforts on a business model that works.  I am not suggesting that you simply play it safe.  I think entrepreneurs should continue to take risk; however, a business model that is reliant on incredible traction, VC investment, and perfect timing is more risk than most of you should take.

Now with that in mind, go out and change the world!

About the Author:  Adam Hoeksema is the Founder of ExecutivePlan.  ExecutivePlan helps entrepreneurs write business plan executive summaries in order to raise capital.  You can access our free executive summary template here.

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  • http://www.keganquimby.com Kegan Quimby

    you really don’t think Instagram would be in business 5 years?

    … is this article a joke?

  • Adam Hoeksema

    Kegan,  

    Instagram would have probably figured out a way to generate revenue in the next five years, but there would have been some major challenges.  I don’t think they could charge a fee for the service.  I suppose they could have slapped some advertisements on the images, but who wants to see an ad on their friends picture?

    I am sure they could have found ways to generate enough revenue to cover their expenses, but right before the acquisition they raised a round of investment at a $500 million valuation.  I think an acquisition was the only way for Instagram to provide a positive return for their investors.  

    Of course… just my opinion.

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  • http://twitter.com/MichaelEFear Michael Fear

    One interesting thing I read about Instagram, was the impact that their network had.  Proves that the people in your network can really be a big part of your success.  

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  • Chief

    Rightly said..its once in a blue moon wht happened to instagram..one should work in a model which is having a calculated risk..

  • http://EntreRev.com/ Puneet Lakhi

    Kevin Systrom didn’t create Instagram with the purpose of selling it. He built it “to change the way people communicate and share in the real world.” He built a great application that many people were looking for, and happened to find a buyer who needed his technology. Instagram had a strong following and strong funding from VC’s. While I’m surprised at just how successful it became, I’m not at all surprised it did become successful, because the goal wasn’t to make money, it was to create something great.

    Why prevent others from creating the next big thing? Yes, I agree success isn’t guaranteed, but isn’t that the case with any new business? Sure, I absolutely agree it’s unreasonable to go in expecting to emulate Instagram’s success, but does that mean it’s not a goal worth aspiring towards?

    Instagram is one of the best success stories of our generation (in terms of time and payoff), and personally I think there’s a lot we can learn from it.

  • http://EntreRev.com/ Puneet Lakhi

    Kevin Systrom didn’t create Instagram with the purpose of selling it. He built it “to change the way people communicate and share in the real world.” He built a great application that many people were looking for, and happened to find a buyer who needed his technology. Instagram had a strong following and strong funding from VC’s. While I’m surprised at just how successful it became, I’m not at all surprised it did become successful, because the goal wasn’t to make money, it was to create something great.

    Why prevent others from creating the next big thing? Yes, I agree success isn’t guaranteed, but isn’t that the case with any new business? Sure, I absolutely agree it’s unreasonable to go in expecting to emulate Instagram’s success, but does that mean it’s not a goal worth aspiring towards?

    Instagram is one of the best success stories of our generation (in terms of time and payoff), and personally I think there’s a lot we can learn from it.

  • http://www.makemoneyinlife.com James W

    I’m going to build new instagram now…..no just kidding :) , great post, fresh dose of reality is always a good thing.

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  • http://EntreRev.com/ Puneet Lakhi

    Check out my rebuttal in terms of 3 specific lessons we can all learn from Instagram: http://under30ceo.com/top-3-lessons-for-young-entrepreneurs-from-instagrams-1-billion-sale/

  • Florantine Cloison

    I didn’t know your site I found it on a website called http://www.hearticle.com, you should go take a look but I totally agree, for me it was just like a Show from Facebook. It doesn’t make sense with the number of user FB has to buy an app so expensive just for the “eyeballs”.

  • ypchoudary

    It is very interesting that you suggest not trying to build the next Instagram. I believe that trying to  build the next instagram is not really a bad idea. It is wrong when you approach it the wrong way.

    If you really want to build the next instagram you need to follow three rules:
    1. Solve a problem worth solving
    2. Choose an idea you are passionate about
    3. Choose an idea which can give you the success which you are going to be happy with

    I have explained these criteria in more detail here: http://mobtok.com/why-trying-to-build-the-next-instagram-is-a-really-crappy-idea/

  • Dondausi

    Instagram is used metaphorically and i think the author meant don’t try to build a business hoping to attain the success of Instagram within a short period of time. However, the most successful business empires are born out of passion, money comes later.(Business-minded people think the other way round)

  • Dondausi

    Instagram is used metaphorically and i think the author meant don’t try to build a business hoping to attain the success of Instagram within a short period of time. However, the most successful business empires are born out of passion, money comes later.(Business-minded people think the other way round)