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    Showing posts with label An Open Letter To Those Not Employed At Instagram. Show all posts

    An Open Letter To Those Not Employed At Instagram

    Alexander Haislip is a marketing executive with cloud-based server automation startup ScaleXtreme and the author of Essentials of Venture Capital. Follow him on Twitter @ahaislip.

    Dear Non-Instagramers,

    Sorry that you didn’t get bought out for $1 billion last week. That’s got to be a bummer. Kevin Systrom just made enough money to buy a boat big enough to make Larry Ellison jealous and you’re still living in a studio apartment.

    Instagram is a one-off. A fluke. An anecdote that many entrepreneurs will mistake for data. Please don’t be one of them.

    This happens about every half a decade. The first mover in a space gets taken out in record time with a ridiculous valuation and the founders look like epic geniuses. Do you remember YouTube? Sure you do. But what about Revver, Metacafe, Guba and Veoh? I didn’t think so.

    I know you’re smart and could probably program Instagram yourself in less than a week. Because let’s face it, how hard could it be? It’s just a few filters put onto the iPhone’s camera with some sharing features skinned to appeal to hipsters. There’s just not that much technology involved. Instagram’s competitive advantage comes from being first.

    First is important. It’s important in defining functionality, setting expectations and capturing mindshare. It’s important to corporate buyers. Now that Facebook has already made its acquisition it’s unlikely that your consumer tech product, if it’s in any way close to Instagram, will also be bought. It’s a classic winner-take-all scenario. Google doesn’t know what to do with the products it has. Yahoo just purged another 2,000 people. News Corp? Barry Diller? AOL? Please.

    And that’s assuming that there even is a market for your consumer technology startup’s product or service. Let’s suppose that you do get Instagram-level breakout and collect 30 million users. That’s great, but only if you (or your potential acquirers) see a viable path to monetize those users. Users aren’t customers. The people who are pissed that Facebook now owns Instagram ultimately have one major concern: that Facebook will find a creepy way to make money off the service.

    That’s the thing about consumer technology: it’s easy to rip off, hard to sell to strategic acquirers and monetization is often a mystery.

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