Monday, 23 April 2012

Learning from Instagram-Start-Ups

Read articles from Forbes about Start-ups that I decide to share with all of you :)

Before that though, Many have been talking about the recent acquisition of Instagram by Facebook - and many commenting how lucky they are. From Stanford graduates to millionaires with over joyed investors in just a couple of years.
Their story: Central to the Instagram principles, was the idea of building a very simple user interface to the application.  Simplicity is hard work from a design perspective, but reaps rewards downstream in two important ways:  First, in terms of minimizing the number of features developed; and second streamlining the user interface to the essential elements - creating the “one button” application.   A one button application is a solution to your customer’s problem where the value proposition requires only one button. Instagram focused on a key feature users always want—speed.
The team did smart research to find the set of influencers that would love what they were doing by looking at who they wanted to reach as influencers in tech; as well as those people who would really be excited about the capabilities of the application (i.e. photographers with lots of twitter followers).   A good focus on continued PR coupled with great ways of capturing, keeping and referring customers was key.   Great execution can also not be underestimated either—the initial MVP was high quality enough that the influencers wanted to use it; and the team was manically focused on preventing any fail whale type of scenario that would cause customer dissatisfaction.  This meant the cost to get each incremental users was inexpensive after the features were in the system; and that a lot of money didn’t need to be spent on “support” to re-win them once the became disengaged or unsatisfied.
They made sure the the application had value for the first person that used it—and not just making the photo look good; but sharing the way people wanted to share.The focus on iPhone also let the team keep performance for the user and simplicity of the experience at the center of what they did. The team used modern web development methods and analytics to discern which part of their solution resonated with the problems that users had.  

From the article, I got reminded of a major point for success to come: (In Singapore especially when product uniqueness does not vary much, its the simplicity of the idea or business that wins)
Develop the simplest solution to the customer problem, then iterate on what resonates FAST
Make it simple to understand and convey it in layman terms
Build a cost effective method of customer acquisition and insure they are yours for keeps
Leverage and focus on existing networks to bootstrap your own

Coming back to the follow-up article using them as examples
Founder #1 : Kevin Systrom got the most out of his internships and initial work experiences—A computer science major getting experience in product management gave him a broader perspective on both the business, design, and technical aspects of developing products.   Working at Google gave him the experience of seeing how a more mature technology company worked.
=> Takeaway:
Many have told us to start when we are young so failures can be a learning point. But after being in the working world from sometime I do realize that its important to have networks before you start a business. And the way to get them is by working somewhere for sometime.

Forbes advice:
Undergraduates coming out of college is generally not to start a company; but instead focus on a medium sized business where your skills are central to their business model to gain experience before embarking on a startup.   Of course, for some people, the itch is just too strong; they can’t stand working on someone else’s agenda, and have an overpowering drive to do their own thing.   If the drive and passion are there, then go ahead; but if not, and you think you might want to start something, think about what experiences you would like to have to help you develop an unfair advantage once you start and that feed your personal passion.   For example, if you are interested in learning about designing and building software at scale, join company that’s in the process of scaling; has a well formed business model and funding and see how they run their mainline product cycle.   If you have an engineering degree and want to learn about the business side, think about product management, marketing, or sales experiences that will give you exposure to how the firm thinks about their overall business.   Even if you start as a line software developer somewhere, a lateral move into product management and sales can be a better thing than an “upward” move into management in the first 5 years. 

Forbes advice:
If your product is dependent on having a network, as a venture capitalist we should have the answers to the following 3 questions: 1) what is the value for the first user in the network 2) what will you do (and how much will it cost) to prime the pump to get a critical mass of interesting content for the network 3) how quickly and what mechanisms do you have to make it grow.
For instagram , the social nature of the activity was a natural generator for new people to enter the network and download the application.   The attachment to existing social networks provided a very cost effective channel strategy.   Their sales strategy was about seeding the social network effectively to get additional adoption.

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