{"id":1419,"date":"2015-10-04T23:58:54","date_gmt":"2015-10-05T03:58:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/textbook-network-effects-how-instagram-achieved-instagrowth\/"},"modified":"2015-10-05T00:01:04","modified_gmt":"2015-10-05T04:01:04","slug":"textbook-network-effects-how-instagram-achieved-instagrowth","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/textbook-network-effects-how-instagram-achieved-instagrowth\/","title":{"rendered":"Textbook Network Effects: How Instagram Achieved Instagrowth"},"content":{"rendered":"

\"instagram_1_0\"<\/p>\n

 <\/p>\n

Instagram is widely known for its “hockey-stick” growth ($0 to $1B valuation in two years!), but it is the textbook example of how\u00a0a\u00a0business grew\u00a0so quickly with direct network effects.<\/p>\n

\n

A product displays network effects<\/strong> when more usage of the product by any user in the network increases the product\u2019s value for other users in the network.<\/em><\/p><\/blockquote>\n

\n

Suppose you developed a product that you believe has strong network effects. I’m sure this is the first question you’ll ask;\u00a0if\u00a0the platform is most valuable with other users on it, then how do you attract those initial users to use it? This classic chicken-egg problem\u00a0has recently seen many innovative solutions in this digital age.<\/p>\n

One way Instagram tackled this problem was to mitigate its adoption risk by providing standalone value. In other words, provide a feature that is useful if only ONE user were using your product. In a time when\u00a0multiple photo apps provided cool photo filters for a small fee, Instagram provided them for free. Many of the initial users\u00a0were initially attracted to Instagram because they could easily apply their favorite filters and then send to family and friends via facebook, twitter, or email for free.<\/p>\n

Of course, the hope was that users would share on Instagram’s network, which they eventually did as more of a user’s family and friends adopted the platform. Many of those early users came for the tool and ended up staying for the network.<\/p>\n

Another key way\u00a0Instagram attracted users en masse was simplicity.\u00a0Instagram was the personification of simplicity: not over-engineered, not too many features, no confusion. It focused on doing ONE thing extremely well. Within 5 seconds and a few straight-forward taps, you have shared your photo with your friends in the way you want it.<\/p>\n

These two strategies created and accelerated this snowball at the top of this\u00a0digital mountain. The network effects determine the slope of this mountain. Each additional user provided additional value to the network. Instagram’s\u00a0user base became its strongest recruiters.\u00a0Eventually, the mainstream user simply had<\/em> to be on Instagram\u00a0to keep up with their closest friends. In other words, Instagram was able to generate\u00a0natural virality and maintained it by staying true to its original intent, focusing on simplicity and user experience.<\/p>\n

\"instagrowth\"<\/p>\n

Instagram’s meteoric rise is obviously only the beginning of its story. Facebook’s purchase of Instagram was both smart and fitting; together they are learning how to monetize these\u00a0mobile platforms with strong network effects. Will Instagram sufficiently capture enough value it initially created?<\/p>\n","protected":false},"excerpt":{"rendered":"

Instagram is the textbook example of how a business initially attracts users in the absence of network effects and quickly grows by leveraging those network effects.<\/p>\n","protected":false},"author":15,"featured_media":1422,"comment_status":"open","ping_status":"closed","template":"","categories":[605,261,604,21],"class_list":["post-1419","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-create-value","category-instagram","category-instagrowth","category-network-effects"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/competing-with-network-effects\/","yoast_head":"\nTextbook Network Effects: How Instagram Achieved Instagrowth - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/textbook-network-effects-how-instagram-achieved-instagrowth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Textbook Network Effects: How Instagram Achieved Instagrowth - 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