By Walt Hickey
Welcome to the Numlock Sunday edition. Each week, I'll sit down with an author or a writer behind one of the stories covered in a previous weekday edition for a casual conversation about what they wrote.
Normally, this is just for paid Numlock subscribers, but this week anyone can check it out! If you like it, consider subscribing.
This week, I spoke to technology journalist Sarah Frier who wrote No Filter: The Inside Story of Instagram which comes out this Tuesday.
Sarah’s work has appeared in Numlock a bunch of times, and her new book is stellar. It covers the story of Instagram, one of the most important mobile apps on the market that started as an upstart competitor, was bought for a then-ridiculous $715 million, and by 2019 was responsible for $20 billion in revenue.
Culturally, the app has become essential: it’s responsible for fame and fortune for all sorts of celebrities and pseudo-celebrities, and how those people directly influenced the development of Instagram itself is my favorite part of the story Sarah tells.
This interview has been condensed and edited.
Walt Hickey: No Filter is the story of Instagram, but it's also kind of a story about Facebook too. It seems like a lot of startup stories have a hero's journey and they end with the victorious moment, but your book focuses on what happened even after the billion dollar sale, and it became somewhat tragic for Instagram. What happened?
Sarah Frier: What is really fascinating about this story is the difference between the myth of what Instagram is within Facebook and the reality. This was the prize acquisition of Zuckerberg that everyone thought was crazy at the time, but turned out to be remarkably successful. What was $1 billion in 2012 is worth more than $100 billion today. Everyone thought that Instagram was just a company within the company, operating independently, that Kevin Systrom, the CEO of Instagram, would call Zuckerberg more like a board member than a boss. And that was just not the reality. I really think the most interesting part of the Instagram story happens after they get to Facebook, and not just because of their tension with Facebook — there's lots of that — but also because that's where they really built their cultural pull and figured out how to make themselves important to us.
A photo from Mark Zuckerberg posted on Instagram, one year before he spent a billion dollars to buy Instagram
One of the most interesting relationships in the book is the relationship between Systrom and Zuckerberg. Why does Mark Zuckerberg resent Instagram?
Zuckerberg is incredibly competitive. I mean, he's one of those leaders who has gotten to where he is by always being paranoid about the inevitable fade of his product, and trying whatever he can to ensure its continued dominance, trying to earn more and more of the minutes we spend online. At a certain point, Instagram's success in his mind threatened Facebook's dominance.
He called it “cannibalization,” the idea that people were spending time on Instagram they should have been spending on Facebook.
To understand how Facebook thinks about this, you have to understand that they think our behavior is malleable, that they could just as easily redirect us to a product that they prefer that we use, as opposed to one that we are choosing to use. Because that's how they built their business. Basically, he found that Instagram was getting too much help from Facebook and it was time for Facebook to get paid back.
You go into another app that is fascinating called Onavo, another acquisition they made that seemed to really undergird their entire business model for a lot of the duration of the book.
Onavo was a VPN app, which basically people used to enhance their security so that they could peruse the internet without being noticed by governments or whoever else might’ve be scanning their activity. Instead, as a consequence of using this, they gave their data to Facebook. Facebook was able to have this worldwide sample of how people were using their phones, not just which apps they used, but how long they spent on them, what parts of the apps they frequented, and Facebook used that Onavo data to figure out what they needed to buy, compete with, or crush. That's why they purchased WhatsApp for $22 billion in 2014. That's why they started going head to head with Snapchat, because they could see through Onavo data that people were flocking to those apps.
I want to kind of get into some of the cultural aspects of this because I think that's the really cool part of what Instagram figured out that Facebook never did. You went into a lot of how Facebook tried to move famous people. You went into how Instagram managed to do it. What need did celebs have that Instagram came to fill?
Instagram, the way it's designed, is inherently a great tool for personal branding, because the posts that you make on Instagram are only what you have created. There's no resharing. So when you go to somebody's Instagram, you just see their interpretation of what they want to present to the world. And Instagram was easier for celebrities to use than the other big celeb platform at the time, Twitter, because you didn't necessarily have to be witty or clever or have anything to announce on Instagram. You could just post a picture of your life, and replace the paparazzi by being your own papparazi, and your own curator of your image.
But it wasn't easy for Instagram to get celebrities to that point at first. People in the celebrity world thought, why would I ever make myself less mysterious? Isn't my mystery part of what people like? Kris Jenner told me that other A-listers were telling her that they were hesitant to use Instagram because they thought they would become less famous once they were revealed to be normal people. And, of course, the opposite thing happened! People who got followings on Instagram became celebrities and regular celebrities wanted to gain followings on Instagram and become like influencers. The roles were converging quite rapidly.
They got there because of the careful work by Instagram to go sign up celebrities in person. They would do dinner parties, they would do cocktail hours, they would explain to people how to use the app. Explain to them why they would want to do it. How they could basically ask their fans what they would want to purchase, and then they could create that product, and then sell it to them and they would want to buy it. I mean, it's just kind of perfect. So they were able to do that at an individual level, which is something Facebook could not and never would do. Facebook is not a company that works at the individual level to grow. They're all about scale.
That was a tension that kind of kept coming up, how Instagram was more about the craft and Facebook was very much looking at all this data. How did that start to blend together?
Eventually, Facebook realized Instagram's immense cultural pull. Now you see Mark Zuckerberg going live with big names like Dr. Fauci. Right now, Facebook is asking celebrities to give people advice on COVID, Steph Curry went live on IGTV talking about about coronavirus. They're noticing the effect that the word of powerful people can have on the actions of others. And that's really an Instagram thing and Instagram lesson.
The book is full of great stories about how celebrities helped personally shape Instagram, like Ariana Grande's early calls for moderation, how Snoop invented sponsored content one time and nobody had any idea how to handle it. How'd their most famous users shape the company?
It's pretty crazy how close Instagram kept its celebrities, not just for customer service problems, but for product requests. In one instance, Taylor Swift was really concerned about being trolled by Kim and Kanye fans on her Instagram and asked Kevin Systrom to do something about it. And he wants to just like mass delete all the snakes on her Instagram profile, but the head of policy at Instagram says, you can't just make a change for a celebrity, you have to do it for everyone. And so that's why they got comment filtering, because T-Swift was trolled. And then there are other things like that. Miley Cyrus at one point in 2015 was threatening to quit Instagram and the team came up with a strategy to get her to stay. She was really concerned about bullying of transgender and homeless youth through her Happy Hippie Foundation, she was going to quit Instagram in protest. Instead, they said, why don't you use your Instagram as a way to highlight some of these people that you care about protecting and we'll reshare it on the main Instagram account, which has more followers than any celebrity. She agreed to that, and they did this whole photo campaign, and all of these trans youth became more famous and Miley Cyrus was happy and stayed on Instagram.
You talk a lot about how Instagram was very interested in curation, and basically minted a lot of millionaires personally by flagging them on the @Instagram account.
Instagram is unlike Twitter and Facebook. Twitter and Facebook always talk about how they are neutral platforms, they don't want to be the arbiters of what is good content or bad content, they really only want to step in and make a judgment when they find that something is harmful or illegal. Instagram had a completely different perspective, which was that they thought by promoting what they liked to see on the app, they would inspire people to do more of it, which is what ended up happening. It's why their relationships with celebrities and others became so powerful.
My favorite story about this is there's actually an Instagram employee who keeps a spreadsheet of all of the best animal accounts. He's got like cats and dogs and iguanas, but he has a soft spot for really goofy looking animals. And so one day he decides to promote this dog named Tuna, and the dog's owner has no idea. But when the photo posts, this dog looks so funky, it has this elongated snout and this overbite that immediately goes viral, and this dog had 8,000 followers then it doubles, triples, quadruples. The owner of the dog is invited on Anderson Cooper, she gets invited to places around the country to meet fans of the dog, and she ultimately decides to quit her job and just be the manager of her dog's fame. And that's all just because this one guy decided that this was good content.
I love how like a lot of the book almost reads like a mystery in the sense that these folks made something and they spent so much time trying to figure out what the heck they made. They started having to interview teens because they wanted to find out what was actually going on in their app and they found out that 15 to 20 percent of users had Finstas.
There has to be a balance between this kind of curatorial editorial approach and actually understanding what's happening on your product. On Instagram it's much harder to find, because there's no virality, nothing just bubbles to the surface like it does on other platforms. It's really a discovery process, and that's probably something Facebook contributed to Instagram's success, by forcing them really to take on more of an appreciation for what they could learn from data in conjunction with their user interviews.
They've discovered that a huge problem with teens using the app was they felt such immense pressure. It took them a long time to come to terms with the fact that Instagram may not be serving its users as well because the bar was so high to have a perfect life. That's why they ultimately copied Snapchat Stories because they learned that was a place they really lacked and it was incredibly successful once they understood what was wrong.
People use Instagram in completely different ways in different countries too.
Right! They can see people in Indonesia posting photos and then rapidly deleting them. And it looked like this massive spam ring. But when they dug a little deeper and asked their employees on the ground, they discovered that it was actually a thriving e-commerce trend, that people were posting photos of product and then deleting them once those products were sold.
Looking back now, the FTC literally just had no idea what the correct questions to ask were when Facebook bought Instagram.
The FTC was really looking at whether Facebook and Instagram were competing because they wanted to make a determination about whether Facebook purchasing Instagram would make them more of a monopoly. But Facebook was going through a lot of turmoil with their stock price, and Instagram was only 13 people. So they really just asked very basic questions like, "how's the technology built? Does Facebook also have a photo app?” They didn't really get to the core question, which is, "is this app the one that's winning the network effects?" Because there's something that happens with social networks once enough people join them, then there becomes no reason to join a competitor for the same purpose.
Instagram was really hitting that stride where they were growing — even though they only had 30 million users — they were growing so much faster and getting so much bigger than any other photography app. So if the FTC had understood network effects and how they affect who wins on the internet, then they would have had much better questions. But Facebook really played down Instagram's potential. "Oh, this? We don't know. We kind of just wasted $1 billion!" And then ultimately what they ended up with was the second-most important social network in the world. Zuckerberg could see that was what it would become. But honestly, nobody else did, not the media, not competitors. Even Twitter, in trying to buy Instagram, wanted to combine it a little bit with Twitter. They didn't understand what Zuckerberg did about its potential as a standalone platform.
Do you think that Instagram will ever eclipse Facebook itself?
Well, I think whether Instagram is able to achieve its full potential depends on how Zuckerberg wants it to play, because he is currently restricting Instagram's independent resources and combining it more closely with Facebook. Those curatorial, editorial initiatives are becoming not as important as the automated efforts, like recommendations and notifications, all the Facebooky ways of growing that have now been implanted into Instagram. I think we're going to see Instagram become a lot more like Facebook and a lot more commercialized too as they work on Instagram shopping. I think we're going to see a lot more video and messaging, but I don't know that Zuckerberg will allow Instagram to become Facebook's future.
Cool. So nobody's going to be using it in three years.
Well, I mean, of course it's a big part of the future, but I don't know. Facebook is going to start reporting out numbers for the family of apps as opposed to individual apps. So like eventually we won't even know how many people individually use Facebook or individually use Instagram. We will only know how many people use the Facebook family, and Instagram is being branded as Instagram from Facebook. Their messaging team is already reporting to the Facebook Messenger team, their shopping product is built on top of the Facebook Marketplace stack. It's becoming a mega network all feeding into itself.
So it's just a re-skin of Facebook now.
Same data, same numbers, everything's going to be integrated.
Damn. Well, on that note, where can people find the book?
So you can buy this book wherever you buy books. It's available in audiobook and Kindle forms as well. I would encourage you right now to buy from an independent bookstore, there are a lot of resources online for that. In the U.S, I suggest bookshop.org or Indiebound.org. Because right now those bookstores are hurting and your purchase can go a long way towards helping them out. I'm at @sarahfrier on Twitter and Instagram. My DMs are open, tell me what you think!
If you have anything you’d like to see in this Sunday special, shoot me an email. Comment below! Thanks for reading, and thanks so much for supporting Numlock.