Kevin Systrom: Instagram | Lex Fridman Podcast #243

1. 0:00 – 0:22

   Introduction

   1. LFLex Fridman0:00

      The following is a conversation with Kevin Systrom, co-founder and longtime CEO of Instagram, including for six years after Facebook's acquisition of Instagram. This is the Lex Fridman podcast. To support it, please check out our sponsors in the description, and now here's my conversation with Kevin Systrom.

2. 0:22 – 42:29

   Origin of Instagram

   1. LFLex Fridman0:22

      At the risk of, uh, asking the Rolling Stones to play Satisfaction, let me ask you about the origin story of Instagram.

   2. KSKevin Systrom0:28

      Sure.

   3. LFLex Fridman0:29

      So, maybe some context. You, like we were talking about offline, grew up in Massachusetts, learned computer programming there, liked to play Doom II-

   4. KSKevin Systrom0:38

      (laughs)

   5. LFLex Fridman0:38

      ... uh, worked at a vinyl record store, then you went to Stanford, turned down Mr. Uh, Mark Zuckerberg and Facebook, went to Florence to study photography. Those are just some random, beautiful, impossibly brief glimpses into a life. So let me ask again, can you take me through the origin story (laughs) of Instagram, given that context?

   6. KSKevin Systrom0:59

      Yeah. You basically set it up. Um...

   7. LFLex Fridman1:01

      (laughs)

   8. KSKevin Systrom1:01

      All right. So, uh, we have a fair amount of time so I'll go into some detail, but basically what I'll say is, um, Instagram started out of a company actually called Burbn, and it was spelled B-U-R-B-N.

   9. LFLex Fridman1:15

      Mm-hmm.

   10. KSKevin Systrom1:16

       And, uh, a couple of things were happening at the time. So if we zoom back to 2010, not a lot of people remember what was happening in the dot-com world then, uh, but check-in apps were all the rage.

   11. LFLex Fridman1:29

       Mm-hmm.

   12. KSKevin Systrom1:29

       So, this-

   13. LFLex Fridman1:30

       What's a check-in app?

   14. KSKevin Systrom1:30

       Uh, Gowalla, Foursquare, Hot Potato.

   15. LFLex Fridman1:34

       So I'm at a place, I'm gonna tell the world that I'm at this place?

   16. KSKevin Systrom1:37

       That's right.

   17. LFLex Fridman1:38

       What's- what's the idea behind this kind of app, by the way?

   18. KSKevin Systrom1:41

       You know what? I- I'm gonna answer that, but through what Instagram became and why I believe Instagram replaced them.

   19. LFLex Fridman1:47

       Mm-hmm.

   20. KSKevin Systrom1:48

       So the whole idea was to share with the world what you were doing, specifically with your friends, right?

   21. LFLex Fridman1:52

       Mm-hmm.

   22. KSKevin Systrom1:52

       Um, but they were all the rage, and Foursquare was getting all the press. And I remember sitting around saying, "Hey, I want to build something but I don't know what I want to build. What if I built a better version of Foursquare?" And I asked myself, "Well, why don't I like Foursquare?" Or, "How could it be improved?"

   23. LFLex Fridman2:09

       Right.

   24. KSKevin Systrom2:09

       Um, and basically, I sat down and I said, "I think that if you have a few extra features, it might be enough," one of which happened to be posting a photo of where you were.

   25. LFLex Fridman2:19

       Mm-hmm.

   26. KSKevin Systrom2:20

       There were some others. It turns out that wasn't enough. My co-founder joined, we were going to attack, uh, you know, Foursquare and the likes and- and try to build something interesting, um, and no one used it, no one cared because it wasn't enough. It wasn't- it wasn't different enough, right? So one day, we were sitting down (laughs) and we asked ourselves, "Okay, it's a come to Jesus moment. Are we gonna do this startup? And if we're going to, we can't do what we're currently doing, we have to switch it up. So what do people love the most?" So we sat down and we wrote out three things that we thought people uniquely loved about our product that weren't in other products. Photos happened to be the top one. So sharing a photo of what you were doing, where you were at the moment was not something products let you do really. Facebook was like, "Post an album of your vacation from two weeks ago."

   27. LFLex Fridman3:10

       Mm-hmm.

   28. KSKevin Systrom3:10

       Right? Twitter allowed you to post a photo, but their feed was primarily text and they didn't show the photo inline, or at least I don't think they did at the time. So even though it seems totally stupid and obvious to us now, at the moment then, posting a photo of what you were doing at the moment was, like, not a thing.

   29. LFLex Fridman3:30

       Mm-hmm.

   30. KSKevin Systrom3:32

       So we decided to go after that because we'd noticed that people who used our service, the one thing they happened to like the most was posting a photo. So that was the beginning of Instagram. And yes, like, we went through and we added filters and there's a bunch of stories around that, but the origin of this was that we were trying to be a check-in app, realized that no one wanted another check-in app. It became a photo sharing app, but one that was much more about what you're doing and where you are. And that's why when I say I think we replaced check-in apps, it became a check-in via a photo rather than saying your location and then optionally adding a photo.
3. 42:29 – 1:01:34

   New social networks

   1. KSKevin Systrom42:29

   2. LFLex Fridman42:29

      Do you think it's possible ... You said you're not saying it's necessarily a good idea to launch a social network. Do you think it's possible today, maybe you can put yourself in those shoes, to launch a social network that achieves the scale of a Facebook or a Twitter or an Instagram and maybe even greater scale?

   3. KSKevin Systrom42:51

      Absolutely.

   4. LFLex Fridman42:53

      How do you do it?

   5. KSKevin Systrom42:55

      (laughs)

   6. LFLex Fridman42:55

      Asking for a friend.

   7. KSKevin Systrom42:56

      Yeah. If I knew, I, I'd probably be doing it right now-

   8. LFLex Fridman42:59

      Yes.

   9. KSKevin Systrom42:59

      ... and not sitting here, (laughs) so, um-

   10. LFLex Fridman43:01

       So also, I mean, there's a lot of ways to ask this question. One is create a totally new product/market fit, uh, create a new market, create it something like Instagram did, which is, like, create something kind of new, or literally out-compete Facebook at its own thing, or out-compete Twitter at its own thing.

   11. KSKevin Systrom43:19

       The only way to compete now if you want to build a, a large social network is to look for the cracks, look for the openings. Um, you know, no one competed w- w- v- r- I mean, no one competed with the core business of Google. No one competed with the core business of Microsoft. You don't go at the big guys doing exactly what they're doing. Instagram didn't "win," quote, unquote, because it tried to be a visual Twitter. Like, we spotted things that either Twitter wasn't going to do or refused to do, images in feed for the longest time, right? Or that Facebook wasn't doing or not paying attention to because they were mostly desktop at the time, and we were purely mobile, purely visual. Often, there are opportunities sitting there. You just have to... Y- you have to, you have to figure out, like... Uh, I think, like, there's a strategy book, I can't remember the name, but talk about moats and just, like, the best place to play is where your competitor, like, literally can't pivot because structurally they're set up not t- to be there, and that's where you win. Um, and what's fascinating is, like, do you know how many people are like, "Pfft, images? Pfft, Facebook does that. Twitter does that"? I mean, how wrong were they? Really wrong. And these are some of the smartest people in Silicon Valley, right? But now Instagram exists for a while. How is it that Snapchat could then exist?

   12. LFLex Fridman44:45

       Mm-hmm.

   13. KSKevin Systrom44:45

       Makes no sense. Like, plenty of people would say, "Well, there's Facebook, no images. Okay, okay, I mea- Instagram, I'll give you that one."

   14. LFLex Fridman44:52

       (laughs)

   15. KSKevin Systrom44:52

       "But wait, now another image-based social network's gonna get really big?" And then TikTok comes along. Like, the prior... So you asked me, "Is it possible?" The only answer an- reason I'm answering yes is because my prior is that it's happened once every, I don't know, three, four, or five years consistently. And I can't imagine there's anything structurally that would change that. Um, so that's why I answer that way, not because I know how. I just... When you see a pattern, you see a pattern, and there's no reason to believe that's gonna stop.

   16. LFLex Fridman45:25

       And it's subtle too because, like you said, uh, Snapchat and TikTok, they're all doing the same space of things. But there's something fundamentally different about, like, a three-second video and a five-second video and a 15-second video and a one-minute video and a one-hour video.

   17. KSKevin Systrom45:42

       Right?

   18. LFLex Fridman45:42

       Like, fundamentally different.

   19. KSKevin Systrom45:43

       Fundamentally different. I mean, I think one of the reasons Snapchat exists is because Instagram was so focused on posting great, beautiful, manicured versions of yourself throughout time. And there was this enormous demand of like, "Hey, I really like this behavior. I love using Instagram, but man, I just, like, wish I could share something going on in my day?" (laughs) Like, "Do I really have to put it on my profile? Do I really have to make it last forever? Do I really..." Um, and that opened up a door. It created a market, right? And then what's fascinating is Instagram had an Explore page for the longest time. It was image-driven, right? Um, but there's absolutely a behavior where you open up Instagram, and you sit on the Explore page all day. That is effectively TikTok, but obviously focused on videos. And it's not like you could just put the Explore page in TikTok form and it works. It had to be video. It had to have music. These are the hard parts about product development that are very hard to predict. But, um, they're all versions (laughs) of the same thing with varying... If you line them up in a bunch of dimensions, they're just, like, kind of on... They're different values of the same dimensions, which is, like, I guess easy to say in retrospect. But, like, if I were an entrepreneur going after that area, I'd ask myself, like, "Where's the opening? What needs to exist because TikTok exists now?"

   20. LFLex Fridman47:08

       So I wonder how much things that don't yet exist and can exist is in the space of algorithms, in the space of recommender systems, so in the space of how the feed is generated. So we kind of talk about the actual elements of the, um, the content. That's what we've been talking, the difference bet- between photos, between, uh, short videos, longer videos. I wonder how much disruption is possible in the way the algorithms work, 'cause a lot of the criticism towards social media is in the way the algorithms work currently. And it feels like... First of all, talking about product/market fit, there's certainly a hunger for, um, social media algorithms that do something different. I don't think anyone... Everyone's, like, complaining, "This is not doing... This is, this is hurting me, and this is hurting society. But I keep doing it 'cause I'm addicted to it." And they say, "We want something different, but we don't know what."

   21. KSKevin Systrom48:11

       (laughs)

   22. LFLex Fridman48:11

       It feels like a (laughs) , uh, just different, uh... It feels like there's a hunger for that. But that's in the space of algorithms. I wonder if it's possible to disrupt in that space.

   23. KSKevin Systrom48:22

       Absolutely. Um, I have this thesis that the worst part about social networks is that they're, uh... (laughs) is the people. (laughs) It's, it's a, uh, it's a line that sounds funny, right? Because, like, that's why you call it a social network. Um, but what do social networks actually do for you? Like, just think, mm, you know, like, imagine you were an alien, and you landed, and someone says, "Hey, there's this site. It's a social network. We're not gonna tell you what it is, but just what does it do?" And you had to explain it to them. Just two things. One, uh, is that...... people you know and have social ties with, uh, distribute updates through, whether it's, uh, you know, photos or videos about their lives so that you don't have to physically be with them but you can keep in touch with them. That's one. That's like a big part of Instagram, that's a big part of Snap. It is not part of TikTok at all. So there's another big part, which is, there's all this content out in the world that's entertaining, whether you wanna watch it or you wanna read it.

   24. LFLex Fridman49:25

       Mm-hmm.

   25. KSKevin Systrom49:25

       Um, and matchmaking between content that exists in the world and, uh, people that want that content turns out to be like a really big business, right?

   26. LFLex Fridman49:35

       Search and discovery, would you... ?

   27. KSKevin Systrom49:37

       Search and discovery, but my point is, it could be video, it could be text, it could be websites, it could be... I mean, think back to, um, think back to like Digg, right? Or StumbleUpon or...

   28. LFLex Fridman49:48

       Yeah.

   29. KSKevin Systrom49:48

       Right?

   30. LFLex Fridman49:49

       Nice. Yeah.
4. 1:01:34 – 1:24:36

   Selling Instagram to Facebook

   1. LFLex Fridman1:01:34

      I have to ask about April 2012 when, uh, Instagram, along with its massive employee base of 13 people-

   2. KSKevin Systrom1:01:44

      (laughs)

   3. LFLex Fridman1:01:44

      ... was sold to Facebook for one billion dollars. What was the process like on a business level, engineering level, human level? What was that process of selling to Facebook like? What did it feel like?

   4. KSKevin Systrom1:01:56

      So, I wanna provide some context which is, I worked in corporate development at Google, um, which not a lot of people know, but corporate development is effectively the group that buys companies, right? You sit there and you acquire companies. And I had sat through so many of these meetings with entrepreneurs. We actually... Fun fact, we never acquired a single company when I worked in corporate development, so I can't claim that, um, I have like, a lot of experience. Um, but I had enough experience to understand, okay, like what prices are people getting and- and what's the process? And- and as we started to grow, you know, th- we were trying to keep this thing running and we were exhausted and we were 13 people. And I mean, we were... I'm trying to think back. It's probably '27? 37 now. Um, so young and w- on a relative basis, right? And, uh, we're trying to keep the thing running. And then, you know, we go out to raise money and we're kind of like the hot startup at the time. And I remember going into a specific VC and saying, "Our terms we're looking for are, uh, we're looking for a $500 million valuation." And I've never seen so many jaws drop, all in unison, right? And I was like, thanked and walked out the door very kindly after (laughs) . Um, and then I got a call the next day, uh, from someone who was connected to them and said, they said, "We just wanna let you know that like, uh, it was pretty offensive that you asked for a $500 billion valuation." And I- I can't tell if that was, um, like just negotiating or what, but it's true. Like no one offered us more, right? So, we were-

   5. LFLex Fridman1:03:33

      So, can you clarify the- the number again? You said how many million?

   6. KSKevin Systrom1:03:37

      500.

   7. LFLex Fridman1:03:38

      500 million, okay.

   8. KSKevin Systrom1:03:39

      500 million. Yeah, half a billion.

   9. LFLex Fridman1:03:41

      Yeah.

   10. KSKevin Systrom1:03:41

       Um, so in my mind, I'm anchored. Like, okay, well literally no one's biting at 500 million and eventually, we would get Sequoia and Greylock and others together at- at 500 million basically, uh, post. Uh, it was 450 pre. I think we raised $50 million. But just like no one was used to seeing $500 million companies then. Like I- I don't know if it was because we were just coming out of the hangover 2008 and things were still in recovery, um, mode. Uh, but then along comes Facebook. And after some negotiation, we've 2X-ed the number from half a billion to a billion. Yeah, seems pretty good, (laughs) you know. And, uh, I think Mark and I really saw eye to eye that this thing could be big. Um, we thought we could ha- Their resources would help us scale it. And in a lot of ways, it de-risks... I mean, it de-risked a lot of the employees' lives for the rest of their lives, including me, including Mike, right? Um, I think I might have had like 10 grand in my bank account at the time, right? Like, we're working hard. We had nothing. Um, so on a relative basis, it seems very high. And then I think the last company to exit for anywhere close to a billion was YouTube that I could think of.

   11. LFLex Fridman1:04:57

       (laughs)

   12. KSKevin Systrom1:04:58

       And, uh, and thus began the giant long bull run of 2012 to all the wa- all the way to where we are now, where, um... I saw some stat yesterday about like how many unicorns exist and it's absurd. But then again, never underestimate technology and like the value it can provide. And man, costs have dropped and man scale has increased. And you can make businesses make a lot of money now. But on a- on a fundamental level, I don't know, like, how do you describe the decision to sell a company with 13 people (laughs) for a billion dollars?

   13. LFLex Fridman1:05:33

       So, first of all, like how... Did it take a lot of guts to s- sit at a table and say 500 million or one billion with Mark Zuckerberg? It seems like a very large number with 13. Like, especially, like you said-

   14. KSKevin Systrom1:05:46

       It doesn't seem, it is. (laughs)

   15. LFLex Fridman1:05:47

       It is.

   16. KSKevin Systrom1:05:48

       They're all large numbers. (laughs)

   17. LFLex Fridman1:05:49

       Especially, like you said before, the unicorn parade.

   18. KSKevin Systrom1:05:55

       I like that. I'm gonna use that. Uh, unicor-

   19. LFLex Fridman1:05:57

       The unicorn parade.

   20. KSKevin Systrom1:05:58

       ... nicorn parade, yeah. The, uh, the- the-

   21. LFLex Fridman1:05:59

       You were the head of the unicorn parade.

   22. KSKevin Systrom1:06:01

       It's the, uh... Yeah, it's a massive unicorn parade. Um, okay, so, no. I mean, we knew we were worth "a lot", but we didn't... I mean, there was no market for Instagram. I mean, it's not... You could mark- You couldn't mark to market this thing in the public markets. You didn't quite understand what it would be worth or was worth at the time. So, in a market- an illiquid market where you have one buyer and one seller and you're going back and forth, and well, I guess there were like VC firms who were willing to, you know, invest at a certain valuation. So, I don't know. You just go with your gut. And, uh, and at the end of the day, I would say, um, the hardest part of it was not realizing, uh... Like when we sold, it was tough because like literally everywhere I go, restaurants, whatever, like for a good six months after, there was a lot of attention on the deal. A lot of attention on the product, a lot of attention... It was kinda miserable, right? (laughs) And you're like, "Wait, like I made a lot of money but like why is this not great?" And it's because it turns out, you know... And I don't- I don't know, like I don't really keep in touch with Mark, but I've got to assume his job right now is not exactly the most happy job in the world. It's really tough when you're on top and it's really tough f- when you're in the limelight. So, the decision itself was like, "Oh cool, this is great. How lucky are we," right? Um-

   23. LFLex Fridman1:07:29

       So, okay, there's a million questions I want to ask.

   24. KSKevin Systrom1:07:30

       Yeah, go, go.

   25. LFLex Fridman1:07:31

       First of all-

   26. KSKevin Systrom1:07:32

       Go, go.

   27. LFLex Fridman1:07:32

       First of all-Why (laughs) ... Why is it hard to be on top? Why did you not feel good? Like, ca- can you dig into that? I- it always, um... I've heard like Olympic athletes say afterward they win gold, they, they get depressed.

   28. KSKevin Systrom1:07:48

       Mm. Mm-hmm.

   29. LFLex Fridman1:07:48

       Um, is it something like that where it feels like it was kind of like a thing you were working towards?

   30. KSKevin Systrom1:07:56

       Yeah. Sure.

Episode duration: 2:44:38