The 5 lessons Entrepreneurs MUST learn from the Instagram deal

This a reproduction of the article I wrote for the Sunday Economic Times for the 15th April 2012 edition.

The ‘Instagram Moment’ is here. 

Last Monday, at ten thirty p.m., the world changed. The globe shifted on its axis. Planet earth spun a bit faster. The moon blinked. The Seven Seas parted. Tech entrepreneurs like me, saw the light!!

Facebook bought Instagram for 1 billion US$!

Cough, cough. Are you saying you’ve never heard of either of these Companies? Okay, you’ve heard of one but not the other? Well don’t worry, keep reading!

First, let’s talk numbers.

1 billion dollars, is approx. Rs. 5200 crores.

So let’s assume that you had Rs 5200 and wanted to buy a Company on the Mumbai Stock Exchange. Fancy a solid engineering business? Just pick up Thermax for Rs. 5300 crores.  Wanna be ‘super cool’? Buy Voltas! It’s available for Rs. 3900 crores. Don’t feel like working anymore? Wanna retire? Well, choose The East India Hotels (aka Oberoi) for Rs. 4800 crores or The Indian Hotels (aka Taj) for Rs. 4700 crores!

Having tempted you with these splendid buys, would you allow me to force you instead to buy a business that is less than two years old, has no revenue (yeah, you read right), has no plans to make revenue, and employs just 13 people? Let me add, a business that doesn’t even have a real business plan?!

Well, I am not drunk (or hungover) on a Sunday morning. I am in my senses when I tell you that Facebook has bought a little known Company called ‘Instagram’ (the puny company I was pushing at you), for Rs 5200 crores!!

Now that we’re on the same page, allow me to circle back. Back to my cave. Back to when I saw the flash of light.

There, I saw the Goddess of Internet herself, smiling and shining! She blessed me and said, “Son, your tribe of Internet entrepreneurs has prayed to me long and hard. Your time has come. Now and forever, remember the five stars that will always show you the path to glory. She pointed to five stars that shone like mini suns in a still dark sky.

The Goddess disappeared, but the stars remained, shining bright. In these few days, this is what the five stars have started teaching me:

1. The Zero Revenue Star

Instagram is an ‘app’. (Silly young people make acronyms of everything; during the good old British Raj it was called an ‘application’.) Now, the Instagram app is free (like fresh air and love) that mobile phone users all over the world can use to ‘dress up’ their otherwise banal phone photographs. Users simply use Instagram’s amazing filters and effects on their dull photos and then publish the new ‘polished’ photos on Facebook, Twitter, etc.

Instagram makes you look like Atul Kasbekar or RaghuRai, even though you are really a tax embezzler who doesn’t even know how to use your phone camera.

Now, if you are a Marwari accountant (like me) and are trying to figure out how much you are charged to become an ace photographer, you are in for a shock. Instagram does not charge its users anything. And yet it’s worth 1 billion dollarzzz! [p.s. when the amount is 1 billion dollars, you are supposed to pronounce it as “dollarzzz”, as the Goddess said.]

The Zero Revenue Star teaches me that my meditation should be to delight people, to make them feel special, to make them do things they could never do before – all this, without charging them. In doing so, I in turn, will become very valuable!

2. The Lean Star

Instagram has 13 people. Hmmm. Now, while these folks dress in tees and sneakers, they aren’t ‘lafangas’. Nor are they smart coders or programmers. They are Gods! Remember ‘Ocean’s 12’? Well, these guys are the ‘Instagram’s 13’ and they created a Company worth 1 billion Dollarzzz!

The Lean Star teaches me that you do not need massive manpower to create massive value. You need massive brainpower.

3. The Scale Star

Instagram went from serving 1 lac users to 3 crore users in just 18 months. They grew 300 times in 18 months! Because their service was awesome, their consumers went crazy and the apposphere (atmosphere in which apps live) bent backwards to help Instagram. 

The Scale Star teaches me that on the Internet, I can go from Zero to Hero, if I deliver an extremely easy, elegant and exquisite service. That’s it. Remember the 4 Es –Extremely Easy, Elegant, Exquisite

4. The Zero Marketing Star 

Instagram did not advertise its product. Instead, it used sheer genius to create a product that advertised its consumers! By making consumers feel and look good, Instagram created a massive ‘word of mouth tsunami’ that made people to clamor to sign up for its service. Instagram is close to proving that ‘Viral’ marketing is bigger than Television, Radio and Print advertising, all put together.

The Zero Marketing Star taught me that great products sell themselves. No help required there.

5. The Acquisition Star

Facebook has bought Instagram for 1 billion Dollarzzz. The fat lady has sung and burped.

The Acquisition Star teaches me that if I remain fanatically faithful in creating what I think is ‘delightfully helpful’; then someone else will believe me, my product and buy me. And at that time it will not matter if I have revenues or teams or brand gyaan. 

In the past 96 hours, the Five Shining Stars have begun to redeem me. A struggling Internet entrepreneur, long shunned as someone who burns VC money, dreams of castles in the air, creates companies with zero revenues and demands heft valuations, has seen the light!.

Yes. The Instagram Moment has arrived.

****
Related articles:
What would have happened to Instagram if it was not bought by facebook?

Terabytes of Credit to Asha (as usual) for editing, proof reading and bonsai-ing  :-)

Click to on the image below to read the article on the Economic Times website:

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