Instagram and Facebook: Why business 'experts' must listen to fresh talent if they are to survive
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Instagram and Jeremy Lin: Proof that the hardest people to teach are the 'experts'
Jeremy Lin is a name you may have heard within the past two months. Before becoming part of the starting lineup for the New York Knicks NBA team, Lin was waived by both the Golden State Warriors and the Houston Rockets and continuously assigned to the NBA Development League, which is the minor league basketball association. So, how is it that this man, once an invisible flyspeck to the media, managed to generate a global following in just one week? Well, it’s quite simple. He was given the opportunity. After Lin scored 38 points in one game, Kobe Bryant, one of the best players in the NBA, said, “Players playing that well don't usually come out of nowhere. It seems like they come out of nowhere, but if you can go back and take a look, his skill level was probably there from the beginning. It probably just went unnoticed.” Experts and industry veterans had passed him over, too hypnotized by their own clouds of preconceived notions and knowledge to recognize the diamond in the rough. Not so anymore.
Instagram is a high-tech corporate version of Jeremy Lin. While it wasn’t necessarily dismissed outright in its early years, the speed at which it has grown from seed money to a billion dollar purchase -- a mere two years -- is turning heads. What other undiscovered gold mines are just under the radar out there, either already in development or waiting to be given the right opportunity?
Cultivate and encourage, otherwise the money and talent runs dry
Why, given the countless business examples of ostriches with their heads in the sands, do business decisions regarding company strategy and employees continue to stubbornly browbeat fresh ideas and perspectives into dust? These days, given the easy cross-pollination of intellectual capital in the high-tech industry, companies are losing Jeremy Lins and Instagram opportunities left and right.
Instagram creators, Kevin Systrom and Mike Krieger, for example, obtained a $500,000 seed money deal from Baseline Ventures and Andreessen Horowitz, after showing them a prototype during a party in early 2010. Given the rising popularity of online photos, Instagram’s creators had recognized a very specific niche that needed to be filled. Investors, who are not necessarily tech savvy themselves, must have seen in Instagram’s team and prototype, a very clear vision and simple plan. However, those who had either passed up the opportunity to invest or experts who did not see the value in Systrom and Kriefer's ideas, must be kicking themselves now that Facebook bought Instagram for $1 billion in cash and stock! Just as the Knicks quickly signed Lin for the season after discovering his skills, Facebook wanted to lock Instagram under its wing before it rose so high that it would be looking down on Facebook.
As a user of both Facebook and Instagram, I must admit that ever since I downloaded the Instagram app on my iPhone, I use Facebook almost 70 percent less than I once did. The last time I uploaded a picture on Facebook was in November of 2011. The last time I uploaded a picture on Instagram, however, was yesterday. I am obviously not the only person following this trend as Instagram has attracted 30 million users in just two years -- with only 13 employees!
Facebook's IPO: Where does Instagram fit in?
Now, here’s where the inevitable controversy comes in. Facebook is in the middle of a $100 billion initial public offering (IPO), meaning it’s about to go public. So what? Well, there’s this little thing called a ‘federally required quiet period.’ When a company is in the process of going public so that any individual can buy a share, the management staff and employees must remain silent in regards to company affairs, especially financial affairs. While many critics are accusing Facebook of violating this regulation, Facebook is confident that it is abiding by the distinct exceptions of open activity.
The US Securities and Exchange Commission’s “Quiet Period” memo states, “Communications by issuers more than 30 days before filing a registration statement will be permitted so long as they do not reference a securities offering that is the subject of a registration statement. All reporting issuers are, at any time, permitted to continue to publish regularly released factual business information and forward-looking information.” If the SEC agrees, and it seems they haven’t objected thus far, then Facebook will most likely just have to revise its S-1 IPO form to reflect its purchase of Instagram. The one thing Mark Zuckerberg or anyone from Facebook’s management team shouldn’t do is respond to the aggressive criticisms against the acquisition or Facebook’s financial expenditures.
One instance of an IPO gone south is the case of Groupon, a website that offers tons of daily discounts. Its CEO, Andrew Mason, was in violation of the quiet period rules last year after a contentious memo that he sent to his employees regarding the heavy scrutiny they were receiving from the media leaked to the public. Groupon suffered a rough patch as the SEC began to investigate the memo and its long list of claims concerning financial affairs.
When the 'experts' begin wagging their tongues, just smile and nod
Zuckerberg has remained deaf to critiques, tuning out the sermons and lectures by industry 'experts,' and instead just went ahead and posted one positive announcement on his Facebook page: “I'm excited to share the news that we've agreed to acquire Instagram and that their talented team will be joining Facebook. For years, we've focused on building the best experience for sharing photos with your friends and family. Now, we'll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”
Is that the real reason Facebook bought a $500 million company for $1 billion? Many people think not. One guy on Facebook commented on Zuckerberg’s post saying, “My translation: Facebook was scared ... and knew that for first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects. Why? Because Facebook is essentially about photos, and Instagram had found and attacked Facebook’s achilles heel -- mobile photo sharing.” Sounds plausible considering Instagram became the number one free app in the Android store only after a week of its launch on April 3rd. And overall, in all app stores, Instagram is ranked number three in free apps, while Facebook is ranked number eight. No doubt Facebook jumped on its prey before any of the other companies on the prowl got too close.
So it’s of no surprise that many Instagram fans are outraged by Facebook’s ‘selfish’ move that will now ‘ruin’ their Instagram experience. These voices of the opposition argue that this is just another Facebook scheme to get their hands on more data and continue to violate privacy through what Facebook calls ‘frictionless sharing.’ However, Zuckerberg promises otherwise: “We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook. That’s why we’re committed to building and growing Instagram independently.”
Marketing deception? I guess there’s only one way to find out. Keep posting. If Facebook knows what's good for it, though, it will let Instagram grow and flourish through encouragement and independence, rather than trying to strangle its development and creativity with 'expert' micromanagement.
As for Zuckerberg, why is he so consistently confident and immune to criticism? Because he's a young genius whose ideas created a worldwide phenomenon. Because he's never believed that opinion was worth much unless it had the numbers, facts and market research to back it up. Take a look at Instagram, the rise of photo sharing in social media and the $1 billion price tag. The numbers speak for themselves.