You have to be willing to put in the long hours (err, years) and the schlepping to do all the business-y stuff:
* distribution
* monetization
* back end systems for admin users
* sales channels
etc, etc
Or, you can cash out and assimilate, err integrate, with a larger company that has done that hard work and lose control of your destiny. That's OK, most of us don't have full control of our destiny, and building product can be more fun. It's just a choice you should make with your eyes wide open.
I will say that I think he dismisses Snapchat's founders too quickly. Yes, they've been struggling, but they are trying to build a business rather than just integrate with an existing conglomerate.
It will be very interesting to see if Systrom et al can build another product, and if so, if they will try to build a business as well.
It's a soberingly different worldview than product-obsessed, hacker/maker/developer-centric worldview you get on HN a lot of the time. HN definitely skews toward the entrepreneurial/business end of software, but there's still a real emphasis on building great products, talking to users, and faith in the idea that in the long term, the best product will win. Whereas the Stratechery worldview is more like, "figure out sales and do enough of that engineering mumbo-jumbo, and everything will fall into place". I think there's more truth to this than is commonly acknowledged on HN. Eng/product isn't always the center of the damned universe.
I find both views important. I think the best products do tend to win. But reading stratechery has also given me an appreciation for the difficulties inherent in fighting an entrenched competitor, and bootstrapping distribution (how customers discover/use/buy something) from scratch.
On the other hand, Ben (stratechery author) says almost daily, "It's not the technology that matters, it's the strategy". I don't think that's right. A big talking point that comes up over and over with Instagram was how well-built the app was. There was genuine craftsmanship in terms of usability, performance, and a lot of other things that made it a joy to use. That matters.
The only thing I think is outside both of these elements - product quality and viable strategy - is the component of luck be it right place, right time, or catching an unforeseen wave of buzz. The most well known success stories typically owe a non-insignificant amount of debt to good fortune out of the control of the product or strategy. It's a real elephant in the room and it's difficult for ego to acknowledge either in success or failure, but it's real.
Yet that wouldn't have mattered if they hadn't pivoted from a location based app to photo sharing. Technology/product matters to get your foot in the door, but it's strategy/execution what ultimately makes it or breaks it.
Ah, you optimist, you! :)
I think that if you expand the definition of product to include sales and marketing, the answer is yes.
But if you don't, the world is littered with great products that lost to better competition: betamax to vhs, apple to windows.
Though I can't think of any modern examples, so maybe the world has changed.
The incumbent/legacy/first mover advantage is the one thing in tech that allows you to overcome better competition. Yes, as a mature company with a large integrated software suite, sales are extremely important. This does not apply to early stage companies.
There is a gap in "the best product will win". Where is the revenue come from?
> "It's not the technology that matters,
> it's the strategy"
You initially lead with a use case, but end up following how people actually use your product, or competitive products, and iterate on them in order to retain and attract users.
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The broader point here though is that, at least with consumer software, you will not be able to compete with Google AND Facebook AND Snap AND Amazon in any category.
Maybe your product can beat Google+ at social networking, you won't beat Facebook and they'll either buy you or siphon your users. You might be able to build a better enterprise messaging system than LinkedIn but Microsoft will bleed you dry with a better enterprise sales team.
Even new categories that are subsets of broad categories eg. Social/Ephemeral Messages have no chance of surviving, as they are features to existing products that have BN of users.
So the best chance you have as a software startup to compete is to sell to the Cartel (Facebook, Google, Apple, Amazon, Microsoft), and hope that you're given enough lattitude to see the product that you're ruddering play out as long as possible.
From yesterday: https://techcrunch.com/2018/09/24/snapchat-amazon-visual-sea...
I am aware this is not the same as acquisition or total assimilation, but I think it speaks directly to your comments about how Snapchat is trying to create it's business side of things.
You seem to be doing the founders and the team behind Instagram a huge disservice here by accusing them of not being willing to put in the work and riding on Facebook's coattails.
I don't think it is a disservice to say that being acquired and integrated into a larger company means you don't have to focus as much on the business schlep. I think that is the truth.
Zuckerberg tends to avoid monetisation, leaving that to Sales (i.e. Sheryl) and Ads.
Plus, your statement comes off as kind of cynical and snarky ("no shit, guys" is the tone, even though you probably didn't mean it that way). The piece itself makes some pretty interesting, non-obvious points I think.
On the technical side, FB's methodology with acquisitions seemed the most rational. Rather than sucking the new company in they embedded PE's in there for the purpose of giving the tech teams a fast track to using FB resources.
It's not like it's the same as $700 to $4,000, or even from $7,000,000 to $40,000,000. There are things you can buy to spend most of those amounts, but those are things it's not really worth buying multiple of (e.g. houses, super yachts), so at the point you have close to a billion dollars, what does another billion buy you, besides bragging rights?
I imagine there's some impetus to stick around because you want to see what you built succeed, but at some point I imagine you realize it's not really yours anymore, so why not leave and do what you want, instead of what other people want you to do? I mean, you literally have "fuck you" money.
I hope they stuck around to make sure their original team was taken care of, but it's naive to think they'd have C-level control at the parent company after acquisition.
Are there instances where the thesis that “folks who outsource the business side to the acquirer” stay? Salesforce seems good at keeping acquirees but enterprise is different. The acquired companies come with their own revenue and field sales.
Hsieh? I mean, I don't know too much about the inner workings of Zappos but I find it hard to believe that the FB->IG relationship is significantly different from the Amazon->Zappos one.
Then again maybe he's just the exception that proves the rule.
Why? Zappos was minting money and sustainable in their own right well before the acquisition. IG had no datapoints showing they could sustainably make revenue when they were acquired.
https://www.thehindubusinessline.com/companies/how-dentsu-re...
But how many first time entrepreneurs would turn down a $1B offer after 2 years of work?
Guaranteed the writers of these articles have never been in that position.
That has an advantage, which is you can plug into Facebook's monetization model and instantly start making money, but it also has a disadvantage, which is no longer being in total control.
It's a little tautological, but the fact that they took it means they probably wouldn't have succeeded.
- Great app who turned a camera phone into a powerful camera for those who couldn't afford one of those expensive Canon/other brands of good cameras.
- Democratizing photography made phone vendors spend more time build better camera, we're at a point where cameras on certain phones are as a good as stand-alone cameras for photography.
- Filters have been around forever but with filters in instagram a whole generation became addicted to what they're able to do - turn a simple picture in a more interesting picture. To the point where people had to start create the #nofilter hashtag. Snapchat took the filters to the next level or rather the next iteration and also made itself a name because of them.
- Instagram also has it's darkness too: some people say you can get depressed if you browse instagram too much, seeing all those happy pictures of delicious food, beautiful looking humans, cars, paradise-like places, etc. It sounds crazy right? :shrugemojigoeshere:
Short aside: Friends of friends who used to work in the same building with the founders of Instagram told me that on the night of their launch they stayed up till the early morning hours to fix their server issues because their initial instagram app was such a success! Honestly, you can't get more real than that - almost like a movie!
Thanks instagram co-founders for your creativity throughout the years: Although copying most of Snapchat's features wasn't a great move, it was a business decision that worked really well for your userbase..I can smell that being a very Facebook thing to do. I remember Snapchat turning down $3B acquisition offer, I guess that move really showed how much FB wanted Snapchat's features.
Back to Instagram - were the co-founders good businessman? I don't know, instagram pre-acquisition was very cool and ad-free. Now it's ad-ridden and almost an annoyance. Every 3rd post/video/story has ads on it. Blocking those ads is a pain (I still haven't found a universal workaround since ad-blocking doesn't work as well). Another reason why I don't use FB's app.
You can smell the FB influence on Instagram far 10 miles, I would also feel sad to see my own creation being taken over by a bunch of product managers who come from the company who acquired my app because they need to "ad-ify all the things".
Finally, I think instagram is the only app I use on the daily, every single day (more than Uber/Lyft, more than Spotify and as much as Twitter but not as much as Chrome) ! Hope they can find something cool they're passionate about and build the "next" Instagram, even if it's not a camera-app!
I think it was $30 B
But in reality their departure is really part of the business of software, the founders sell out, become exceedingly wealthy. After a few years the disillusionment with being part of a corporate machine (and not in control) sets in and they quit to spend time on their burning man floats. Its always been this way and theres nothing wrong with that.
I think many of us would do exactly the same given the option of struggling for a decade to profitability or a $10m+ exit with a comfortable VP level role.
I find it interesting that Instagram would want to include more adverts, as I find myself drawn to brands/interests without the help of annoying ads.
> Letting Facebook build the business may have made Systrom and Krieger rich and freed them to focus on product, but it made Zuckerberg the true CEO
Instagram's decision to include advertisements is best understood from Zuckerberg/Facebook's view. Even if the local view is that IG adverts are negative, they are likely accretive from the perspective of the entire Facebook enterprise.
Giving a single person full control of a company is great when they're on the right track. These have to be warning shots to employees and investors though.
Is instagram a net negative? Maybe. Are they zombies? No.
Just as content is king, so product will always be king. The ads will follow whoever has the best product, and hence user attention.
Ads are the product that Facebook sells
And the constant amazement at the IG founders' extraordinariness is very tiring. (They are obvioulsy not dumb, but they mainly got lucky, as it's not like there were no other apps with photo taking and filters trying to make it big in/on the Apple App Store at the time.)
Or, license the patent, but why wouldn't Friendster have done the same?
But the first advantage he mentions -- the size of the network -- is a direct result of the product. The point of a good product is to get people to use it which is what grows the network.
Sounds nice on paper.
> It is about finding and developing a business model that lets you determine your own destiny.
But when you sold the business to Facebook, you ultimately agreed to forfeit your ability determine your own destiny to obtain the ability to use their vast resources.
How true this is for life in general.
> entirely stolen from snapchat
> a total sellout
but look what a bold idea and strong leadership brought to instagram!