Understanding Instagram | The Motley Fool


Few people know Instagram better than Bloomberg News tech reporter Sarah Frier. Author of the award-winning book No Filter: The Inside Story of Instagram, she talked with Motley Fool producer Ricky Mulvey about:

  • How parent company Meta Platforms ( FB 0.29% ) affects Instagram’s user experience.
  • CEO Mark Zuckerberg’s role in company acquisitions.
  • The company’s shift into the metaverse.

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This video was recorded on March 20, 2022.

Sarah Frier: They’re always thinking about growth. They’re always thinking about what’s next. They’re always thinking about products they can design, and how they can crush the competition. And they’re not thinking about how to clean up their messes, and they’re not thinking about how to retain the users they already have by making the products higher quality.

Chris Hill: In 2012, Facebook bought Instagram for $1 billion. Today, Instagram is estimated to be worth $100 billion. To get those kind of results, sometimes you have to break a few things along the way. I’m Chris Hill and that was Sarah Frier, tech reporter for Bloomberg News and author of the award-winning book, No Filter: The Inside Story of Instagram. Ricky Mulvey caught up with her to talk about how Facebook’s, now known as Meta Platforms’, focus on growth at all costs affects Instagram’s user experience today, the fundamental reason behind the company’s shift to the metaverse, and a lot more.

Ricky Mulvey: We’re more than 10 years from then-Facebook buying Instagram. Is Instagram in danger of losing that cachet? The co-founders aren’t there anymore. People are moving to TikTok. Instagram is seen as different, and part of that was the building blocks that Kevin Systrom built when founding it, which was, it’s going to be the simple platform. Is it losing that simplicity though? Is it just going to be eaten alive by Facebook?

Sarah Frier: It’s absolutely losing its simplicity, losing what made it great in the beginning. Listen, people went to Instagram because it was just easy. You would go and you knew exactly what to do. You take a photo, you post it with a filter, and suddenly your everyday moments have turned into these nostalgic memories. They have this collection of art about your life essentially. [laughs] Imagine being a new user of Instagram. You’re going and you have five different ways to post video. You could post on your Reels, you can post on IGTV, you can put something in your Highlights, you can put something in your Story. By the way, your Story disappears after 24 hours, but if you put it on the Feed it stays there. But sometimes if your video is too long on the Feed, it’ll bump people to IGTV. It’s just so not simple. There are probably some people listening to these podcasts who don’t even understand half of those words I said, because they’re just using Instagram in the main way that it was always designed in its launch in 2010. There’s always a balance. Platforms have to grow to compete, they have to give their great content creators something fresh and new to stand out with. However, [laughs] you can try to be too many things to too many people. I think that that’s one of the issues at Instagram. Since the founder’s departure, Instagram has become the venue for Facebook to try to fight for the young person demographic. Everything they do is in service of trying to be relevant to young people. Which is to say, they have a competitor to YouTube, they have a competitor to TikTok, they have a competitor to the messaging apps, all within the same product. I think that it gets confusing and I think you’re right, it could ultimately lose the simplicity and purpose that brought people to it in the first place.

Ricky Mulvey: Kevin Systrom and Mike Krieger, what did they hope Instagram would become when they started it in 2010? When Burbn was shutting down and Instagram with starting up, did they have that five-year, 10-year timeline, or was this just the next idea that became a $100 billion asset for Meta?

Sarah Frier: I think that they didn’t anticipate that this would be what it turned out to be. But once they started to see it gain momentum, once they joined Facebook and saw, wait, the way that we do things is really different, people actually like Instagram, they like hosting here, they enjoy tailoring their lives to Instagram. The impact of Instagram on our everyday life — it’s visible. You can see people arranging their weddings, their vacations, the way that they date, the way they dress, the way that they eat, the way that they work out  — all changed because of Instagram. I think when they started to see that and noticed that they started to think, wow, this thing could actually be bigger than Facebook one day. This is something that has real potential to be something that grows in line with popular culture, as regular people started to become influencers and as celebrities started to become influencers. Everyone was trying to work in both directions. I think that Facebook recognized that and instead of letting it thrive in that direction, Mark Zuckerberg became jealous. He became threatened. This was a big surprise in the reporting for my book, No Filter. That Mark Zuckerberg looked at this and said, “We don’t want Instagram to cannibalize Facebook. We don’t want this to become bigger than Facebook. In fact, we want to use the popularity of Instagram to drive people into Facebook.

Ricky Mulvey: One thing you wrote in No Filter that I think really exemplifies that is he, meaning Zuckerberg, asked Systrom to build a prominent link within the Instagram app to send his users to Facebook and alongside the Facebook news feed. In the navigation of all the social networks, other prospects like groups and events, Zuckerberg removed the links to Instagram. Facebook tried to essentially work against the asset that it bought. It didn’t want it to grow bigger than the property that it purchased. Do you think that jealousy, that essentially working against this now multibillion-dollar asset, is that what led the co-founders to leave the company?

Sarah Frier: Absolutely. It wasn’t just that — it was the hands-on direction from Zuckerberg. They were told that they would be able to be independent, and now everything that they were trying to build, Zuckerberg had very strong opinions about. One example being when they did finally launch IGTV, Kevin Systrom, the CEO of Instagram, got a call from Zuckerberg that day or a call from his manager who had just heard from Zuckerberg. It wasn’t congrats on the big launch, the call was, “Your logo looks too much like the Facebook Messenger logo.”

Ricky Mulvey: Was it the lightning bolt?

Sarah Frier: Because it had a squiggly in it. This looks too much like the Facebook Messenger logo, and it was anger. I think that that’s how they thought, “This is how it’s going to go.” When you’re in a position where you can’t get anything done because everything is controversial with your boss, that makes for an uncomfortable future. So now, Adam Mosseri runs Instagram. He’s the former head of news feed. He’s been running it since 2018. And the company, Instagram, is so much more closely integrated with Facebook. You see it in e-commerce, you see it in messaging. In fact, Instagram messaging works under the same team as Messenger, and they’re trying to combine those, or they have combined those products, and they’re going to combine that with WhatsApp. It’s all supposed to become this mega-network, which is ultimately Zuckerberg’s goal, is that he has the largest group of connected humans in the world.

Ricky Mulvey: You also reported on how Systrom called Zuckerberg more of a board member than a boss: “Hey, we’re not going to take you over. We’re going to advise you. The employees are going to stay in place.” What do you think the turning point was? Where they realized, “Oh, when they acquired us they actually bought the company. Even though we put all of our worth into this company, they bought us out and now we have a new boss.” Where do you think that turning point was where Facebook became that boss and not just an advisor to Instagram?

Sarah Frier: Well, I think it was in Kevin Systrom’s interest to frame himself as still the boss for the entirety of his tenure. He didn’t even report to Mark Zuckerberg. That wasn’t his direct manager [laughs] when he was there in the beginning. He reported to someone below Zuckerberg. I think that was in his interest. The thing that really surprised me is, when Instagram started, there was all this myth around Instagram being an independent product within Facebook. Well, when they started, one of the first things that happened is Facebook’s growth team came and asked for Instagram’s numbers, and then said: You know what? We need to run a study to see if Instagram is the reason that people are not posting photos as often on Facebook. We can’t let you grow until we find out the conclusion of that study. Everything was on hold for a bit and [laughs] the Instagram was, what? You just offered $1 billion for a company, which was unheard of for a mobile app at the time, and you’re willing to let this asset wither if it’s at all competitive to Facebook? That seemed crazy to them. That study was inconclusive, and they were allowed to grow. I think Facebook did manage to ignore Instagram for a while because I don’t think they really respected what Instagram was doing. The fact that Instagram was doing direct user outreach and cultivating celebrities, all these things that Facebook thought would be a total waste of time that actually worked. It wasn’t until, I would say 2015, that Zuckerberg said, “I want $1 billion in annual revenue from Instagram.” That was really the first directive that showed Zuckerberg’s ambitions with the products went beyond having this little independent asset, and more toward making up for a slowdown in Facebook’s growth. So that started in revenue. Then in 2016, when Instagram copied Snapchat Stories — that’s the 24-hour disappearing posts that were very popular on Snapchat. Mark Zuckerberg was always about trying to crush the competition, but Facebook hadn’t really ever done it successfully. When Instagram copied Snapchat Stories successfully, and actually started to accelerate their growth, Zuckerberg took notice.

Ricky Mulvey: Your book discusses how Facebook’s paranoia is in its employee handbook, which says, “If we don’t create the thing that kills Facebook, then someone else will.” For the longest time, Facebook’s strategy has essentially been copycatting other platforms. Who could forget Lasso in 2017?

Sarah Frier: We could all forget Lasso.

Ricky Mulvey: We could all forget Lasso. Is that what they’re trying to do with Instagram Stories now with TikTok, which I feel has become just a repository for things that exist on TikTok and now are just copied and pasted to Instagram, or do you see their big growth driver coming from something completely new with either an acquisition or something in the metaverse?

Sarah Frier: You have to look at every move Facebook makes in the context of competition. Because even with the metaverse, even with this area that they are trailblazing in — or they hope that they are trailblazing in — the reason that they are going so hard on the metaverse is because they don’t own an operating system on mobile. For the entire existence of the company, at least as long as it’s had a mobile phone product, it’s been operating in Apple‘s sandbox or Google’s sandbox. They haven’t really had total control over their destiny. I think Apple’s recent changes to its ad privacy rules, which if you follow Facebook, that’s one reason their stock dropped by a quarter, and now it’s down about a third since its earnings in February. That’s why they need to build the metaverse. They need to build an environment that they can control, and they are not beholden to the rules of an Apple or a Google in order to ensure the longevity of their business model. On Instagram, on Facebook, the Reels product, it’s absolutely a copycat of TikTok. What I think is going to become difficult for them is what we learned with Instagram Stories, which is you can’t just copy a product and hope that it works and leave it at that. You have to think about: What do my users actually want? What problem am I trying to solve for them? Is this a need that they have that I’m filling? The reason Stories works so well as a competitor to Snapchat is because it’s solved the problem of users on Instagram having such terrible anxiety about everything they posted. Like, Instagram had a problem with people who were thinking, well, what I’m doing in my life is not Instagram-able, so I’m not going to post. Once you get Instagram Stories, these disappearing posts, then you can post something that you would have otherwise left on the cutting room floor. It really fit into the problem Instagram users had. What problem is Reels trying to solve? It’s trying to solve Meta’s problem, which is that they have this competitor in TikTok. But it’s not trying to solve a problem that Instagram users have.

Ricky Mulvey: Facebook’s made its fair share of mistakes with Instagram. But I think at the core this is a business, they paid $1 billion for, and now it’s worth 100 times that. When you’re talking to early employees at Instagram and Facebook, did they know that core Facebook’s interest would wane? Do you think they had the foresight at the time that they needed that next-generation social media platform?

Sarah Frier: Well, they were rolling their eyes at Facebook from the outset. I think every quarter is the quarter that people think, “Oh, well, maybe Facebook will slow down this time,” and it never really happened until this year, which is another reason that the numbers in February for the end of the year were such a shock. I think that Instagram, even if they saw the numbers on Facebook continue to go up year after year, they saw the way that it was happening. They saw the red dot notifications luring people back to the site, even though there wasn’t really anything valuable for them to see. They saw the emails that Facebook would send out to try to rekindle interest from users who had forgotten about Facebook. They saw the clickbait that would go viral on Facebook, or the junk videos, the visual clickbait, you might call them, where you just end up looking at weird backflip tricks or cake decorating, or [laughs] top 5 tricks for how to use plastic bags. Like, those videos just go viral on Facebook, but they are junk. So Instagram was looking at this thinking like, we actually curate our content and give the best content to people who come. We have this human touch that really is unmatched by Facebook, so I think that we’re going to be winning in the long term. What’s happened now is you see the same lowest-common-denominator content on Instagram. I think that it’s becoming a lot more like Facebook.

Ricky Mulvey: In No Filter, you write that Facebook is a better place to go viral, but Instagram is a better place to spread lies. What led you to that conclusion in you’re reporting?

Sarah Frier: On Instagram, it’s not about the content. It’s about the person. On Facebook, everything can be reshared. On Instagram, it can’t. So when you go to somebody’s profile, you’re seeing only things that they have created, which then makes the profile a good reflection of that person, and you decide — do I want to follow this person? Well, if you follow somebody, you have this connection with him that’s almost like a friendship connection. They are very influential. What they say, how they say it can be a lot more convincing than if you were to just read a post that went viral on Facebook. So when we see misinformation go viral on Instagram, it’s from people who have a relationship with their audience, like an influencer relationship. We’re seeing this especially in wellness. Say you’re a health junkie and you really care about nutrition and you follow this great nutritionist. Then they start to tell you, “Well, I don’t think you should get the COVID vaccine because who knows what’s in it? I’m not getting it. You make your own choice, but I’m not getting it for these reasons.” Just using that as part of their overall content. Well, say this is a person — you’ve followed their diet plan, you followed their workout plan, and now they’re telling you not to do this. You are really going to think about it even if it’s based on misinformation. And that is the way that misinformation works on Instagram. It’s something that is more intimate, and then if you are a content moderator trying to find that and deal with it, you’re not going to as easily find it because it’s not like content bubbles up to the top, because there’s no virality. The way that Facebook systems work, they’re trained by artificial intelligence. Artificial intelligence spots things that have some sort of momentum. Facebook is focused on taking down the stuff that’s causing the most harm first. You’re not really going to find an anti-vaxxer on Instagram, because it just doesn’t bubble to the top the same way it does on Facebook.

Ricky Mulvey: One thing that’s led to Instagram’s success — and also a difficulty I have as a user — is that blurred line between what’s an advertisement and what’s an actual post. At the beginning, you’ve written about how Kevin Systrom had to approve every single ad that ended up on Instagram. And now, their ad platform is very much just integrated within Meta. Is this a problem that still exists for Instagram? That line between what’s an actual post and what is an advertisement? And what is Instagram doing to solve for that problem?

Sarah Frier: Well, the Federal Trade Commission in 2017 said that every ad on Instagram would have to be labeled as such. I don’t think that’s happened. I think that there’s such a blurred line, even more now, because you have creators on Instagram. They may have sponsored content, or they may be just talking about a product they got for free, or it may be their own merchandise. The ambiguity over what is being sold to you and what isn’t — there’s so much ambiguity, but also Instagram is primarily about selling you people. This person who is selling you this product, they also want you to listen to their podcast. They also want you to buy their merch. They also want you to send them tips on Venmo or whatever the case may be. There are all of these ways on Instagram that people are constantly selling. So I would say the line between advertisement and regular content, it’s even blurrier than it was when the FTC said you have to use #ad, #sponsored.

Ricky Mulvey: I don’t even know how the Federal Trade Commission would enforce that.

Sarah Frier: Well, Instagram came up with the way — they said that if you’re working with a brand, you can connect it on their advertising system and so it can say, like if I posted something, I can say “in partnership with Starbucks.” But not everything that you post that’s selling something is going to be in partnership with a brand. Sometimes it’s stuff you’re selling on your own or in partnership with another creator. It’s complicated.

Ricky Mulvey: Separately, you talked to a lot of Facebook employees, you talked to a lot of Instagram employees off the record. What’s it like to work for Mark Zuckerberg? You’ve been around people who have a good temperature of his vibe. Did they like working for him? Was it a hot-cold relationship? What did you see?

Sarah Frier: I think Zuckerberg’s the big man on campus, and what he says goes. I think the way that people think about working for him: It’s like he has this way he envisions the future looking. If you are providing something aligned with that vision, he’s all for it. If you’re not, then don’t even bother. He has the majority voting power. He has the power at the company to get done whatever he wants to get done. It’s his show. I think that people do, when they are in the higher ranks of the company, they do enjoy working with him if they are a product mind or an engineering mind. I think if you are on the operations side, the advertising side, the business side, you’re not going to get Zuckerberg’s attention and you’re not going to get to see the side of him that makes everyone excited to work with him on the building side of things. Which is probably why we’ve seen Facebook do this structuring of their company in such a way that they’re always thinking about growth, they’re always thinking about what’s next. They’re always thinking about products they can design, and how they can crush the competition. And they’re not thinking about how to clean up their messes, and they’re not thinking about how to retain the users they already have by making the products higher quality, besides thinking about it in terms of the ways that can affect growth, like speed, like getting rid of bugs.

Ricky Mulvey: For our last couple of questions, we talked about some of the problems with Instagram, but it is an incredibly powerful force. It’s changed the architecture of our world, whether it’s more exposed light bulbs in coffee shops or sprinkles inside of multilayered cakes. What are some of the surprising ways that you’ve seen Instagram really change the architecture of our visible world?

Sarah Frier: I think one of the biggest is just how everyone can be an entrepreneur on Instagram. That’s something, it’s really life-changing. We think about the creator economy, we think about influencers. You probably imagine a bathing-suit-clad travel influencer getting free stays at a hotel in order to flaunt sunscreen products, or whatever you have in your head when you imagine what an influencer is. In reality, influencers or creators on Instagram are in every single category of visual business. Whether you’re in real estate, or home design, or maybe you’re a motivational business coach, or maybe you have a finance podcast. I think there are people who use Instagram to create a brand in almost every industry now. I’ve seen that become a double-edged sword, because, say you are a person who may get overlooked by the normal gatekeepers in society. You’ve always wanted to be a comedian, but you’re a black woman and you just haven’t been able to get booked at the top clubs in L.A. because they all have white men. You could just start making jokes on Instagram. People will find them. You’ll get noticed, and then maybe you’ll get your big break. I know that’s happened with a lot of people in the entertainment industry, and in other industries in the art world. The downside is, it’s really exhausting to constantly be a brand, really exhausting to have to constantly put up that image. We’ve seen a lot of young people, for instance, comparing themselves to the cool factor on Instagram, and not realizing the corners that other people cut in order to appear more famous or more successful than they actually are. It’s very easy to fake it on Instagram. It’s very easy to buy followers, to buy comments, to manipulate the way your face looks, get rid of your acne, whiten your teeth. So if you are somebody who is trying to make it in the world and you don’t know those tactics, it can be quite depressing. You can feel inadequate.

Ricky Mulvey: Especially people are getting plastic surgery to look more Instagramable. It’s also difficult for comedy, especially stand-up comedy, where it does give you that exposure, but you’ve constantly pressured to post.

Sarah Frier: Somebody might steal your jokes.

Ricky Mulvey: Somebody might steal your jokes. It could take months to develop a joke, and with Instagram and in a lot of cases TikTok now, for comics, you got to pump out new material on a very regular basis to keep up with your following. Also real quick: Just what are some of your favorite Instagram social media rabbit holes when you’re trying to avoid work, maybe, after doing a podcast interview?

Sarah Frier: I love cooking things. One of my favorite accounts is Pasta Grannies. It’s these old ladies in Italy who make amazing pasta that they’ve made in their particular region for years and years and years. That kind of content I think is very feel-good. I also liked that during the course of reporting out my book, I’ve gotten to know people from various corners of the world. Actually, since the publication of my book, too, I hear from people in various countries that I probably would not have heard from in the regular course of business. Somebody from Mexico messaged me yesterday, and somebody in Dubai. I think just getting to have that kind of open dialogue with readers around the world has helped me become more of a global reporter, or have that awareness that these products … Instagram for instance, more than 80% of its users are outside the United States. So when we think about culture, we think about that impact, the economic impact, the societal impact — it’s a very global one.

Ricky Mulvey: Sarah Frier is reported for Bloomberg News in charge of big tech coverage and the author of No Filter: The Inside Story of Instagram. Sarah, thank you so much.

Sarah Frier: Thank you.

Chris Hill: As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. I’m Chris Hill, thanks for listening. We’ll see you tomorrow. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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