Watch : How Instagram built in this one small feature to keep us hooked—and ultimately made the app worth $1 billion


In December 2009, best friends Lucas Buick and Ryan Dorshorst began selling an iPhone app. The app sold for $1.99, and the pair watched eagerly as the download counter climbed. Thirty-six hours after its launch it was the most downloaded app in Japan. Sales rose more slowly in the U.S. but by New Year’s Day U.S. customers had downloaded over 150,000 copies of the app. Apple itself took notice, and soon the app was front-and-center on the Apple Store’s homepage.

The app was called Hipstamatic, and it allowed iPhone users to digitally manipulate the photos they took with the camera built into their phones. With the help of digital film, flashes, and lenses, even naïve photographers could turn mundane shots into masterpieces that mimicked the retro snaps of the 1980s. Experts were paying attention, too. Damon Winter, a New York Times photographer, used the app to take shots of soldiers in Afghani-stan in 2010. The photos won Winter third place in the Pictures of the Year International photojournalism competition, and further enriched the Hipstamatic brand.

Buick and Dorshorst were graphic designers by trade, but they also happened to be intuitive entrepreneurs. To cultivate the app’s retro appeal, they used names like Ina’s 1982 Film, Roboto Glitter Lens, and Dreampop Flash. Their masterstroke was inventing a rich backstory for the app that journalists have since struggled to authenticate. As they told it, in 1982 two brothers from Wisconsin created a camera named the Hipstamatic 100. Their aim was to build a camera that was cheaper than its film, and though they succeeded, they managed to sell only 154 units. The brothers died in a tragic car accident in 1984, and their older brother, Richard Dorbowski, kept the three remaining Hipstamatic 100s in his garage until July 29, 2009, when Buick and Dorshorst told him they wanted to release a digital version of the camera.

Journalists were captivated by the story, and they described Hipstamatic’s romantic history in dozens of feature stories. They were helped by scattered online evidence to support the story: a blog page on the Hipstamatic 100 written by Dorbowski (with photos of his younger brothers in the early 1980s), and Facebook and LinkedIn pages that described Dorbowski as living in Wisconsin and working as chief comptroller at a paper company. It wasn’t until several years later, when other journalists tried to delve deeper, that the backstory crumbled. The three brothers were a figment, and so, apparently, was the Hipstamatic 100. Still, the Hipstamatic app was real, and hundreds of thousands of copies were selling every month. Apple crowned Hipstamatic “2010’s App of the Year,” and the New York Times included the app in its “Top Ten Must-Have Apps for the iPhone” list in November 2010.

Buick and Dorshorst were riding high, but a pair of entrepreneurs living in San Francisco were preparing to release a rival app. Kevin Systrom and Mike Krieger launched Instagram in October 2010. The two apps offered the same basic service, so entering the market ten months late put Instagram at a huge disadvantage.

Though Instagram lacked Hipstamatic’s charming backstory—its name simply combined the words “instant” and “telegram”—Systrom and Krieger were canny businessmen. If 2010 was the year of Hipstamatic, 2011 was the year of Instagram. Hipstamatic remained popular, but its download count slowed, and Instagram soon had a larger base of users. Having crowned Hipstamatic “App of the Year” in 2010, Apple bestowed the same honor on Instagram in 2011. In 2012, Hipstamatic’s user count peaked around five million, and Instagram now has around three hundred million users. But the biggest difference between the apps came on April 9, 2012, when Facebook acquired Instagram for one billion dollars. When Dorshorst read about the acquisition, he was convinced he was reading a headline from satirical newspaper The Onion. He had to double-check. Laura Polkus, a former designer at Hipstamatic, remembered, “We saw Mark [Zuckerberg]’s blog post, and it was like, “Wait, one billion? Like, a billion dollars? What does that mean for us? Does that mean Instagram won?”

Hipstamatic and Instagram offered the same core features, so why did Hipstamatic falter while Instagram continues to grow? The answer lies in two critical decisions that Systrom and Krieger made before they released the app. The first was to make the app free to download. That got users in the door, and it explains in part why so many users downloaded the app early on: there was no risk of spending on a dud, so at worst they could delete the app a couple of days later. But many apps are free, and they still fail miserably. It was the pair’s second decision that made the difference: Instagram users posted their photos on a dedicated social network tied to the app. (Hipstamatic users could upload their photos on Facebook, for example, but Hipstamatic wasn’t itself a stand-alone social network.)

It’s easy to see why Zuckerberg chose to acquire Instagram. He and Systrom shared a similar insight: that people are endlessly driven to compare themselves to others. We take photos to capture memories that we’ll revisit privately, but primarily to share those memories with others. In the 1980s, that meant inviting friends over to watch slides of your recent vacation, but today that means uploading photos of your vacation in real time. What makes Facebook and Instagram so addictive is that every activity you post either does—or doesn’t—attract likes, regrams, and comments. If one photo turns out to be a dud, there’s always next time. It’s endlessly renewable because it’s as unpredictable as people’s lives are themselves.

So what is it about Instagram’s social feedback mechanism that makes it so addictive? People are never really sure of their own self-worth, which can’t be measured like weight, or height, or income. Some people obsess over social feedback more than others do, but we’re social beings who can’t ever completely ignore what other people think of us. And more than anything, inconsistent feedback drives us nuts.

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