Note to startups: The network is all that really matters

It’s probably an understatement to say a lot of digital ink has been spilled about Facebook’s $1-billion acquisition of Instagram, a deal that sent shock waves through the startup community, the venture-capital industry and the technology sector like a boulder dropped into a swimming pool. Many people are questioning the value of Instagram — something that appears to be just a childishly simple simple photo-sharing app — and have ascribed all kinds of motives to Facebook’s interest in it. But as Om has noted in his own posts on the acquisition, there is a lot more to Instagram than meets the eye, and the biggest lesson that I think needs to be learned is: Nothing is more important than the network.

A lot of the coverage of Instagram, especially from people who don’t seem to have ever used the app, has focused on the filters that are provided for users, some of which add a 70′s-style look or an old-fashioned border or a sepia tone to a photo before it is posted. In fact, much of the criticism that the service has gotten — and some of the scepticism around the deal with Facebook — seems to be based on the idea that all Instagram does is make people’s pictures look worse by adding grainy filters:

This reminded me of the criticism that was aimed at Twitter before it became mainstream — one that still surfaces from time to time — that the “micro-blogging” service was all about telling people what you had for lunch. As anyone who has spent any time on the network understands, it has very little to do with that at all, and is in fact capable of being an incredibly powerful tool for spreading information about important events, including the “Arab Spring” revolutions in Tunisia and Egypt and Libya.

As I tried to argue during the debate over whether Twitter or Facebook was responsible for those events, the important thing is not the tool itself — it’s the power of the network. The way that both Twitter and Facebook allow people to publish their thoughts, post photos and connect with others who share their views about an event is the powerful thing, not the specific features of the tool or service. And while Instagram may not have played a role in those kinds of globally significant events (at least, not yet) it shares the same kind of power in a smaller way — and that is what helped make it so successful.

Connections matter more than features

When I first started using Instagram, I thought it was just another photo-sharing app — of which there seemed to be dozens at the time. But one of the things Instagram did differently from the other apps I experimented with was that it connected quickly and easily to other networks where I might want to share photos, including Facebook, Twitter, Tumblr and Flickr. That made it instantly useful to me, even before I had developed any kind of attachment to Instagram itself, because it leveraged my attachment to those other networks. As more than one person has noted, it achieved what Flickr should have been able to achieve, if Yahoo had had any brains about mobile or apps.

After I started using it to connect and share photos with other networks, I became more and more attached to the internal network within Instagram: I connected with people who I wasn’t connected to on those other networks, and began “liking” and commenting on their photos (and they on mine). I quickly built up a critical mass of users who I wanted to follow, and the app began to seem almost indispensable — and that is exactly where you want to be with any service. It had nothing to do with the filters, and everything to do with the network effects of connecting with other users.

Instagram is only the latest example of this. Draw Something — another incredible startup story that saw the almost-deceased company OMGPOP sold to Zynga for $200 million because of the success of that single game — also shows how powerful even a simple game can be when it incorporates network effects, something that games like Words With Friends and Farmville have also shown, and something Zynga knows very well. And those network effects are arguably even more important with a mobile app like Instagram, since connecting with others is fundamentally what we do with our mobile devices.

There are other lessons to be learned from Instagram, of course, such as the importance of keeping an app as simple as possible, and the value of sticking to your knitting instead of trying to become everything to everyone. But for me, the thing I keep coming back to that made Instagram different was the connection both to external networks and the value of its internal social effects — and that can make all the difference, regardless of what kind of app you are developing. Whether Facebook understands and retains that value after the acquisition remains to be seen.

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