Selling on Facebook is now a bit easier to track as the company is readying a new analytics tool that allows e-retailers to see which ads are most effective.
The conversion tracking tool should be a popular one, but its functionality does not give critical insights some companies might want. The people who click the ads will remain anonymous. Good for privacy, not quite as helpful to ad sellers. Still, it's a step forward for the one billion member strong Facebook as it tries to chip away at Google's stranglehold on online advertising.
Best for Direct Response Marketing
Retailers who have been considering buying Facebook ads will likely find the tool useful, and that could help sway them to advertise on Facebook rather than Google. It couldn't hurt anyway. Any insight companies can get from advertising campaigns will help in targeting the next time around.
One way the tool will help do this is to allow companies to sell new ads to people with similar attributes to those who responded to a previous ad. It's worth noting here that Facebook defines conversions as any desired action taken, like registering for a newsletter, and not just completed sales.
Once the tool launches at the end of the month, marketers will be able to track more than just the numbers of clicks or numbers of app downloads triggered.
Facebook Ads vs Pages
Of course, there is more than one way to make money on Facebook, and trying to convert Likes into dollars is one popular way. This has its own set of pitfalls, however, and that is one of the main reasons why Facebook ads hold so much promise.
Back in September, Facebook CEO Mark Zuckerberg said Facebook was focused on mobile, and so far that has helped the company's bottom line. For customers though, convincing them to advertise on Facebook might be a tougher sell because of the shadow of Google. Google shows relevant ads during a search, and that immediacy is hard to beat.
Along with new features like Sponsored Stories, Facebook's tracking tool is one more piece the company can use to get advertisers on board. Tell us in the comments if you have a loyal Facebook following and if your Page is a moneymaker.
Facebook is experimenting with a new comment structure. The social network is testing a threading comment system that aims to make comments more conversational.
Within the last year, Facebook has gone through a string of minor updates, including the change from Walls to Timeline and allowing users to edit their comments.
It's All About the Conversation
This week, Facebook has introduced a possible update to their commenting system. The company has started a testing a thread-based comment system because they've noticed that sometimes comments tend to get buried if a lot of people are replying to a single thread.
With this new feature, users will still be able to reply to an initial post, but will also be able to reply to a particular comment. All of the comment replies will be curated together, making the thread easier to navigate so users won't overlook important comments and can also ignore those they don't find relevant.
This change isn't only beneficial to individual users, but businesses as well. Posts made by companies about their products or services may receive hundreds of comments and likes a day. With this new feature they’ll be able to sort through what their fans are saying to make sure they have addressed all of their costumers concerns. As for customers, they’ll be able to easily find comments that are similar to what they wanted to say and either comment or like it — without having to weave through 100 comments or risk posting the same information twice.
To Like or Not to Like
Facebook’s like button, which was introduced in 2009, is also playing a pivotal role in this new comment system. Comments with the most likes will automatically be rotated toward the top of the comment section. This will allow the most popular comments to be the focus and allow users to highlight the most relevant or interesting replies.
It’s unknown at this time if Facebook plans to stretch this new update beyond its trial users and offer it to the entire network.
Being Compatible with Facebook
Facebook aren't the only ones that have been rolling out updates that aim to improve customer experience within its social network.
It’s time for the Facebook App of the Week. This week we're discussing the Static HTML iFrame Facebook Tab app which enables users to create custom tabs for their Facebook fan pages.
The app, which is designed by Woobox gives users the ability to customize a Facebook tab with either an image, static html code or with Static Markup Language (SML). In doing this, users are able improve their social interactions with their community and broaden their Facebook presence.
How Does Static HTML iFrame Work?
By either clicking through the app page on Facebook or through the Woobox website, users can install the tool. From there, they choose which of their pages they’d like to add a tab to and customize the settings for that tab.
From the settings page they can change the URL, page source, non-fan page source, tab icon and tab name. By using this app, users have access to a variety of other features. These include:
Fan-Gating: Users can choose what content is available to those who have liked their page and those who haven’t.
Custom Tab Icons: Users can change the icon on the tab so it’s better suited to the tab’s content.
HTML/JavaScript/ CSS Support: There aren't any restrictions on what type of code is used, any of the three mentioned are accepted.
Tracking Visits: Users can use Google Analytics to track who visits their individual tabs.
External URLs: If users want to make a externally hosted page show up in a tab, they merely have to put the URL into the settings and select its height.
The Cost of Static iFrame HTML
Users who install this app are automatically given a free account with Woolbox. There are also four paid, non-long term commitment options. Users can change or cancel their plan at any time.
Free: By keeping their free account, users have an unlimited fan per page limit, unlimited promotions tab, YouTube, Twitter, Pinterest and Instagram page tab options, limited fan-gating options and limited coupons.
Plus: For US$ 10 per month, users have all the features in a free account, but also gain unlimited access to the fan-gating functionality.
Pro: At US$ 29 a month users can have 20,000 fans per page. Additional features for the pro option include full access to coupons, as well as photo contests, instant wins, polls, group deals and rewards.
Pro100: For US$ 99, users have all of the previously mentioned features, but the fan limit per page is 100,000.
Pro250: At US$ 249, those who choose this options have all of the possible features, as well as an unlimited amount of fans per page.
Final Thoughts
This is a simple, yet useful app for those who aren't technically savvy or have a limited marketing budget, but still want to their page tabs to have a professional look.
Content on 10-inch tablets is mostly shared by email, while content on mini-tablets and the iPhone is more often shared through Facebook. That’s one of the findings of a new report about Content Consumption on the Touch Web.
The report, by tablet publishing and ad provider Onswipe, is based on more than 150 million touches per month that the New York City-based company registers on its platform.
More Sharing on iOS
On minis and the iPhone, the study found that email remains the second choice for sharing, at 29 percent for minis and 32 percent for the iPhone compared to 42 percent for Facebook sharing on minis and 50 percent on the iPhone. On 10-inch tablets, the numbers are nearly reversed, with 48 percent of users sharing via email, compared to 32 percent through Facebook.
Twitter sharing is less consistently related to decreasing device size than Facebook sharing. Thirteen percent of sharing is conducted through Twitter on the larger tablets as well as on smartphones, compared to 24 percent on minis. For all three platforms, sharing through Pinterest is five percent or less.
Mobile Device stats Sharing
The report also found that, despite the huge popularity of Android-based smartphones and the growing popularity of some Android-based 10-inch and mini tablets, iOS-based tablets still account for an overwhelming portion of content sharing — 75 percent of shared content, versus 22 percent for Android.
e-Readers Linger
Interestingly, while iOS device users overwhelmingly employ Apple’s Safari browser (75 percent) for touch-based content, and Android device users nearly universally use the default Android browser (97 percent), Google’s Chrome browser is about equally popular on both platforms (2.33 percent on iOS versus 2.13 percent on Android).
Mobile Browsers used
Onswipe found that, although there are many more iPhone users than iPad ones, more than half (54 percent) of all mobile web traffic comes from iPad users. It also said that users of a tablet such as Amazon’s Kindle Fire, which is marketed with a slant toward e-reading, spend substantially more time on sites than those who own the Nexus 7 or the iPad tablets. The report said the reason could be that Fire owners tend to favor long-form content, such as e-books.
However, size does not necessarily matter in this regard. Owners of seven-inch, fully-featured web tablets, such as the Nexus 7, spend the same time on web sites as do those who have a 10-inch tablet like the iPad.
Meet Pedram Keyani, the coder behind the nocturnal events that shake up Facebook. Yes, we're talking kegerators, Zuck's hammock--and coding.
Kicking off a Facebook hackathon, with Pedram Keyani, left.
Pedram Keyani is a manager of engineering on Facebook’s “site integrity” team, meaning he works to keep your account safe from spam and other threats. One of Keyani’s greatest contributions to Facebook, though, may be his unofficial role in organizing and kicking off Facebook’s hackathons, which are held internally about every six weeks. We caught up with Keyani to talk about kegerators, Mark Zuckerberg’s hammock, and how a burst of scrappy nocturnal creativity can change the direction of an Internet behemoth.
FAST COMPANY: When was your first Facebook hackathon?
KEYANI: I think in my first month at Facebook. I joined over five years ago. I told my wife, I’m not coming home, I’ll be staying at work, and she kept prodding me: “You’re staying at work?” It took me 20 minutes to explain to her, we’ll be making cool things, and everyone at the company does this. I went to my first hackathon and fell in love. The next day I was totally beat but couldn’t wait to do the next one. Two weeks later I asked some people, “When’s the next one?” and they said it wasn’t planned. I sent out an email saying, “Hey, I’m going to get some Chinese food and hack all night.” It was super successful, and most of the company was there. The next day Mark Zuckerberg came to my desk and said, “That was awesome.” So over time, it became a thing, where every six to eight weeks I asked if people wanted to hack.
This seems like every company’s dream. I can’t imagine an auto plant getting its workers psyched about a "building-cars-a-thon." Do people get overtime for this?
We’re not hourly employees. We’re salaried. Some people come at 4 in the afternoon each day and leave at 4 a.m. No one keeps track of time. The other thing about hackathons is that the most critical rule is you can’t work on the same thing as your day job. It’s a way to experiment with ideas in a low-cost way. Lots don’t make it into products, but every hackathon tends to result in four or five things implemented on the site. A couple have changed the direction of the company.
For example?
Chat. For a long time, there was a lot of negative pressure in the company against building a chat client. The thing around here is, code wins arguments. You could argue something for two days, or you could just make it and prove your point in an hour.
How do people form groups during a hackathon?
We have a group called Hackathon Ideas, and in the week leading up to a hackathon, people post ideas, and groups form organically. One project I worked on two hackathons ago, it was four interns, an infrastructure engineer, someone from our sales team, and me. It worked beautifully, and now a lot of us are friends--people who didn’t talk to each other or know each other before.
As you grew into the hackathon organizer, how’d you decide to hold them every six weeks?
It turns out if you do it more often than every six weeks, people are like, “Dude, I have a family. I need to go home. I can’t disrupt my life like this.” But after six or seven weeks, if I wait too long, I’ll start getting two or three emails a day asking about it, and it’s clear we need another hackathon.
What are some traditions around the hackathons?
We always get Chinese food at the same place, Jing Jings in Palo Alto. Even though now we’re bigger and further away, because of tradition we go to the same place. People pile up food and hack for hours. Usually about 20-30% of people, by 3 in the morning, are asleep or at home. Then steadily every hour after that about 10% of the people drop off until at 6 in the morning I shut the thing down. Having done 30 of these things, I’ve learned an important skill: The Tuesday of a hackathon, I always find time to take a two-hour nap. I’ll find a conference room somewhere. In the previous location, we were four blocks from Mark’s house, and I said, “Hey, you have a hammock in your backyard--can I sleep there?” He said, “That’s silly, just take the key,” and I’d crash on his couch.
What’s the hardest you’ve laughed at a hackathon?
I built a thing called "Keg Presence" with my friend George. He had a startup that didn’t do very well, but one thing left over from his startup was a kegerator. We thought, “We have to figure out a way to bring this to work and not get fired.” We came up with the idea of putting a computer on top, having people swipe an employee badge, and it would take a picture of them with their beer and that would go in their news feed. At the hackathon in August of 2009, we wheeled in this kegerator and went to work as quickly as possible. We tested it, and photos of both of us drinking our beer populated everyone’s news feeds. All of a sudden we saw heads popping up around the office: “Hey, where’s the keg?” Within 10 minutes, there was a line of 15 people. We killed the keg that night.
But how do you scale that for a billion users?
That’s a lot of beer. I don’t know if we could scale that. But the basic concept has grown. Basically what we did is make a way for a physical interaction to be the equivalent of entering your user information and password and entering content on the site. The basic idea is, how do you marry Facebook with the physical world?
For other non-coding companies, how can they get the spirit of a hackathon at their workplace?
Lots of other groups--legal, HR, business development--use hackathons to rethink how they do their job, or how they can restructure what they’re doing. I think the core idea is to take ideas you haven’t had a chance to focus on and think about them in a different way. Lots of companies have the notion of a “think week,” a week to brainstorm other things. It doesn’t have to be in the middle of the night. If a company has hired the right people and trusts its employees to have good ideas, it should trust them to have the free time and autonomy to come up with amazing things the company should explore.
This week our Facebook App of the Week is Pagemodo, an app designed to give Facebook fan pages and tabs a more professional look.
Pagemodo gives users the ability to professionally customize fan pages without having to know HTML or any specific graphic design skills. With this app, Pagemodo aims to improve the customer experience by giving businesses one of the first things needed to properly engage with consumers on social networks — a professional looking Facebook fan page.
How Does Pagemodo Work?
Once a user clicks on the app, they’re directed to an account on the Pagemodo website. There they are asked if they want to create a timeline photo for their fan page or a custom Facebook tab.
If a user chooses the tab option they are redirected to the dashboard where they click Create New Tab. After a choosing a theme for the tab, they can modify its layout, background image and content. After customizing the tab, users (if they have a Agency account) can then choose to include a ‘like button. Once the page is finished users click publish and it should appear, after a few moments the Facebook page.
The cover photo option is relatively new, as it goes a long with the Facebook timeline update. In order to customize a cover photo users, when at their dashboard, first have to choose which page this photo is for and then choose a theme. Themes range from a single image, to four squares, to a bubble. In the Edit Background Image page, users can then choose which photo or photos they want to include as well as the colors. They can choose their own images or pre-loaded backgrounds from Pagemodo. Once this step is finished users will be able to edit the content and change how the photo or photo looks in their cover photo.
The Cost of Pagemodo
Once users give the app access to their Facebook account they're automatically signed up for a free Pagemodo account, but there are also three paid options.
Free: With this option, users are allowed to make one tab and one fanpage, as well as cover photos and have access to the builder, hosting features and a support forum.
Basic: The basic option is available for US$ 6.25 a month. With this option, users have all of the basic options, as well as the option to create three tabs. They also won't have a 'created with Pagemodo' footer at the bottom of the fanpage and can talk about issues with the app through the support forum and through email support.
Pro: This option is available for US$ 13.25 a month. In addition to all of the other features from the previous versions, users can create unlimited tabs and three fan pages. They have access to more professionally designed page templates, can add like buttons to their pages, use Google analytics and have the 'powered by Pagemodo' statement removed from tabs. Pro Users also have access to the support forum and premium email support.
Agency: For US$ 33.25 a month users have access to all of the previously mentioned features. They also have unlimited tabs, an unbranded feature, which allows clients to update pages and contact forms that don’t have the Pagemodo brand on them. Users who choose this option also have access to Agency Support.
Final Thoughts
Pagemodo is a useful app for those who want to create a professional looking fan page, but don’t have the time to design it themselves. The free and basic options would only be useful to those who own very small businesses, larger companies or those who need to promote a lot of products should consider the Pro or Agency options.
So, your brand is on Facebook, Twitter, Pinterest and YouTube. You refresh your Radian6 hourly, have a killer Klout score, and hundreds of thousands “liked” your brand on Facebook. So what?
While it’s now considered a brand death sentence to ignore social media, many marketers, who are results- and/or strategy-oriented, are still failing to connect social to entire channel strategy and measure its results therein.
In fact, a recent Econsultancy study revealed that while 66 percent of marketers consider social media an integral part of their strategy, less than a quarter of them have measured its impact on their customer conversion rates. At the end of the day, customer conversion really is the end goal of any strategy, marketing or otherwise, a company bothers to put together.
Social media is somewhat of an anomaly though; it’s been widely accepted by marketers as a vehicle for awareness rather than one that can be relied upon for conversions or enhancement of the 360-degree customer experience. Ironically, it’s become a lot like traditional advertising in that regard. This is likely because marketers aren’t exactly sure the right next steps to take once they’ve met their social media awareness goal and they simply aren’t sure how to bridge their virtual friends & fans with tangible business objectives.
Not only is it possible to use social media as an effective customer conversion tool, marketers can take it a step further to use it as a customer retention tool thereafter.
Here are 5 steps you can take to elevate your social media goals beyond awareness and into customer conversion and retention:
1. Nurture Fan Engagement Immediately
Your job begins the second visitors arrive at your social media doorstep, so make sure your page has eye-catching visuals and branding that’s consistent with your official website (albeit a tad more relaxed, in most cases).
Like it or not, people are superficial — and most followers won’t ever come back unless they feel they have a good reason to. So once they’re in, offer immediate and easy ways to engage them: gift downloads, blog subscriptions or an email list.
Hint: use A/B and multivariate testing to see what types of content, design style and initial offers have a positive impact on conversion rates.
2. Encourage Sharing
When people tweet about you on Twitter, “like” you on Facebook or pin your images to their Pinterest boards, you have access to consumer data that can be used to create unique, personalized fan experiences — providing a boost to customer loyalty.
Of all the content you provide, you want to emphasize the type your fans will share with their friends and followers. Shared content is the strongest indicator of social media’s business value, as it translates into the types of action that lead to tangible results.
Take sharing a step further by integrating social media plugins into your site. Tools such as “like” buttons, comment boxes and recommendations turn these new visitors into brand advocates, making it easy for them to share select information with their friends.
Finally, show followers what they can do and what’s available to them by displaying prominent calls-to-action (CTA) with clear instructions.
Hint: Test various CTA combinations — in terms of style, content, placement, and ease-of-use — to see which bring in the most fans.
3. Gather Data!
One of the most important steps in moving from awareness to conversions is gathering data about fans and followers who end up on your website as a result of your social media efforts. You can learn a ton about the type of visitors you’re attracting — age, gender, location, relationship status, other “likes” and more — depending on the level of authorization granted by each fan.
The emergence of social business as a new way of working is now mirroring the runaway popularity of platforms such as Facebook with its origins in youth culture. As I’ve been chatting with my kids and their friends, who are taking their first steps into the world of work, it seemed to me that a rich vein of breakthrough thinking may be available to their new employers.
The Up-and-Coming Generation Collaborate Online
A natural focus for their social life on the move
Am I alone in finding that it’s tough to get much response these days via email? Why is WhatsApp eating Gmail for breakfast? Generation Y hasn’t suffered email overload like their parents — their email defaults to spam and the vast bulk of it is blissfully ignored.
What counts is quality, immediacy, connectivity and the ability to “pull” relevant content. Look at the emergence of micro-networks such as littlemonsters.com with its multi-lingual chat feature, where one million Lady Gaga fans have registered in the three months since its launch. Not so “micro” any more, it’s easy to see how networks such as this are going to be monetized. Enterprises seeking to drive value from their collaborative tools please take note.
They “Get” the Power of Collaboration Tools
They’re drawn intuitively to streamlined ways of working
An example came up in a specialist PR agency with a strong heritage of providing their clients with relevant briefings from the trade press. The business process works efficiently enough, but with quite a linear information flow based on well-worn traditions.
Knowing the power of automated online search, content filtering, aggregation and community-based forums, it seemed evident to my daughter after just a few days of work experience that more could potentially be achieved for and with the firm’s clients, at lower cost all round. New starters bring a keen eye for any wasted effort and are inclined to challenge anything too “clunky” to use in practice.
Sharing Valuable Knowledge & Experience is How They Learn
They’re schooled in exchanging authentic content via a high-quality network
Students are generally much bolder than their parents in publishing their thoughts and ideas; they welcome feedback and find it highly productive to be part of an open discussion. In guiding candidates through the recruitment jungle, employers seek to showcase how they have fully embraced the digital future: they realize how attractive that is to forward-thinking graduates.
But does the practical reality of career development live up to the hype? Are organizations still too dependent on personal/standalone content, which lacks up-to-date context and refresh, with multiple versions perpetuated through straggly email trails? Standalone content quickly gathers digital dust, and the up-and-coming generation prefer to sweep clean.
They’re Impatient for Advancement
They reject hierarchical structures and organizational silos
Could the learning and career development of new starters also be accelerated through social business? Online interaction with communities of peers, the organization’s specialists and end-users for problem-solving, sharing of experience and lessons-learnt, is already demonstrating impressive results according to the latest case studies. Is it time now to challenge the time-served approach to career development? Try appointing an early-stage graduate as a moderator of key discussion forums and watch their pace of learning take off!
The disruptive potential of social technologies is clear: both as a productivity boost and in the quality of results achieved for customers. As organizations search for the formal justification to roll-out social tools, they should perhaps turn to their newest recruits for inspiration to make social business “the way we work around here.”
Paul gained a first class degree in Physics from Oxford University, and a postgraduate Management Diploma at Manchester. He built a successful career in engineering, and then in management consultancy as a Partner at Accenture advising High Technology businesses. Since 2005, Paul has built up KorteQ's information and knowledge management services based on a successful track record of innovation. More recently he has led the evolution of consulting services from a heritage in learning and knowledge management to social business solutions, on which he’s an authoritative speaker at industry events. He keeps fit as a keen cyclist and every June may be found riding up or down an Alp in aid of the Fireflies charity organisation.
The inside story of Hipstamatic’s losing struggle to keep pace with Instagram, Facebook, and others in the white-hot photo-sharing space. In the third and final chapter of the series, Hipstamatic searches unsuccessfully for capital, and founder Lucas Buick and ex-employees ponder the future of the business.
Lucas Buick, the CEO of Hipstamatic, failed to define his startup’s mission over the past year. But several of his ex-employees seem to have no problem nailing precisely what set it apart. “Whereas Instagram was a social network that had a camera, Hipstamatic was the camera that shared to any other social network,” says one former staffer. “It was very clearly distinguished.”
To outsiders, the distinction may seem insignificant, even pointless. But inside the company, some felt it was Hipstamatic’s golden ticket, a chance to become the go-to smartphone camera for sharing with social giants like Facebook, Twitter, and Flickr. Instead, the opportunity was squandered when the company lost its focus.
Since Buick launched Hipstamatic in late 2009, the service, a $1.99 photo app that takes analog-style photographs on your iPhone, has undergone relatively little change. It didn’t need to. The startup attracted millions of users and millions of dollars in revenue by selling in-app digital lenses and films that effectively turn your iPhone into an old-school instant camera.
If it’s common wisdom for founders to heed the call of social, then Hipstamatic proves that every founder should be wary of conventional Silicon Valley wisdom. Social for Hipstamatic was a siren song, and its turbulent journey over the last year only demonstrates the oft-overlooked dangers of pivots, especially ill-conceived ones that damage a startup’s core business so deeply that no amount of venture capital can repair it.
Throughout the summer of 2012, Buick says he and his cofounders took meetings with investors, hoping to raise the company's first round of funding. But the team could never find the right terms, Buick says, partly because of Facebook's bungled IPO. "We went down this path one other time, and the term sheets have gotten worse since the Facebook IPO, just from what we've seen," Buick says.
The other issue, ironically, was Hipstamatic's bottom-line, Buick says. While startups with no revenue can often drum up seemingly arbitrarily high valuations, Hipstamatic was plagued by its own market success. Instagram had generated no revenue since it launched, yet sold at a market valuation of roughly $1 billion. Hipstamatic didn't have the same “advantage.” According to Inc. magazine, the self-funded startup pulled in $10 million last year, and was on track to more than double its revenue in 2012. "For us, raising money was always super awkward because we made money," Buick says. "It fucked everything up and we'd get a different valuation. Like, 'Oh you have numbers? Well, I'm going to put the X here and the Y here, and this is what you're worth.' It's like, 'No, no, no, we don't make money! I lied!'"
"They thought raising VC money would be really easy--that they'd basically be picking money off trees," says Jonathan Wight, a former engineer at the company. "Every few weeks we'd get an update, and it would be, 'Oh it's a lot harder than we thought,' or, 'The terms aren't what we want.' Blah blah blah."
Fast Company reached out to a slew of top-tier VCs but was unable to find one who had met with or even looked at the company. Two of the VCs surmised the startup would have a very difficult time raising money after the Instagram acquisition. “Another billion-dollar photo-sharing exit is hard to imagine. The category is over and done with, and I’d be surprised if they can even raise,” says one of the topflight VCs.
The investor agrees that general market sentiment for social media investments is down because of Zynga’s and Facebook’s declining market caps. However, the VC disagrees with Buick’s argument that having revenue would hurt its chances to raise funding. “The real problem is that Hipstamatic is perceived as a copycat that desires to be Instagram, and VCs don’t want to be in a me-too deal,” the investor says. “Having revenue absolutely won’t hurt; if anything, it helps, though the idea and market size matter much more.”
At that point, however, Hipstamatic's biggest problem was finding the right idea, regardless of the size of its market or revenue. And its development team back in San Francisco felt completely disconnected from whatever the founders were planning. "They were gone for weeks and were impossible to reach," says one former employee. "Apparently they were meeting with VCs, but I don't know. We were just trying to ship this new product that was already behind. The original goal was to ship it when the new iPhone came out, but there was no fucking way we could do it. All we had was what we hacked together for them to demo to VCs." (Hipstamatic denies that its cofounders were impossible to reach during this time.)
By the time the “Wolfpack,” the self-appointed nickname for the company founders, decided to offer other members of the team stock in the company, many had already lost faith, multiple sources say. “All of us were like, ‘Dude, you’re never going to IPO,’” recalls Stuart Norrie, then a designer at Hipstamatic.
In late July, Buick and his cofounders went to New York, which Wight says felt like the “last chance to get VC money." (Hipstamatic denies that it was the company’s last chance for VC funding. It’s also worth noting that I had met with the team during their visit, and none of the products herein described were mentioned at that meeting. Buick was focused more then on ways to work Hipstamatic into third-party services.) When the team returned, however, there was no news of a round being raised. "Nothing was said. It was like, 'Well, I guess we didn't get any money,'" Wight recalls. "I confronted Lucas about it and he said, 'Yeah, we didn't find any terms that we liked, but we have something in China.' It was kind of obvious then that they weren't going to get VC funding."
Wight also says he pressed Buick on whether they could still go ahead with the social product without raising capital. "Lucas said, 'Yeah, we're going to mortgage [Hipstamatic's] building if we need to,'" Wight recalls. "He actually said, 'Our backup plan is to mortgage the building.' At that point, all my alarm bells went off. It was obvious that something crazy was going on. As far as I could tell, they were running out of money. That was about a week or two before the layoffs."
Hipstamatic says that it’s simply not true that the company considered mortgaging the building as an option. Hipstamatic also denies that anyone ever indicated the company was prepared to go forward with the social product without raising a round of funding.
If Hipstamatic’s product roadmap seemed slapdash, the rapidly evolving landscape of the photography space was only making its business even more chaotic. By mid-August, Instagram was racing toward 100 million users, in part due to the app’s successful launch on Android. Viddy, arguably the model for CS9, Hipstamatic’s squashed video product, had raised a $30 million round at a reported $370 million valuation. Path, Dave Morin’s private social network, had raised $40 million at a reported $250 million valuation. Camera+, its camera app competitor, was nearing 9 million users, more than double Hipstamatic’s user base, and would soon launch on the iPad. And Tumblr, Pinterest, and any number of other white-hot startups, which arguably served as inspiration for Hipstamatic’s social products, were flying into the upper-echelon of Silicon Valley superstardom.
But even in such a hectic time for the company, Buick was starting consider yet another pivot for Hipstamatic. Pivots, Eric Ries’ term for a change in company direction, are usually reserved to describe companies that have made successful shift in focus: Instagram, for example, is famous for pivoting away from its unsuccessful, complicated earlier iteration, called Burbn, which included a host of random features, such as game mechanics and future check-ins. Pivots are also used to designate startups that have lost focus, as was the case with Color, the proximity based photo-sharing app, which has become a punch line in the Valley for a startup desperately spiraling in all different directions.
But Hipstamatic never truly pivoted. If anything, it lurched. The startup performed a series of missteps throughout 2012 that snowballed and left the company stagnant by the summer’s end.
In further violation of Ries’s revered business principles, Hipstamatic seemed almost incapable of putting out a minimum viable product: most every prototype product was either killed or not given the attention it needed to get to market.
Worse yet, the company was not run like a lean startup. The company's headquarters, for example, a wide brick building on Langton Street in SOMA called the "Haus of Hipstamatic," cost roughly $1 million. Additionally, the cofounders decided to renovate the building's rooftop with deck and minibar, an upgrade that cost at least $800,000, explains Sam Soffes, a former engineer, who says he saw an invoice for the construction. “Lucas told me the stain for the deck had been imported from Belgium, and I was like, 'Dude, there's a Home Depot in Daly City--we could’ve just gotten it for way less than you paid to have that shit imported form Belgium!'" recalls Norrie. (Hipstamatic confirmed the cost of the building, but declined to confirm the cost of rooftop construction.)
Inside the $1 million "Haus of Hipstamatic" Parties at company headquarters were frequent. As Buick once told me, "Our entire lifestyle is built on the philosophy that work and play are one."
"It felt like a bloody frat house," says Wight, who says he was told the company's alcohol budget was $20,000. "I've never worked at a startup with an alcohol budget. People would be getting drunk at night and end up sleeping on the floor of the company. I think Lucas wanted a certain amount of rock n' roll there."
(Buick denies that the company had an alcohol budget, though he adds, “I mean, if we did have one, I’d be curious what it would be.” Buick also clarifies that, with all parties thrown--for product launches, say, or app updates--he always considered whether they’d generate short-term income or long-term revenue. Molli Sullivan, Hipstamatic's director of communications, says that much of the money spent on parties and other “fun events” was designed for team building.)
"We had a ton of parties--maybe that's what they meant by having a 'lifestyle brand,'" says one former developer, referring to Buick's company motto.
So while Hipstamatic was still generating revenue, it's perhaps no surprise why some employees started to wonder if the company was speeding toward bankruptcy. Employees were not privy to the startup's earnings; they only knew of revenue figures that had been reported by the press. When it became clear the company was not going to raise a round of funding, some started to think the worst. "I inferred that they were running out of money--that they had just gone through money way too quickly," says the former employee. "You've seen the office--it's really expensive. They all have really lavish lifestyles. I figured they were seeking out funding because they needed more runway to keep the ship afloat."
The truth according to Buick is, by mid-August, the company had several different options. Buick could've continued down the path toward social and raised a round of funding at less-than-pleasing terms. He also could've sold the company. ("We can't comment on who [we could’ve sold to], but it just seemed like a shitty option--it felt like giving up to cash in a check and buy a boat," Buick says.) Or he could've pivoted backward, scaled down the company's ambitions, and refocused on Hipstamatic's original photo app.
After much deliberation, Buick says he went with the last option. (Also in early August, one of the company’s iOS developers quit voluntarily, which helped reinforce Buick’s decision, he acknowledges.)
Over dinner in mid-August, Buick presented the plan of scaling back to several other founding members of the startup. "From the time we decided to pull the trigger to the time we executed was about 48 hours," Buick says.
On Aug. 16, the company began laying off employees, either in the office, over the phone, or over coffee. Employees were (not surprisingly) unhappy when they were told the news. "Yeah, I got my pink slip, or plaid slip, whatever hipster term you want to call it," says the former employee.
At the Mondrian Soho in mid-September, over dinner and drinks, Buick appears genuinely unfazed by the internal drama at Hipstamatic and the way it negatively spilled into the press after employees were let go. Later, when I ask Buick whether Hipstamatic is going bankrupt, he immediately responds, “No, we are not.” And even when I press him about the startup’s runway and burn-rate, he retorts with a giggle, “You're using startup terms that we've never internally used. I mean, I've heard burn-rate and runway, but let me say this: I have no idea what our burn rate is. I have no idea how long our runway is.”
Throughout our dinner, Buick’s general nonchalance gave the impression that the layoffs were not a financial decision, regardless of whether they actually were or not. (Molli Sullivan, the company’s spokesperson, says the company is not running out of money, and explains the layoffs had nothing to do with “paying the bills.”)
"The honest truth is I took a lot of bad advice and started building stuff we weren’t passionate about," he says. "That whole product development was all about how to make money and maximize users, and we were focusing on the shit that we didn't really care about. We started focusing on money and talking to a whole different scene, and we started to lose touch with our community--the photographers, for example, who totally got ignored for a year. I don't know what the trigger was but the honest truth was we hadn't shipped anything, and that drove me nuts. And what we were building was still so far away from being available that I didn't even like coming to work.”
Ex-employees can’t speak fast enough to list off the many problems that plagued the company: a lack of transparency, an incoherent product roadmap, and so forth. Almost every source I spoke was offended that Buick would say the layoffs were due to not shipping products—the ex-employees chalk up the dearth of shipped products to the company’s poor leadership. And many sources place the blame on the ever-mounting disconnect between the cofounders and new hires, who say they were not given the agency to push new developments forward. (At least three sources I spoke with said the cofounders had a “death grip” on the original Hipstamatic app, for example, and only gave developers read-only access to the service for much of their time at the company.)
While one could certainly argue Hipstamatic had many original ideas, Hipstamatic’s central problem was execution—and it was a problem that worsened as the team’s cohesion deteriorated. The startup could not act as a functional whole.
When I ask Buick what went wrong, he reflects for a moment, and answers, "I think we totally got caught up in the San Francisco bubble. If you don't leave enough, you forget that not everyone has an iPhone, and not everyone reads TechCrunch. The rest of the world doesn't care about that stuff. The San Francisco bubble is a sounding board for the same idea heard over and over in a thousand different ways. We fell into that, and it led to a lot of frustration and wasted time and resources. So we took a left turn."
Adds Buick, "We should coin this the unpivot."
Stuart Norrie, the former designer, summarizes the company’s issues most eloquently: “In this industry, it’s inevitable that you’re going to pivot. You should be expected to be switching direction at a moment’s notice. But not weekly--not changing direction completely every week. They were trying to become Camera+ and Instagram, and that’s a losing battle. It’s suicide to take them on. And if you focus too much on your competitors, you’re going to lose sight of your own business, and that’s what really happened.”
He continues, “The biggest problem with Hipstamatic is that [Lucas] didn’t focus on Hipstamatic. What did Instagram do when lightning struck? They did nothing but focus on Instagram. What happened when Hipstamatic got successful? They made [separate products such as] Swankolab, Incredibooth, D Series, Family Album, Snap Magazine, and splintered off in so many different directions. They lost sight from the very beginning, and it still makes me sad because it was a golden opportunity to make something really amazing.”
Other members of the team echo Norrie’s sentiment. Says one former employee, "The people I worked with at Hipstamatic were the best people I've ever worked with."
Buick agrees. "It sucked," he says. "We've let people go before but it was always justified because they weren't doing their work. This had nothing to do with that. They were all really awesome and talented. What we did was build a Ferrari and we didn't know how to drive stick. So we had this awesome machine that wasn't able to perform like it should. We built the wrong type of team to solve the wrong kind of problem.”
Finishing up his second or third old-fashioned at the Mondrian Soho, Buick transitions away from the past to talk about Hipstamatic's future. As he takes me through the roadmap, I can't help but be intrigued by what he and the company might have to offer--if the surviving team can even pull it off. All the while, a song by a French pop band blares over the restaurant's sound system. Then, later, another song by the same group. Then a third in the course of an hour. The band is Phoenix, the name for the mythical firebird that rises from its own ashes--not that anyone catches the heavy-handed, trite symbolism. Says Buick, "This fall we're launching a bunch of stuff…"
We have become a society intent on not letting Facebook’s privacy settings get the better of us. Thanks to a new browser extension for both Chrome and Firefox, we are a step closer to simplifying our lives.
Get in Control of Your Privacy
With the goal of putting the user in control of their own online privacy, the Privacyfix browser extension scans for privacy issues based on your Facebook and Google settings, the other sites that you visit and the companies tracking you. Privacyfix directs users to the settings they need to fix, and can warn of new privacy issues as you surf the web — so you'll know when sites like Facebook change their privacy policies or have privacy breaches.
Additionally, your information will not be compromised further by using PrivacyFix — the application has been engineered not to transmit or share any of your data, including history, cookies or privacy settings. Because all of the ratings and calculations for Privacyfix happen inside the browser, with generic formulas and data being sent from their server, the only data that a browser sends to PrivacyFix's server is standard technical data (like IP addresses), which the company says is promptly deleted.
Tracking the Outcome of Better Privacy Controls
What are the long-term implications of an extension like this? Will users be curious enough to learn about how specific sites are using their information? Upon learning that sites may be collecting more information than users thought, will they be moved to make more educated choices? If they decide not to share information, will companies update their policies?
Of course, it’s too soon to know. Additionally, it’s too soon to know if we can get the right people using these extensions. Three years ago GetSafeOnline.org found that students are more likely to put themselves at risk of online fraud than any other adult demographic in the United Kingdom. Twenty-eight percent admitted to entering personal details into a website from an unsecured computer, over double the national average of 11 percent. Almost one in five students (19 percent) regularly posted valuable personal information, such as their date of birth or home address, on social networking sites, almost double the national average of 11 percent.
Are students likely to install these extensions on their browsers? It will be interesting to see how PrivacyFix markets themselves to this vulnerable demographic. The appeal, in the beginning, will be to those who are already proactive about protecting their privacy online — so getting this app into the hands of those who can benefit from it most will be most important.
The inside story of Hipstamatic’s struggle to keep pace in the white-hot photo-sharing space. In part two of the saga, Facebook's billion-dollar acquisition of Instagram rattles Hipstamatic, which fumbles through a series of half-baked products and social features that never stick.
When I ask Hipstamatic CEO Lucas Buick if he lost focus in the last year, he immediately responds, “Absolutely.” Since laying off roughly half of his workforce in August, Buick has had to come to terms with his darling Silicon Valley startup suffering negative press, ex-employee reprisals, and a public perception that his company is approaching bankruptcy.
Three years ago, Buick launched a $1.99 photo app that takes analog-style photographs and sells in-app digital lenses and films that effectively turn your iPhone into an old-school instant camera. The startup attracted millions of users and millions of dollars in revenue, and Buick believed the company could become “Kodak for the digital era.” He envisioned a future where Hipstamatic would become the industry leader in digital camera goods and third-party photography and printing services. But the fickle app market where Hipstamatic dwells has since become obsessed with finding the next killer social photo app.
Throughout 2011 and leading into the new year, Buick began moving his own startup toward social. But by that time, it was perhaps already too late: Its photo-sharing competitor Instagram had soared beyond Hipstamatic in popularity, and would soon capture the attention of Facebook. We pick up where we left off in part one of our three-part series, as Buick realizes he can no longer ignore the siren call of social. Like so many other startups that have undergone a similar transformation, Hipstamatic will soon experience severe growing pains. As it hires more people and pursues new products in an attempt to keep pace with competing apps, Hipstamatic's culture becomes fractured. On one side, founders chase venture capital and rush a series of half-baked products, while on the other side, newly hired employees struggle to build something they think will last. The two groups strike out after very disparate visions for Hipstamatic's future.
For a startup that prides itself on the originality and creativity of its users, Hipstamatic spent much of 2012 chasing many other companies’ ideas. "I can honestly say that there was a lot of talk about Instagram, Path, and social," Buick says of his company's internal discussions. "Ultimately, that’s what shifted our focus away from who we really are.”
In the most regrettable ways, Hipstamatic was, in fact, becoming Kodak. Like the once venerable brand, which failed to keep pace with industry changes during the 1990s, Hipstamatic was struggling to adapt to the daily chaos and external pressures of the social app world.
It had arrived at a crossroads that many other startups inevitably encounter: Hipstamatic had to pivot. So in February of 2012, an engineer started work on a project internally called CS9, which would expand Hipstamatic's filters to video, similar to the 18-month-old service Viddy, which is often called the Instagram of video. (According to Buick, the idea was on the “product list for two years,” but only kicked into gear again in February.) Around that time, another team began developing a prototype web service and iPhone app codenamed Timeline. ("It was a horrible name," acknowledges one former employee. "I was confused by it so much I begged them to rename it internally just so I could keep up with the differences between Facebook Timeline and our Timeline app.") Timeline would aggregate photos from a user's fragmented social networks, pulling images from Instagram, Tumblr, and Twitter into one unified stream; the team also had plans to add Facebook photos and implement cross-network interactions for commenting and liking.
Also on the docket was Hipstamatic Classic, the internal name for the new version of the original photo app, which would have more mainstream, point-and-shoot-camera-like functionality. (The social app would assume the Hipstamatic branding, or possibly be called Hipstamatic Next, sources say, though nothing was ever finalized.) "They wanted to make a Camera+ killer--it was actually described in those terms," says Jonathan Wight, a former engineer at the company, referring to the popular camera app that had become one of the top-selling photography services on iTunes.
(Molli Sullivan, Hipstamatic’s director of communications, disputes Wight’s recollection. “There were no conversations around app killers--there was nothing around any type of killing of other companies,” she says. “When we looked at the competitive landscape, we would have discussions around other companies, but it was never malicious. That’s not what the conversations were like.” However, at least one other source says it wasn’t uncommon to refer to the product as a “Camera+ killer.”)
In March, Hipstamatic held a companywide meeting to demo Timeline. Buick distributed questionnaires to employees afterward to gather feedback about the prototype, but their feelings had already become evident at the meeting. "Once you attached Timeline to a camera app, it became Instagram," Wight says. "During the meeting everyone was like, 'You know this is Instagram, right?' It was voiced several times: 'This sounds a lot like Instagram.'"
One former developer, who was also present in the meeting, recalls, "People raised concerns that it didn't offer anything more than an Instagram feed of photos, and that we would basically be mimicking all the functionality that Instagram already had."
Hipstamatic CEO Lucas Buick and CTO Ryan Dorshorst
“At the beginning of the meeting, Lucas was very vocal and upbeat, but the second that was said--that it was basically just a version of Instagram--he immediately shut down, became quiet, and seemed pissed off,” says Stuart Norrie, then a designer at the company. “It was very clear those comments touched a nerve.”
Sullivan confirms the meeting took place, but clarifies, “There were a lot of questions about [Timeline]. We were testing a lot of different technology. I wouldn’t put so much focus on Instagram--it wouldn’t be right to focus entirely on comparing things to Instagram. While Instagram may have been mentioned, there were other companies [mentioned]. When you're looking at the competitive landscape, more than one company comes up.”
Indeed, by that time, rather than viewing Instagram as a competitor needing to be challenged, Buick had actually decided to partner with Instagram. He and Instagram CEO Kevin Systrom, who Buick refers to as his "best frenemy," had been in talks for weeks over ways to team up. (The two are friendly and get drinks together every so often. Says Buick, “I'm a whisky drinker, though not quite as hardcore a whisky drinker as Kevin is.”) In late March, the companies unveiled an exclusive partnership that would allow Hipstamatic photos to be seamlessly shared on Instagram's network with one click. "When we launched, it was all about Facebook, Flickr, and Twitter, and now we're seeing a huge shift in our user base toward Instagram," Buick told me at the time.
The partnership provided additional exposure to Hipstamatic on Instagram's platform. By then, Instagram boasted 27 million users, while Hipstamatic had peaked at roughly 4 million active users.
But what the partnership most demonstrated was the powerful social pull that Instagram wielded. "We started to see how many people were sharing to Instagram, and I think [Buick] felt like he was missing out on all that," says Sam Soffes, a former iOS engineer at the company, who would later have a dustup with Buick.
“I was sitting next to Jon [Wight] who just said aloud, ‘Oh, Facebook bought Instagram?’ I think it was [CTO] Ryan [Dorshorst] who was like, ‘No way--that’s a joke.’ We all thought it was a headline on The Onion,” recalls Laura Polkus, a former designer at Hipstamatic. “Then we saw Mark's blog post. And it was like, ‘Wait, one billion? Like, a billion dollars? What? What does that mean for us? Does that mean that [Instagram] won?’” The team spent most of that April morning reading stories about the acquisition.
Buick was on a plane landing in New York from London when he heard the news. He sent Systrom a congratulatory note, but otherwise didn’t return to Hipstamatic’s headquarters for several days. “It was never our goal to be acquired,” explains Buick, who adds that, if anything, he was happy for Systrom. “We weren’t building that type of company.”
“He didn’t have much of an outward reaction. He was more like, ‘Well, that’s fine; we didn’t want to be bought,’” confirms Polkus. “At least that’s what he told us, regardless if it’s true. I mean, I don’t know who wouldn’t want a billion dollars. It would’ve gone through my head if I was in his position: Why not us?”
Lucas Buick was shopping at Uniqlo when he received a phone call. It was mid-April, not long after Facebook had announced it would be acquiring Instagram. (Some sources say it was on the day of the announcement.) The call Buick received, it turned out, was from Twitter, which again expressed interest in acquiring Hipstamatic, sources say. Before Facebook beat it to the punch, Twitter was reportedly interested in purchasing Instagram in order to bolster photo sharing on its network. Perhaps Hipstamatic wasn’t such a bad secondary option. Buick entertained the idea, sources say, but never seriously considered it. (Hipstamatic and Twitter declined to comment on this matter.)
By that point, the Hipstamatic team already had enough on its plate without potential acquisition offers. Outside CS9, Timeline, and Hipstamatic Classic, multiple sources say the company was juggling an ever-growing number of projects, including a physical Hipstamatic camera. “There were plans to do a photography field guide, a bunch of community initiatives, and always talk of physical products,” says one source. “I guess none of that really happened. Products would get shelved, ideas would get thrown away, and new things would take their place.”
In the spring of 2012, for example, after both Timeline and CS9 had died, another social idea started to take priority: The Hipstamatic team began work on a new product that Buick says was a cross "between Tumblr and Instagram." It would be a private social network, like Path, designed to share the photographs you still find yourself inefficiently sending to friends via email or text or showing them in person. (The sharing feature was internally called PhotoMail, sources say.) As Buick explains, "It all comes down to brunch. After some shit goes down on Saturday night, there's always the great iPhone swap over brunch. These are photos that you don't want on Facebook but you want your friends to have."
But nearly all involved say the experience never came together in any coherent way. "They wanted it to be everything: to be Camera+; to be Path; to be Pinterest," the former employee says. "It was kind of like the new [group photo-sharing] Flock app--that's pretty much what we wanted to do." Even “director of fun” Mario Estrada, who is still with the company, admits, "None of us could really identify it. We kept on talking about the elevator pitch to describe what the product was. The product never really made complete sense."
Despite the internal confusion, Buick knew that if his company were to seriously compete in social, it would need to raise a round of funding. Hipstamatic's pivot toward social would be a huge risk for the company. In order to scale a private social network and achieve viral growth numbers, Hipstamatic would have to become a free service, Buick explains, which would upend its business model and cut off its revenue stream. Buick also had hoped to triple the size of the startup's team. Over the summer, he set out on a financing tour to meet with as many investors as possible, in hopes of raising between $15 million and $20 million.
"We didn't need money to operate the type of business that we had," Buick says. "What we needed money for was scaling the social network--to build another fucking social network."
"At a company meeting they announced they were going after VC money, which we thought was kind of strange because we had a good amount of money coming in. Well, supposedly. I didn't get to see the financials," Wight recalls. "I started to wonder if the financial situation was worse than I thought. When they decided to go for venture capital money, that's when things went a little bit crazy."
As the summer progressed, multiple sources say Hipstamatic’s product plans only became more complicated. “Whenever Lucas came in, he would have another crazy idea,” says Wight. At one point, the team started experimenting with a Zynga-like virtual goods store where users could purchase Hipstamatic credits that could be spent on individual photo filters. “The idea was you’d go to this store and spend $1 to get 50 credits,” Wight recalls. “I had very strong objections because it was basically relying on the end users being dumb to get more money out of them.”
The team also explored the concept of digital galleries, which were going to be akin to Pinterest pinboards but for Hipstamatic photos, so users could start their own galleries and list their favorite pictures. Another idea involved situation-specific filters: say, a filter for night photography, or for taking pictures of food.
Sources say the product kept changing from week to week, with little or no concrete direction from higher-ups. Says the former developer, "There was a lot of direction change--a lot of, 'We're going to do this! No! We're going to do that instead! No, that doesn't matter; this matters now!'"
“We didn’t know what we were supposed to keep adding to this social app without getting any feedback,” the former employee explains. “At a certain point, we would come to work and just talk for hours. They kept pushing everything off, and it got to the point where by the end, we were just twiddling our thumbs trying to find stuff to do.”
Hipstamatic disputes this characterization of the company. When asked about the startup's seemingly haphazard product roadmap, Buick says, "I feel like we're reliving our whiteboards here."
"It's just not true that there was a new idea every single week," says Sullivan, the company's spokesperson. "Absolutely, we would whiteboard. Everyone would talk and throw ideas out about what the product could look like. But to lay this out like Lucas and [CTO] Ryan [Dorshorst] were changing their minds every other week is not accurate, and it's not fair to what the process was like."
Stuart Norrie, the former designer, describes a different atmosphere at the company. “There were nine billion ideas on the table and nobody was saying what to do,” he says. “They didn't really know what their next move was, and it was very apparent that they were paralyzed in making decisions. They were constantly switching back and forth. I’d ask them for feedback and they would never have an answer. They'd be like, ‘We'll talk about it next week.’ I’m like, ‘But it's only Tuesday! What am I supposed to do?’ It was the most unproductive time of my life, and I'm including grade school.”
As if the company didn’t already have enough projects in the pipeline, in June of 2012, Hipstamatic released yet another side project called Snap Magazine. Snap was an iPad magazine that would give Hipstamatic an editorial voice, and enable the company to highlight exemplary user photography as well as potentially push advertising and in-app purchases down the road.
In a sea of stop-and-go projects, Snap Magazine somehow turned out to be a big success. Its first several issues over the summer received more than 100,000 downloads, and Apple would eventually feature Snap on billboards and in an iPad commercial.
But despite the external success of the product, internally, tension had reached a boiling point, and demonstrated Buick's growing disconnect with Hipstamatic's developers, in terms of both product development and company direction. The tension spoke to a larger divide between the company’s designers and engineers, an obstacle that most startups face at some point. As Buick tells me, his founding team, which was composed mostly of designers, "never operated [Hipstamatic] as a software company. As we started building that type of company, we ended up with really talented engineers, who were not used to our creative process. There was tension. There was separation on the teams."
The “teams” that Buick describes can be divvied up into two groups: the new hires, composed mostly of the development team, and the members of the founding team, who call themselves the “Wolfpack,” a likely reference to the film The Hangover. The “Wolfpack” includes Buick, Dorshurst, Mario Estrada, and creative director Aravind Kaimal, most of whom were friends from the University of Wisconsin at Stevens Point. The “Wolfpack” became a source of resentment for the new hires, who felt the clique created unnecessary splintering within the small startup. “It was not a well-loved term by nonmembers of this group because it felt divisive and, for some, just further evidence that there was an in- and out-crowd within the company,” says the former developer.
“I shit you not: They’d actually be like, ‘Wolfpack is going to lunch,’ or ‘Wolfpack just got back from Vegas,’” recalls Norrie. “It was like, good god.” Another source confirms that it was common for the founding team to say, "I want it to just be a Wolfpack thing this weekend.”
The tension between the “Wolfpack” and other hires reached a breaking point during the development of Snap. At the time, the team was discussing whether to build an in-house solution for the magazine or to outsource it to Adobe's publishing platform. The latter solution, which is used by publishers such as Condé Nast and Fast Company, would allow the company to quickly get to market, but it would also cost upward of $75,000 for an annual license. Hipstamatic’s team could build its own publishing platform, but in one watershed meeting, Buick directly questioned whether his developers could even build the product themselves.
The discussion became heated, and a war of words erupted between Buick and Sam Soffes, the former iOS engineer, who argued he could build a solution that was just as good as or better than Adobe’s platform. "It was a big argument right in the big open area of the office," recalls Wight.
Music was blaring through the headphones worn by Laura Polkus and Stuart Norrie when the two heard shouting between Buick and Soffes. “My music was really loud but I started hearing raised voices, so I sent an IM to Laura and was like, ‘Are you hearing this?’” Norrie recalls. “I hit pause and all of sudden F-bombs were dropping like it's D-Day.”
"I remember I was like, 'You're completely wrong. I can pull up graphs on my computer and show you how much faster we can build it,'" Soffes recalls. "And he goes, 'I got two graphs for you.' And then he gave me the finger in both hands."
“The double bird,” Polkus recalls.
"The entire company basically saw the CEO of this company give the double finger to a developer," Wight says. "It wasn't in jest either. It was, 'I'm angry, so fuck off.' Lucas walked out. That pretty much sums up the company for me. You just don't do that as the CEO."
Buick acknowledges that the argument took place, but says he wanted to go with Adobe’s platform only because there “were not enough engineering resources to go around.” Buick also clarifies that he hadn’t realized how expensive it would be to use Adobe’s platform yet. “I mean, I certainly feel bad about it,” he adds, referring to the exchange. “I don’t feel like an adult about what I did, but it happens. Shit happens. Let’s move on.”
Of course, it's far from uncommon for tensions to spill over in any environment where strong-willed personalities tend to prevail. But the tenseness of the relationship between designers and engineers at Hipstamatic was palpable, ex-employees say. In fact, Soffes left Hipstamatic not long after his argument with Buick.
The quarrel also highlighted bigger issues simmering within the company regarding its overall vision. To Buick, Snap Magazine was an opportunity to further cultivate its growing photography community, in industries ranging from fashion to media. It was part of his strategy to make Hipstamatic a “lifestyle brand,” as he calls it.
But others inside the organization felt that idea made little sense. To some, between D Series and Family Album, two past, semi-social products soon to be discontinued; Timeline and CS9, which were both killed; and ongoing plans to make a social app, remake its camera app, and develop potential hardware products—in addition to Snap Magazine and two other previously released photo products called Incredibooth and Swankolab—Buick’s referral to Hipstamatic as a “lifestyle brand” was simply wishy-washy jargon meant to mask the company’s floundering product strategy. "They kept pitching us, 'We're a lifestyle brand,' whatever the fuck that means," says the former employee. "We didn't know what to do because there was no direction. It was a bunch of art school kids that didn't know how to run a software company.”
“Most of my time was trying to convince the development team of what the lifestyle brand was, and then trying to convince the lifestyle people what the development team was doing,” acknowledges Buick. “Ultimately, we never got on the same page.
"We may have been a lifestyle brand," says Wight, "but we also make software. And we had to get serious about making software. We had the loosest, most disorganized plan I have ever seen--there weren’t even regular developer meetings. We needed someone who could lead the development team."
“Very clearly there was a growing disconnect between the teams. It’s a company of designers versus guys who are engineers, so it’s not always easy to speak the same language. Did we experiment with a lot of different ideas over the course of the last year? Absolutely,” says Sullivan, the company’s spokesperson. “These engineers are very used to a certain structure or company or schedule, and maybe that wasn’t quite aligned with the vision we had.”
Says the former developer, "Hipstamatic needed to transition to a software company, but it failed to do that.”
Tomorrow: In the final installment, Hipstamatic's founders go hunting for venture capital but come up empty. In a perceived cash crunch, they lay engineers off and attempt a do-over. "We should coin this the un-pivot," Buick says.
User growth will come from new territories as the social media giant continues to eat up users' time and Likes, with almost half of all North Americans using the Facebook service to keep in touch online. But where will it see new revenue growth?
All Around the World
While the stock price might be on the way down, the user numbers are going up and up for Facebook. With almost 45% of North Americans and Australasians now on board, a third of South America, nearly as many in Europe with only Africa and Asia lagging behind in single figures. That led the company over the 1 billion mark, which he discussed in an interview on NBC.
They are the key growth markets for the company, and it will be aiming aggressively at signing them up. Of the existing users, over 600 million now use Facebook on a smartphone or other mobile device, up from 552 million users measured in June this year.
Mobile will be key in emerging markets where they are more common than computers. Facebook is trying to adapt the service to the feature phones prevalent in Africa but will need to use marketing muscle in China and Russia where local services dominate.
On the Face Of It
Facebook recently broke into the physical gifts market in an attempt to move on from the virtual gifts that helped boost its early growth. With long-time revenue partner Zynga also suffering, it will also be looking for the next big thing in revenue generation, with better targeted advertising already on the radar.
Gambling could become one natural focus, with real money gambling having started in the United Kingdom via a Bingo game, and virtual sports betting being trialled in America. These and other initiatives should see revenue rising to keep the stock holders happy.
However, it may face more defections from users over the latest claim on weak privacy with private messages claimed to be publicly visible. Similarly, further attempts to monetize the service's vast user database could lead to collisions with irate users suffering growing "intrusion" into their News Feeds.
While still in a very strong position, and dominating the social media scene, Facebook still has plenty of time to find its feet as a traded company, but every move and misstep will come under increasing focus and scrutiny.
Facebook has struggled to generate mobile revenue, which could stunt its potential. But Instagram could be the key to changing Zuck's fortunes. GRP Partners' Mark Suster, Big Spaceship's Karina Portuondo, Percolate's Noah Brier, and Ad.ly's Walter Delph share their ideas.
Call Sheryl Sandberg! Facebook stock, which rallied 32% since it was announced CEO Mark Zuckerberg would make his first post-IPO appearance on stage at TechCrunch Disrupt, is once again on the decline, and it looks as if the Zuck bump was short-lived at best.
The share-price drop comes following a report in Barron's that called the stock "still too pricey," and specifically questioned Facebook's potential to generate mobile revenue. The company has struggled to tap into the mobile market, and is said to be generating less mobile ad revenue in the U.S. than even Twitter, which has a much smaller user base. But its $1 billion acquisition of photo-sharing service Instagram was seen by many as an opportunity to tip the mobile scales in its favor. Will Facebook be able to monetize Instagram?
The problem, as Barron's Andrew Bary pointed out, is that Facebook's bet on mobile is "no sure thing." Due to condensed real estate on the screens of smartphones, Bary contended, Facebook isn't left with "much room to configure ads without alienating users." Even Instagram cofounder Kevin Systrom has acknowledged the startup's focus on scale rather than monetization. At a recent hearing in California related to the approval of the acquisition, state officials asked Systrom how Instagram generates revenue. "That's a great question. As of right now, we do not," said Systrom, who said the startup aimed to "grow something that people really loved."
So how can Facebook tap into Instagram to start generating mobile revenue? We asked four experts in the space to find out.
I think there is no wild idea to monetize Instagram. There are straightforward, practical ideas, and one would have to test people's willingness and interest in these types of products, but let's start with the basics.
Sell Ads The most common one that people talk about is ad insertions. It would be very easy to insert ad-based products into Instagram. That's kind of obvious. When I say advertising, there are maybe five different ways you could advertise. You could, for example, have what are called interstitials, which means, if I look through 20 pictures, out of every 20 pictures, the twentieth is always an ad unit that's inserted into people's streams, like promoted Instagram photos. I could have tools for advertisers that help me to build more interactions--Instagrams, say, that are clickable. I'm not going to say it's inevitable that they do something like Pinterest, but there are 10 different ad products there, and that's only one of them.
Offer Premium Service Other obvious low-hanging fruit relates to how the product is free now. So one could design a version that is premium. The nice thing when you're dealing at scale, even if people are willing to pay a modest sum, say $5 per month, and even if you're converting five to 10% of your user base...well, when you have 100 or 200 or 300 million users, that's a lot of money. Of course, there is a culture in social media of not charging people. But look at Dropbox. Dropbox charges people, and people seem willing to pay, and that's become quite a large business. So one could easily imagine a service where they design features that people are willing to pay for.
Print Products I mean, we already know images can be monetized. Just look at Shutterfly. If you created an offline product, something related to printing, where I could take those moments--the photos that I love and that look good and that are filtered--and connect them with a way to print photo packs, or create albums, or to do mugs, or T-shirts.
Harvest Data And the final component that is obvious low-hanging fruit is the data, and being able to sell the data. I know when you talk about selling the data, people assume you mean private confidential data. But that's not the case. There are opportunities to sell aggregate information that are valuable to people, either about people's shopping behavior or restaurant behavior, or what their interests are. Know more about individuals and who they're following and connecting with--these fabrics of networks have become very valuable data sources, and in particular Instagram has an attribute that's very similar to Twitter, which is that it's an open network. When you started using Instagram, just like Twitter, your starting assumption was, unless I made myself private, everyone was going to be able to see it. You know the data and photos are already public.
And there's a ton that can be done with the data. I'm involved with a company called DataSift, which has already built a very fast-growing business around helping to monetize Twitter data. I know firsthand how much businesses crave market intelligence that can be picked up from open-data sources. So let me just give some examples that won't seem so obvious. It's possible for governments to crack down on terrorism and hooliganism by looking at open-data sources like Twitter and Instagram. It's possible for people to make predictions that might help with crowd control by monitoring behavior. It's possible that in the legal field, as you're looking to do jury selection, and you're going in and interviewing jurors, to figure out what their biases may be with public data. A lot of that can be down at a lower cost without having to bring people in.
I could go on and on. You think about news sources. Right now, Twitter is doing a great job of aggregating real-time news. But in a world where Instagram is as widely diffused as Twitter, news organizations could aggregate real-time photos and they could do it in a way without having to have photographers on the ground. So say, okay, I know there was a major fire in the zip code 90272. I could mine the Instagram data from the last hour in 90272 if I wanted to look for images of the fire.
There's so much that could be done with public open data that people don't understand. Those are the immediate obvious business opportunities.
Get Into Sponsored Filters Well, one way would to be to monetize filters. Could Marvel sponsor a filter that changes your pictures into comic styles? Could the Met put a Renoir filter on your photos? Could Crayola put specific coloring filters on your photos? And so forth. Facebook could target it so people don't have an endless amount of filters to choose from.
Offer Promoted Pics Of course, you could do promoted Instagrams like Promoted Tweets. But I see that as an obvious place to go. I don't think it's the most innovative thing they could do with Instagram. I'm leaning against the idea of Promoted Photos on Instagram, and leaning more toward more utility-based things--a way of marketing that users of Instagram would appreciate more than something they expect from a platform like Facebook or Twitter. So another kind of twist would be to do hashtag takeovers. I found myself recently since the update spending a lot of time in the Explore section, seeing who is using the same hashtags I am. That I think is an interesting stop for an ad placement. Like if #Catstagram was taken over by Purina, with all pictures of cats or dogs all over it.
Leverage Location, Deals I also really think Instagram should be used like Twitter in terms of the one-on-one responses. So a lot of people are geo-locating their photos. We recently went to the Brooklyn Cyclone's game, and took tons of Instagram photos while we were there, which were all geo-located. What would've been cool is if there were deals, so say, if Nathan's, which is right down the street, commented on our pictures and said, "Enjoy the game! Come over afterward to get free waffle fries with purchase of a hotdog!" I think there is the timely, surprise-and-delight reaction that is getting common on Twitter that hasn't transferred over to Instagram yet, but should.
So for brands to get involved, I think it could be very similar to Facebook in that there's the lo-fi way to do it that's perhaps more manual. But then there could be packages where Instagram actually helps brands find the right people at the right time, and makes sure they get the right message.
Sell Exposure Well, first I'd say that now that I'm running my own business, I no longer try to tell people how to run theirs. But what I'd say for Instagram is that the basic model for brands on asymmetrical networks seems to have been solidified. Facebook created it: the ability to get fans and build your network, which solves a huge issue brands had, which is, How do I get people to pay attention? Facebook solved the audience acquisition problem. If you are willing to spend the money, you can have the audience. Facebook, Twitter, and Tumblr all have that model now.
The other side of that model, which all three platforms have, is the ability to promote content to additional audiences. So with Instagram, I suspect the end game is going to be the same as everywhere else. Ultimately brands want exposure. We've seen Instagram being used so far for behind-the-scenes looks. So GE has a really good Instagram feed that's basically behind the scenes. But it's for very specific reasons. Part of the company's mission over the last few years is to communicate that GE is a maker and an innovator and a real manufacturer of things. So going back behind the scenes is communicating that in a visual manner. It does what it needs to do. I don't think we need someone to leave [Instagram] to do that.
People keep asking about mobile advertising, and I think we're looking at it already. The mobile winners are going to be Facebook and Instagram and Twitter. Ultimately they're going to win because the ad product is content, and it translates perfectly to mobile. Like Promoted Tweets on Twitter, you don't need to do something special to make it run on mobile. It's just there. I think everybody is having these conversations about trying to find the silver bullet in mobile advertising. But I think it's here. You're looking at it.
And you also have to remember it's still very early on. Facebook only introduced Promoted Posts in the last three or four months.
Keep Building Value, Cash Out Later My perspective is that Instagram is an amazing platform. The killer app for Facebook is photos. I used to help run Photobucket--I know photos are the killer app. And if you have people taking pictures, posting pictures, and distributing and sharing them, and not utilizing the Facebook platform, well that's a massive detriment to Facebook. So I think its acquisition of Instagram was partly a defensive move.
As to monetization, I believe there's a great opportunity with photos, but no one has really done it. If anyone is going to do it, it's going to be a Facebook or Google. But they haven't really figured out how to make money off of photos yet. The problem in mobile and with photos is that there aren't as many ad units that people can sell.
So we'll have to wait and see. I really don't have an answer to this one. If I did, I'd be a lot wealthier.
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