Instagram was built in 8 weeks, it went viral in a matter of hours. It looks so easy it’s unnerving. Well…not so fast.

Back in 2010, when Foursquare was at its peak, two young enthusiasts, Kevin Systrom and Mike Krieger, started Burbn. It was a location-based app allowing users to make future plans, hang out with friends, and post pictures. Basically, a cooler version of Foursquare, but a bit cluttered.

Burbn, the original Instagram (Screenshot from Famous First Landing Pages)

Burbn was well received. For its early adopters, it was a way to share their daily lives with the world. Yet, trying to explain the app to potential new users was frustrating. It was too complex to understand.

They needed to declutter the app, but what to cut?

To answer this, they looked at the data. Turns out, people loved to post photos on Burbn after running them through some photo filter apps. So, they zeroed in on that tiny slice of opportunity. They created a brand new app that did one thing — posted photos. Apply your filter, post, comment, like, done. The rest is history.

Instagram is the exemplar of solving problems with a growth mindset.

The founders approach adhered to three pillars:

Locate your users Find blue oceans Analyze data

Let’s dive into those and see how they did it.

1. Locate your users. Growth thinking focuses on finding creative ways to acquire users. To do that, you should know where your users are and what they like. Before starting with the brainstorm, ask yourself:

Where do my users go?

What do they read?

What do they buy?

How did Instagram do it?

For Instagram, the turning point was a party in the Valley Kevin Systrom attended. There, he met a bunch of people who became Burbn’s early adopters, as well as two investors who jumped on board with him.

In retrospect, a party in the Valley is the perfect place to present Burbn. Techies who like to party make great early adopters for an app focused on sharing fun moments online.

How did this work for other popular startups?

Airbnb is another great example of how knowing your users can make all the difference. Since the beginnings, Airbnb’s focus was on the users. They worked so hard to provide great experience, they even went door to door taking professional pictures of listings. Yet, they struggled with traction. The first stop for people looking for alternative accommodation was still Craigslist.

Airbnb’s email inviting users to republish their listings. Source: Rishi’s blog post.

They knew where their target market was, but how do they get their attention?

Analyzing Craigslist listings, they realized they were all lifeless and boring. They were sure their listings would stand out if published there, so they decided to prompt their users to do it. Soon, Airbnb listings were all over Craigslist and the platform started to rise.

2.Find blue oceans. W. Chan Kim, author of Blue Ocean Strategy, writes:

“Blue ocean strategy challenges companies to break out of the red ocean of bloody competition by creating uncontested market space that makes the competition irrelevant.”

In other words, blue ocean is a marketplace free of competition. The blue ocean strategy aims to make the competition irrelevant instead of outperforming it. It encourages differentiation, opening up a new market space and creating new demand.

How did Instagram do it?

Burbn started as an app that fought Foursquare for the same market space. Burbn users liked the app, some were loyal and active daily but, as they say, it wasn’t “setting the world on fire.” They were fighting in a red ocean and would soon be eaten by the sharks if they didn’t do something. Then, a pivot.

By trimming Burbn’s unnecessary features, the soon-to-be-Instagram created a whole new, blue ocean.

And with this move, Foursquare became irrelevant.

How did this work for other popular startups?

Another great way to find your blue ocean is to look for an alternative solution to a problem. Netflix mastered that. First, they introduced a subscription model to the usual DVD rental. For a fixed monthly fee, their users could get a DVD delivered to their doorstep, and keep it for as long as they want.

Then, they went a step further and released the online stream. With the same subscription model, their users didn’t have to wait for a DVD delivery anymore. They could have their movie played in an instant.

Netflix was one step ahead of Apple and Amazon. Soon, they had their own market space where everyone else became irrelevant.

3. Analyze Data. When it comes to analyzing startups, the Pirate Metrics are still the no. 1 method — AARRR. It stands for Acquisition, Activation, Retention, Referral and Revenue.

What should you look for in these metrics?

Understand your users’ actions. Learn what channels are bringing in the most loyal customers, watch where they come from and when they quit using your product, find the most profitable actions and focus on creating more of those actions. Find their trigger. What makes someone refer the app to their friends? What do they like about it? How does it make them feel? Try to find their incentives and stimulate them to share.

How did Instagram do it?

The Burbn team identified three major clues in their customer data:

Acquiring new users was hard because the app was too complex to explain. Active users were using the photo sharing feature, but only after applying external filters. People liked documenting their daily lives and sharing it with others.

Knowing what we know now, it’s not hard to see how these insights turned into, what is today, everyone’s favorite photo sharing app.

How did this work for other popular startups?

Before becoming the leader it is today, Hubspot struggled with retention. Failing to scale up, they dug into their data.

At the time, Hubspot offered their users two types of tools: TOFU (top of the funnel) and MOFU (middle of the funnel). The former intended to help their users attract visitors to their websites. The latter, to help them turn those visitors into qualified leads.

Hubspot’s focus was on perfecting the TOFU tools. Yet, their data proved this instinct wrong. Turns out, it was HubSpot’s MOFU tools that were resulting in far better retention rates.

Key Growth Lessons from the Early Days of Instagram

Overnight success does not exist. Great success comes from constant testing, iterating and listening to your users. It doesn’t happen overnight. Locate your users. Understand your users, learn where they are, what they like. Then use that knowledge to present your brand, explain what you do and get a serious feedback. Pivot. Never favor bloody competition. Differentiate, give your users extra value, and create new market spaces. Find your blue ocean, so that competition becomes irrelevant. Analyze. Dive into your user data. See how they behave, what parts of your app they like and use, where do they drop out. Find their incentive and motivate them to share it and become your ambassadors.

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