WhatsApp’s chief business officer is leaving

Neeraj Arora was widely believed to be the frontrunner to replace former CEO Jan Koum, who left the company shortly after co-founder Brian Acton earlier this year.

Roughly one year after WhatsApp co-founder Brian Acton made his highly-publicized exit from Facebook, another executive and early employee of the messaging platform is doing the same. Neeraj Arora, WhatsApp’s chief business officer, announced today that he would be “taking some time off to recharge and spend time with family.”

Facebook acquired WhatsApp for $19 billion in 2014 and pledged to allow the messaging giant to continue to operate independently under Acton and co-founder Jan Koum, who served as its chief executive officer until abruptly quitting over privacy and data concerns in April. Arora, who joined WhatsApp in 2011 from Google, was rumored to be the frontrunner to replace Koum as CEO. With him out the door, it’s unclear who will be tapped to lead WhatsApp .

In today’s announcement, Arora said he was “deeply indebted” to both Acton and Koum, “who entrusted me to be their business companion for so many years.”

Facebook subsidiaries WhatsApp and Instagram are both in periods of flux following the exits of their original founders, which are believed to be caused by quarrels with the social media giant’s CEO Mark Zuckerberg .

In what was one of the largest tech stories of 2018, Instagram co-founders Kevin Systrom and Mike Krieger announced they were leaving Facebook years after the company acquired their photo-sharing app for $1 billion. They shared the news in September, just a few months after Koum stepped down from WhatsApp.

At the time, Koum reportedly wrote in a since-removed WhatsApp blog post that Zuckerberg and Facebook no longer had respect for privacy: “These days companies know literally everything about you, your friends, your interests, and they use it all to sell ads. At every company that sells ads, a significant portion of their engineering team spends they day tuning data mining, writing better code to collect your personal data… remember, when advertising is involved, you the user are the product.”

Instagram’s Systrom and Zuckerberg also had their occasional spat. according to The New York Times, Zuckerberg, over the course of the last year, began to assert more and more control over Instagram, upsetting its leaders.

On Koum’s exit, Zuck had this to say: “I will miss working so closely with you. I’m grateful for everything you’ve done to help connect the world, and for everything you’ve taught me, including about encryption and its ability to take power from centralized systems and put it back in people’s hands. Those values will always be at the heart of WhatsApp.”

Arora’s exit is further evidence that Facebook has entered a new era, one in which the company’s acquisition strategy may be in serious danger of long-term damage.

You can read Arora’s full post below.

Josh Kushner’s Thrive Capital brings in $1B

Thrive Capital has announced the close of its largest fund to date.

It’s a good week to be Josh Kushner, venture capitalist, founder of the health insurance unicorn Oscar, brother to President Donald Trump’s senior advisor Jared Kushner and son of real estate tycoon Charles Kushner.

Days after marrying supermodel Karlie Kloss, Kushner’s VC firm Thrive Capital has announced the close of $1 billion in new capital for its sixth flagship venture fund. The firm has raised $600 million for late-stage deals and an additional $400 million for earlier bets.

Thrive is stage and industry agnostic with investments in Oscar, Cadre, a real estate software company co-founded by the Kushner brothers, Glossier, Warby Parker, Slack, Robinhood and Stripe. Its exits include Spotify, Twitch and GitHub, of which it owned a 9 percent stake at the time of its $7.5 billion sale to Microsoft earlier this year.

Kushner, a close friend to Instagram’s former chief executive officer Kevin Systrom, famously doubled his money in 72 hours after investing in the photo-sharing app days before Facebook’s acquisition. He launched Thrive in 2009 and has quickly risen to prominence as both a founder and successful venture investor.

The New York-based firm’s funds have grown successively larger. Its fifth fund closed on $700 million in 2016. Before that, Thrive brought in $400 million in October 2014 for its fourth effort, $150 million in 2012 for its third, $40 million in 2011 for its second and $10 million for its 2009 debut fund.

The $1 billion vehicle is its largest to date.

Kushner, who at just 33 years old is one of the youngest billion-dollar fund managers, has been on a fundraising spree as of late. Oscar secured a $165 million investment in March at a reported valuation of $3.2 billion, bringing its total raised to date to some $1.2 billion.

Thrive’s latest infusion brings its total assets under management to date to $2.5 billion.

Josh Kushner’s Thrive Capital brings in $1B

Thrive Capital has announced the close of its largest fund to date.

It’s a good week to be Josh Kushner, venture capitalist, founder of the health insurance unicorn Oscar, brother to President Donald Trump’s senior advisor Jared Kushner and son of real estate tycoon Charles Kushner.

Days after marrying supermodel Karlie Kloss, Kushner’s VC firm Thrive Capital has announced the close of $1 billion in new capital for its sixth flagship venture fund. The firm has raised $600 million for late-stage deals and an additional $400 million for earlier bets.

Thrive is stage and industry agnostic with investments in Oscar, Cadre, a real estate software company co-founded by the Kushner brothers, Glossier, Warby Parker, Slack, Robinhood and Stripe. Its exits include Spotify, Twitch and GitHub, of which it owned a 9 percent stake at the time of its $7.5 billion sale to Microsoft earlier this year.

Kushner, a close friend to Instagram’s former chief executive officer Kevin Systrom, famously doubled his money in 72 hours after investing in the photo-sharing app days before Facebook’s acquisition. He launched Thrive in 2009 and has quickly risen to prominence as both a founder and successful venture investor.

The New York-based firm’s funds have grown successively larger. Its fifth fund closed on $700 million in 2016. Before that, Thrive brought in $400 million in October 2014 for its fourth effort, $150 million in 2012 for its third, $40 million in 2011 for its second and $10 million for its 2009 debut fund.

The $1 billion vehicle is its largest to date.

Kushner, who at just 33 years old is one of the youngest billion-dollar fund managers, has been on a fundraising spree as of late. Oscar secured a $165 million investment in March at a reported valuation of $3.2 billion, bringing its total raised to date to some $1.2 billion.

Thrive’s latest infusion brings its total assets under management to date to $2.5 billion.

Meet Adam Mosseri, the new head of Instagram

Former Facebook VP of News Feed and recently appointed Instagram VP of Product Adam Mosseri has been named the new head of Instagram. “We are thrilled to hand over the reins to a product leader with a strong design background and a focus on craft and simplicity — as well as a deep understanding of […]

Former Facebook VP of News Feed and recently appointed Instagram VP of Product Adam Mosseri has been named the new head of Instagram. “We are thrilled to hand over the reins to a product leader with a strong design background and a focus on craft and simplicity — as well as a deep understanding of the importance of community” Instagram’s founders Kevin Systrom and Mike Krieger write. “These are the values and principles that have been essential to us at Instagram since the day we started, and we’re excited for Adam to carry them forward.”

Instagram’s founders announced last week that they were resigning after sources told TechCrunch the pair had dealt with dwindling autonomy from Facebook and rising tensions with its CEO Mark Zuckerberg. Mosseri’s experience dealing with the unintended consequences of the News Feed such as fake news in the wake of the 2016 election could help him predict how Instagram’s growth will impact culture, politics, and user well-being.

Born and raised in New York, Mosseri started his own design consultancy while attending NYU’s Gallatin School Of Interdisciplinary Study to learn about media and information design. Mosseri joined Facebook in 2008 after briefly working at a startup called TokBox. Tasked with helping Facebook embrace mobile as design director, he’s since become part of Zuckerberg’s inner circle of friends and lieutenants. Mosseri later moved into product management and oversaw Facebook’s News Feed, turn it into the world’s most popular social technology and the driver of billions in profit from advertising.

After going on parental leave this year, he returned to take over the role of Instagram VP of Product Kevin Weil as he move to Facebook’s blockchain team. A source tells TechCrunch he was well-received and productive since joining Instagram, and has gotten along well with Systrom. Mosseri now lives in San Francisco, close enough to work from both Instagram’s city office and South Bay headquarters.

“The impact of their work over the past eight years has been incredible. They built a product people love that brings joy and connection to so many lives” Mosseri wrote about Instagram’s founders in an…Instagram post. I’m humbled and excited about the opportunity to now lead the Instagram team. I want to thank them for trusting me to carry forward the values that they have established. I will do my best to make them, the team, and the Instagram community proud.”

Mosseri will be tasked with balancing the needs of Instagram such as headcount, engineering resources, and growth with the priorities of its parent company Facebook, such as cross-promotion to Instagram’s younger audience and revenue to contribute to the corporation’s earnings reports. Some see Mosseri as more sympathetic to Facebook’s desire than Instagram’s founders, given his long-stint at the parent company and his close relationship with Zuckerberg.

The question will be whether users will end up seeing more notifications and shortcuts linking back to Facebook, or more ads in the Stories and feed. Instagram hasn’t highlighted the ability to syndicate your Stories to Facebook, which could be boon for that parallel product. Instagram Stories now has 400 million daily users compared to Facebook Stories and Messenger Stories’ combined 150 million users. Tying them more closely could seem more content flow into Facebook, but it might also make users second guess whether what they’re sharing is appropriate for all of their Facebook friends, which might include family or professional colleagues.

Mosseri’s most pressing responsibility will be reassurring users that the culture of Instagram and its app won’t be assimilated into Facebook now that he’s running things instead of the founders. He’ll also need to snap into action to protect Instagram from being used as a pawn for election interference in the run-up to the 2018 US mid-terms.

Facebook poisons the acquisition well

Who should you sell your startup to? Facebook and the founders of its former acquisitions are making a strong case against getting bought by Mark Zuckerberg and co. After a half-decade of being seen as one of the most respectful and desired acquirers, a series of scandals has destroyed the image of Facebook’s M&A division. That […]

Who should you sell your startup to? Facebook and the founders of its former acquisitions are making a strong case against getting bought by Mark Zuckerberg and co. After a half-decade of being seen as one of the most respectful and desired acquirers, a series of scandals has destroyed the image of Facebook’s M&A division. That could make it tougher to convince entrepreneurs to sell to Facebook, or force it to pay higher prices and put contractual guarantees of autononmy into the deals.

WhatsApp’s founders left amidst aggresive pushes to monetize. Instagram’s founders left as their independence was threatened. Oculus’ founders were demoted. And over the past few years Facebook has also shut down acquisitions including viral teen Q&A app TBH, fitness tracker Moves, video advertising system LiveRail, voice control developer toolkit Wit.ai, and still-popular mobile app developer platform Parse.

Facebook’s users might not know or care about much of this. But it could be a sticking point the next time Facebook tries to buy out a burgeoning competitor or complementary service.

Broken Promises With WhatsApp

The real trouble started with WhatsApp co-founder Brian Acton’s departure from Facebook a year ago before he was full vested from the $22 billion acquisition in 2014. He’d been adamant that Facebook not stick the targeted ads he hated inside WhatsApp, and Zuckerberg conceded not to. Acton even got a clause added to the deal that the co-founders’ remaining stock would vest instantly if Facebook implemented monetization schemes without their consent. Google was also interested in buying WhatsApp, but Facebook’s assurances of independence sealed the deal.

WhatsApp’s other co-founder Jan Koum left Facebook in April following tension about how Facebook would monetize his app and the impact of that on privacy. Acton’s departure saw him leave $850 million on the table. Captivity must have been pretty rough for freedom to be worth that much. Today in an interview with Forbes’s Parmy Olson, he detailed how Facebook got him to promise it wouldn’t integrate WhatsApp’s user data to get the deal approved by EU regulators. Facebook then broke that promise, paid the $122 million fine that amounted to a tiny speed bump for the money-printing corporation, and kept on hacking.

When Acton tried to enact the instant-vesting clause upon his departure, Facebook claimed it was still exploring, not “implementing”, monetization. Acton declined a legal fight and walked away, eventually tweeting “Delete Facebook”. Koum stayed to vest a little longer. But soon after they departed, WhatsApp started charging businesses for slow replies, and it will inject ads into the WhatsApp’s Stories product Status next year. With user growth slowing, users shifting to Stories, and News Feed out of ad space, Facebook’s revenue problem became WhatsApp’s monetization mandate.

The message was that Facebook would eventually break its agreements with acquired founders to prioritize its own needs.

Diminished Autonomy For Instagram

Instagram’s co-founders Kevin Systrom and Mike Krieger announced they were resigning this week, which sources tell Techcrunch was because of mounting tensions with Zuckerberg over product direction. Zuckerberg himself negotiated the 2012 acquisition for $1 billion ($715 million when the deal closed with Facebook’s share price down, but later $4 billion as it massively climbed). That price was stipulated on Instagram remaining independent in both brand and product roadmap.

Zuckerberg upheld his end of the bargain for five years, and the Instagram co-founders stayed on past their original vesting dates — uncommon in Silicon Valley. Facebook pointed to Instagram’s autonomy when it was trying to secure the WhatsApp acquisition. And with the help of Facebook’s engineering, sales, recruiting, internationalization, and anti-spam teams, Instagram grew into a 1 billion user juggernaut.

But again, Facebook’s growth and financial woes led to a change of heart for Zuckerberg. Facebook’s popularity amongst teens was plummeting while Instagram remained cool. Facebook pushed to show its alerts and links back to the parent company inside of Instagram’s notifications and settings tabs. Meanwhile, it stripped out the Instagram attribution from cross-posted photos and deleted a shortcut to Instagram from the Facebook bookmarks menu.

Zuckerberg then installed a loyalist, his close friend and former News Feed VP Adam Mosseri as Instagram’s new VP of Product mid-way through this year. The reorganization also saw Systrom start reporting to Facebook CPO Chris Cox. Previously the Instagram CEO had more direct contact with Zuckerberg despite technically reporting to CTO Mike Schroepfer, and the insertion of a layer of management between them frayed their connection. 6 years after being acquired, Facebook started breaking its promises, Instagram felt less autonomous, and the founders exited.

The message again was that Facebook expected to be able to exploit its acquisitions regardless of their previous agreements.

Reduced Visibility For Oculus

Zuckerberg declared Oculus was the next great computing platform when Facebook acquired the virtual reality company in 2014. Adoption ended up slower than many expected, forcing Oculus to fund VR content creators since it’s still an unsustainable business. Oculus has likely been a major cash sink for Facebook it will have to hope pays off later.

But in the meantime the co-founders of Oculus have faded into the background. Brendan Iribe and Nate Mitchell have gone from leading the company to focusing on the nerdiest part of its growing product lineup as VPs running the PC VR and Rift hardware teams respectively. Former Xiaomi hardware leader Hugo Barra was brought in as VP of VR to oversee Oculus, and he reports to former Facebook VP of Ads Andrew “Boz” Bosworth — a long-time Zuckerberg confidant who TA’d one of his classes at Harvard who now runs all of Facebook’s hardware efforts.

Oculus’ original visionary inventor Palmer Luckey left Facebook last year following a schism with the company over him funding anti-Hillary Clinton memes and “sh*tposters”. He was pressed to apologize, saying “I am deeply sorry that my actions are negatively impacting the perception of Oculus and its partners.”

Lesser-known co-founder Jack McCauley left Facebook just a year after the acquisition to start his own VR lab. Sadly, Oculus co-founder Andrew Reisse died in 2013 when he was struck by a vehicle in a police chase just two months after the acquisition was announced. The final co-founder Michael Antonov was the Chief Software Architect, but Facebook just confirmed to me he recently left the division to work on artificial intelligence infrastructure at Facebook.

Today for the first time, none of the Oculus co-founders appeared on stage at its annual Connect conference. Obviously the skills needed to scale and monetize a product are different from those needed to create. Still, going from running the company to being stuck in the audience doesn’t send a great signal about how Facebook treats acquired founders.

Course Correction

Facebook needs to take action if it wants to reassure prospective acquisitions that it can be a good home for their startups. I think Zuckerberg or Mosseri (likely to be named Instagram’s new leader) should issue a statement that they understand people’s fears about what will happen to Instagram and WhatsApp since they’re such important parts of users’ lives, and establishing core tenets of the product’s identity they don’t want to change. Again, 15-year-old Instagrammers and WhatsAppers probably won’t care, but potential acquisitions would.

So far, Facebook has only managed to further inflame the founders versus Facebook divide. Today former VP of Messenger and now head of Facebook’s blockchain team David Marcus wrote a scathing note criticizing Acton for his Forbes interview and claiming that Zuckerberg tried to protect WhatsApp’s autonomy. “Call me old fashioned. But I find attacking the people and company that made you a billionaire, and went to an unprecedented extent to shield and accommodate you for years, low-class. It’s actually a whole new standard of low-class” he wrote.

Posted by David Marcus on Wednesday, September 26, 2018

But this was a wasted opportunity for Facebook to discuss all the advantages it brings to its acquisitions. Marcus wrote “As far as I’m concerned, and as a former lifelong entrepreneur and founder, there’s no other large company I’d work at, and no other leader I’d work for”, and noted the opportunity for impact and the relatively long amount of time acquired founders have stayed in the past. Still, it would have been more productive to focus on why’s it’s where he wants to work, how founders actually get to touch the lives of billions, and how other acquirers like Twitter and Google frequently dissolve the companies they buy and often see their founders leave even sooner.

Acquisitions have protected Facebook from disruption. Now that strategy is in danger if it can’t change this narrative. Lots of zeros on a check might not be enough to convince the next great entrepreneur to sell Facebook their startup if they suspect they or their project will be steamrolled.

Facebook’s plan to let companies it buys live independently is over

Mark Zuckerberg was quick to realize that Facebook, the largest social network in the world, doesn’t have a monopoly on all users nor can it bank on holding its position as top dog forever. Thus he instituted a policy of buying up promising rivals and integrating them into the Facebook ‘group’ in a strategy designed […]

Mark Zuckerberg was quick to realize that Facebook, the largest social network in the world, doesn’t have a monopoly on all users nor can it bank on holding its position as top dog forever. Thus he instituted a policy of buying up promising rivals and integrating them into the Facebook ‘group’ in a strategy designed to be a win-win for all.

But by leaving Facebook in abrupt fashion this week, Kevin Systrom and Mike Krieger — the founders of Instagram — have shown that the social network’s vision of letting acquired businesses operate independently simply isn’t feasible.

Few large-scale acquisitions run smoothly, so it is to Facebook’s credit that Systrom and Krieger remained with the company for six years after Instagram was acquired for $1 billion in 2012.

That’s a long stretch by any tech acquisition standard, but it is still short of Facebook’s vision of entrepreneurs who continue their startup journeys inside its walls.

The Facebook Family

The original idea is a best-of-both-worlds approach: a company’s finances are infinitely secured and it can grow as needed inside the Facebook ‘family,’ with access to resources like engineering, marketing, admin, etc.

That was also the plan for WhatsApp, but founding pair Jan Koum and Brian Acton managed four and three and a half years, respectively, at Facebook following their $19 billion acquisition in 2014. VR firm Oculus, another billion-dollar purchase, lost co-founders Palmer Lucky (political scandal) and Brendan Iribe (reshuffled) three years after its deal. Ex-Xiaomi executive Hugo Barra now runs the unit as “Facebook VP of VR.”

In the normal state of tech acquisitions, getting six years — or even just three — from a founder post-acquisition is impressive. It requires a strong vision and autonomy for the incoming business.

Many founders become serial founders, even after an exit has set them up financially for life. There’s a thrill in building something new, taking sole charge and growing it. But post-acquisition, the basic dynamics change. As a founder, you call the shots — you are the boss — rather than part of the company hierarchy post-deal. Going from employee to founder requires adjustment, but back the other direction is often trickier — particularly when your business is part of a strategy for a larger one that’s rife with politics.

Facebook tried to mitigate that by promising autonomy for its founders.

Instagram’s duo retained a lot of control — Systrom was the face of the company and he reportedly approved all ads personally — while the same was true of WhatsApp, with Koum made a member of the Facebook board. Indeed, the WhatsApp founders dubbed the acquisition a “partnership” such was their insistence that things wouldn’t change under Facebook’s ownership.

Jan Koum, once a member of Facebook’s board, is said to have clashed with the social network’s management over its intentions for his WhatsApp service

Independence Vs Facebook’s Interests

But it didn’t work.

All four founders of WhatsApp and Instagram have left as Facebook inevitably sought further control of their companies in order to advance its wider goals as a business

WhatsApp, for example, has embraced business-consumer communication, is working on payments and has an advertising tie-in with Facebook. These are all features that would have troubled founders Koum and Acton, whose previous public manifesto railed against anything that takes away from a simple user experience, and particularly advertising.

After reported friction with Facebook management, Koum left in April 2018 to “do things I enjoy outside of technology, such as collecting rare air-cooled Porsches, working on my cars and playing ultimate frisbee.” Acton, meanwhile, quietly exited the year before but then tellingly wrote a $50 million check for Signal, an encrypted chat app that rivals WhatsApp, and publicly backed the #deletefacebook campaign over privacy concerns.

Over at Instagram, a similar situation seems to have happened with Systrom and Krieger. As TechCrunch’s Josh Constine reports, sources suggested that the leadership’s “weakening independence” from Facebook was a source of frustration for them that ultimately led to their untimely exit.

Reading the short farewell note from Systrom seems to hammer that home. There’s no thank you for Mark Zuckerberg, Sheryl Sandberg or any other Facebook executive. Systrom instead stated that Krieger and he are keen to explore their “curiosity and creativity again” by building new products.

Instagram CEO Kevin Systrom continued to be the service’s public face even after its acquisition by Facebook in 2012

Facebook had a good run with its independence policy, but ultimately these four exits illustrate that founders can’t be caged and tamed. While, on the other side, a buyer is always going to want to get their pound of flesh from billion-dollar acquisitions. Facebook can bend the rules and get a lengthier service from founders than most, but you can’t defy gravity forever.

While it has lost the original founders, Facebook has also seen wild success from its purchases. Instagram went from 30 million users pre-acquisition to over one billion today, while WhatsApp has more than 1.5 billion active users up from 450 million at the time of its deal.

The important question now is whether Facebook’s in-house team managing these services can continue to scale them without the inventors in place. Beyond talent, losing that original culture is a blow. These acquired services need to remain differentiated from Facebook from a consumer perspective, otherwise the entire point of owning them — the bet that the future of social networks may not be Facebook — is moot.

For IGTV, Instagram needs slow to mean steady

Instagram has never truly failed at anything, but judging by modest initial view counts, IGTV could get stuck with a reputation as an abandoned theater if the company isn’t careful. It’s no flop, but the long-form video hub certainly isn’t an instant hit like Instagram Stories. Two months after that launched in 2016, Instagram was […]

Instagram has never truly failed at anything, but judging by modest initial view counts, IGTV could get stuck with a reputation as an abandoned theater if the company isn’t careful. It’s no flop, but the long-form video hub certainly isn’t an instant hit like Instagram Stories. Two months after that launched in 2016, Instagram was happy to trumpet how its Snapchat clone had hit 100 million users. Yet two months after IGTV’s launch, the Facebook subsidiary has been silent on its traction.

“It’s a new format. It’s different. We have to wait for people to adopt it and that takes time,” Instagram CEO Kevin Systrom told me. “Think of it this way: we just invested in a startup called IGTV, but it’s small, and it’s like Instagram was ‘early days.'”

It’s indeed too early for a scientific analysis, and Instagram’s feed has been around since 2010, so it’s obviously not a fair comparison, but we took a look at the IGTV view counts of some of the feature’s launch partner creators. Across six of those creators, their recent feed videos are getting roughly 6.8X as many views as their IGTV posts. If IGTV’s launch partners that benefited from early access and guidance aren’t doing so hot, it means there’s likely no free view count bonanza in store from other creators or regular users.

They, and IGTV, will have to work for their audience. That’s already proving difficult for the standalone IGTV app. Though it peaked at the #25 overall US iPhone app and has seen 2.5 million downloads across iOS and Android according to Sensor Tower, it’s since dropped to #1497 and seen a 94 percent decrease in weekly installs to just 70,000 last week.

Instagram will have to be in it for the long haul if it wants to win at long-form video. Entering the market 13 years after YouTube with a vertical format no one’s quite sure what to do with, IGTV must play the tortoise. If it can avoid getting scrapped or buried, and offer the right incentives and flexibility to creators, IGTV could deliver the spontaneous video viewing experience Instagram lacks. Otherwise, IGTV risks becoming the next Google Plus — a ghost town inside an otherwise thriving product ecosystem.

A glitzy, glitchy start

Instagram gave IGTV a red carpet premiere June 20th in hopes of making it look like the new digital hotspot. The San Francisco launch event offered attendees several types of avocado toast, spa water and ‘Gram-worthy portrait backdrops reminiscent of the Color Factory or Museum of Ice Cream. Instagram hadn’t held a flashy press event since the 2013 launch of video sharing, so it pulled out all the stops. Balloon sculptures lined the entrance to a massive warehouse packed with social media stars and ad execs shouting to each other over the din of the DJ.

But things were rocky from the start. Leaks led TechCrunch to report on the IGTV name and details in the preceding weeks. Technical difficulties with Systrom’s presentation pushed back the start, but not the rollout of IGTV’s code. Tipster Jane Manchun Wong sent TechCrunch screenshots of the new app and features a half hour before it was announced, and Instagram’s own Business Blog jumped the gun by posting details of the launch. The web already knew how IGTV would let people upload vertical videos up to an hour long and browse them through categories like “Popular” and “For You” by the time Systrom took the stage.

IGTV’s launch event featured Instagram-themed donuts and elaborate portrait backdrops. Images via Vicki’s Donuts and Mai Lanpham

“What I’m most proud of is that Instagram took a stand and tried a brand new thing that is frankly hard to pull off. Full-screen vertical video that’s mobile only. That doesn’t exist anywhere else,” Systrom tells me. It was indeed ambitious. Creators were already comfortable making short-form vertical Snapchat Stories by the time Instagram launched its own version. IGTV would have to start from scratch.

Systrom sees the steep learning curve as a differentiator, though. “One of the things I like most about the new format is that it’s actually fairly difficult to just take videos that exist online and simply repost them. That’s not true in feed. That basically forces everyone to create new stuff,” Systrom tells me. “It’s not to say that there isn’t other stuff on there but in general it incentivizes people to produce new things from scratch. And that’s really what we’re looking for. Even if the volume of that stuff at the beginning is smaller than what you might see on the popular page [of Instagram Explore].”

Instagram CEO Kevin Systrom unveils IGTV at the glitzy June 20th launch event

Instagram forced creators to adopt this proprietary format. But it forget to train Stories stars how to entertain us for five or 15 minutes, not 15 seconds, or convince landscape YouTube moguls to purposefully shoot or crop their clips for the way we normally hold our phones.

IGTV’s Popular page features plenty of random viral pap, foreign language content, and poor cropping

That should have been the real purpose of the launch party — demonstrating a variety of ways to turn these format constraints or lack thereof into unique content. Vertical video frames people better than places, and the length allows sustained eye-to-lens contacts that can engender an emotional connection. But a shallow array of initial content and too much confidence that creators would figure it out on their own deprived IGTV of emergent norms that other videographers could emulate to wet their feet.

Now IGTV feels haphazard, with trashy viral videos and miscropped ports amongst its Popular section alongside a few creators trying to produce made-for-IGTV talk shows and cooking tutorials. It’s yet to have its breakout “Chewbacca Mom” or “Rubberbanded Watermelon” blockbuster like Facebook Live. Even an interview with mega celeb Kylie Jenner only had 11,000 views.

Instagram wants to put the focus on the author, not the individual works of art. “Because we don’t have full text search and you can’t just search any random thing, it’s about the creators” Systrom explains. “I think that at its base level that it’s personality driven and creator driven means that you’re going to get really unique content that you won’t find anywhere else and that’s the goal.”

Yet being unique requires extra effort that creators might not invest if they’re unsure of the payoff in either reach or revenue. Michael Sayman, formerly Facebook’s youngest employee who was hired at age 17 to build apps for teens and who now works for Google, summed it up saying: “Many times in my own career, I’ve tried to make something with a unique spin or a special twist because I felt that’s the only way I could make my product stand out from the crowd, only to realize that it was those very twists and spins that made my products feel out of place and confusing to users. Sometimes, the best product is one that doesn’t create any new twists, but rather perfects and builds on top of what has been proven to already be extremely successful.”

A fraction of feed views

The one big surprise of the launch event was where IGTV would exist. Instagram announced it’d live in a standalone IGTV app, but also as a feature in the main app accessible from an orange button atop the home screen that would occasionally call out that new content was inside. But in essence, it was ignorable. IGTV didn’t get the benefit of being splayed out atop Instagram like Stories did. Blow past that one button and avoid downloading the separate app, and users could go right on tapping and scrolling through Instagram without coming across IGTV’s longer videos.

View counts of the launch partners reflect that. We looked at six launch partner creators, comparing their last six feed and IGTV videos older than a week and less than six months old, or fewer videos if that’s all they’d posted.

Only one of the six, BabyAriel, saw an obvious growth trend in her IGTV videos. Her candid IGTV monologues are performing the best of the six compared to feed. She’s earning an average of 243,000 views per IGTV video, about a third as many as she gets on her feed videos. “I’m really happy with my view counts because IGTV is just starting” BabyAriel tells me. She thinks the format will be good for behind-the-scenes clips that complement her longer YouTube videos and shorter Stories. “When I record anything, It’s vertical. When I turn my phone horizontal I think of an hour-long movie.”

Lele Pons, a Latin American comedy and music star who’s one of the most popular Instagram celebrities, gets about 5.7X more feed views than on her IGTV cooking show that averages 1.9 million hits. Instagram posted some IGTV highlights from the first month, but the most popular of now has 4.3 million views — less than half of what Pons gets on her average feed video.

Fitness guides from Katie Austin averaged just 3,600 views on IGTV while she gets 7.5X more in the feed. Lauren Godwin’s colorful comedy fared 5.2X better in the feed. Bryce Xavier saw the biggest differential, earning 15.9X more views for his dance and culture videos. And in the most direct comparison, K-Pop dancer Susie Shu sometimes posts cuts from the same performance to the two destinations, like one that got 273,000 views in feed but just 27,000 on IGTV, with similar clips fairing an average of 7.8X better.

Again, this isn’t to say IGTV is a lame horse. It just isn’t roaring out of the gates. Systrom remains optimistic about inventing a new format. “The question is can we pull that off and the early signs are really good,” he tells me. “We’ve been pretty blown away by the reception and the usage upfront,” though he declined to share any specific statistics. Instagram promised to provide more insight into traction in the future.

YouTube star Casey Neistat is less bullish. He doesn’t think IGTV is working and that engagement has been weak. If IGTV views were surpassing those of YouTube, creators would flock to it, but so far view counts are uninspiring and not worth diverting creative attention, Neistat says. “YouTube offers the best sit-back consumption, and Stories offers active consumption. Where does IGTV fit in? I’m not sure” he tells me. “Why create all of this unique content if it gets lower views, it’s not monetizable, and the viewers aren’t there?”

Susie Shu averages 7.8X more video views in the Instagram feed than on IGTV

For now, the combination of an unfamiliar format, the absence of direction for how to use it and the relatively buried placement has likely tempered IGTV’s traction. Two months in, Instagram Stories was proving itself an existential threat to Snapchat — which it’s in fact become. IGTV doesn’t pose the same danger to YouTube yet, and it will need a strategy to support a more slow-burn trajectory.

The chicken and the IG problem

The first step to becoming a real YouTube challenger is to build up some tent-pole content that gives people a reason to open IGTV. Until there’s something that captures attention, any cross-promotion traffic Instagram sends it will be like pouring water into a bucket with a giant hole in the bottom. Yet until there’s enough viewers, it’s tough to persuade creators to shoot for IGTV since it won’t do a ton to boost their fan base.

Fortnite champion Ninja shares a photo of IGTV launch partners gathered backstage at the press event

Meanwhile, Instagram hasn’t committed to a monetization or revenue-sharing strategy for IGTV. Systrom said at the launch that “There’s no ads in IGTV today,” but noted it’s “obviously a very reasonable place [for ads] to end up.” Without enough views, though, ads won’t earn enough for a revenue split to incentivize creators. Perhaps Instagram will heavily integrate its in-app shopping features and sponsored content partnerships, but even those rely on having more traffic. Vine withered at Twitter in part from creators bailing due to its omission of native monetization options.

So how does IGTV solve the chicken-and-egg problem? It may need to swallow its pride and pay early adopters directly for content until it racks up enough views to offer sustainable revenue sharing. Instagram has never publicly copped to paying for content before, unlike its parent Facebook, which offered stipends ranging into the millions of dollars for publishers to shoot Live broadcasts and long-form Watch shows. Neither have led to a booming viewership, but perhaps that’s because Facebook has lost its edge with the teens who love video.

Instagram could do better if it paid the right creators to weather IGTV’s initial slim pickings. Settling on ad strategy creators can count on earning money from in the future might also get them to hang tight. Those deals could mimic the 55 percent split of mid-roll ad breaks Facebook gives creators on some videos. But again, the views must come first.

Alternatively, or additionally, it could double down on the launch strategy of luring creators with the potential to become the big fish in IGTV’s small-for-now pond. Backroom deals to trade being highlighted in its IGTV algorithm in exchange for high-quality content could win the hearts of these stars and their managers. Instagram would be wise to pair these incentives with vertical long-form video content creation workshops. It could bring its community, product and analytics leaders together with partnered stars to suss out what works best in the format and help them shoot it.

The cross-promo spigot

Once there’s something worth watching on IGTV, the company could open the cross-promo traffic spigot. At first, Instagram would send notifications about top content or IGTV posts from people you follow, and call them out with a little orange text banner atop its main app. Now it seems to understand it will need to be more coercive.

Last month, TechCrunch spotted Instagram showing promos for individual IGTV shows in the middle of the feed, hoping to redirect eyeballs there. And today, we found Instagram getting more aggressive by putting a bigger call out featuring a relevant IGTV clip with preview image above your Stories tray on the home screen. It may need to boost the frequency of these cross-promotions and stick them in-between Stories and Explore sections as well to give IGTV the limelight. These could expose users to creators they don’t follow already but might enjoy.

It’s still early but I do think there’s a lot of potential when they figure out two things since the feature is so new,” says John Shahidi, who runs the Justin Bieber-backed Shots Studios, which produces and distributes content for Lele Pons, Rudy Mancuso and other Insta celebs. “1. Product. IGTV is not in your face so Instagram users aren’t changing behavior to consume. Timeline and Instagram Stories are in your face so those two are the most used features. 2. Discoverability. I want to see videos from people I don’t follow. Interesting stuff like cooking, product review, interesting content from brands but without following the accounts.” In the meantime, Shots Studios is launching a vertical-only channel on YouTube that Shahidi believes is the first of its kind.

Instagram will have to balance its strategic imperative to grow the long-form video hub and avoid spamming users until they hate the brand as a whole. Some think it’s already gone too far. “I think it’s super intrusive right now,” says Tiffany Zhong, once known as the world’s youngest venture capitalist who now runs Generation Z consulting firm Zebra Intelligence. “I personally find all the IGTV videos super boring and click out within seconds (and the only time I watch them are if I accidentally tapped on the icon when I tried to go to my DMs instead).” Desperately funneling traffic to the feature before there’s enough great content to power relevant recommendations for everyone could prematurely sour users on IGTV. 

Systrom remains optimistic he can iterate his way to success. “What I want to see over the next six to 12 months is a consistent drumbeat of new features that both consumers and creators are asking for, and to look at the retention curve and say ‘are people continuing to watch? Are people continuing to upload?,'” says Systrom. “So far we are seeing that all of those are healthy. But again trying to judge a very new kind of audacious format that’s never really been done before in the first months is going to be really hard.”

Differentiator or deterrent?

The biggest question remains whether IGTV will remain devout to the orthodoxy of vertical-only. Loosening up to accept landscape videos too might nullify a differentiator, but also pipe in a flood of content it could then algorithmically curate to bootstrap IGTV’s library. Reducing the friction by allowing people to easily port content to or from elsewhere might make it feel like less of a gamble for creators deciding where to put their production resources. Instagram itself expanded from square-only to portrait and landscape photos in the feed in 2015.

My advice would be to make the videos horizontal. We’ve all come to understand vertical as ‘short form’ and horizontal as ‘long form,'” says Sayman. “It’s in the act of rotating your phone to landscape that you indicate to yourself and to your mobile device that you will not be context switching for the next few minutes, but rather intend to focus on one piece of content for an extended period of time.” This would at least give users more to watch, even if they ended up viewing landscape videos with their phones in portrait orientation.

This might be best as a last-ditch effort if it can’t get enough content flowing in through other means. But at least Instagram should offer a cropping tool that lets users manually select what vertical slice of a landscape video they want to show as they watch, rather than just grabbing the center or picking one area on the side for the whole clip. This could let creators repurpose landscape videos without things getting awkwardly half cut out of frame.

Former Facebook employee and social investor Josh Elman, who now works at Robinhood, told me he’s confident the company will experiment as much as necessary. “I think Facebook is relentless. They know that a ton of consumers watch video online. And most discover videos through influencers or their friends. (Or Netflix). Even though Watch and IGTV haven’t taken the world by storm yet, I bet Facebook won’t stop until they find the right mix.”

There’s a goldmine waiting if it does. Unlike on Facebook, there’s no Regram feature, you can’t post links, and outside of Explore you just see who you already follow on Instagram. That’s made it great at delivering friendly video and clips from your favorite stars, but leaves a gaping hole where serendipitous viewing could be. IGTV fills that gap. The hours people spend on Facebook watching random videos and their accompanying commercials have lifted the company to over $13 billion in revenue per quarter. Giving a younger audience a bottomless pit of full-screen video could produce the same behavior and profits on Instagram without polluting the feed, which can remain the purest manifestation of visual feed culture. But that’s only if IGTV can get enough content uploaded.

Puffed up by the success of besting its foe Snapchat, Instagram assumed it could take the long-form video world by storm. But the grand entrance at its debutante ball didn’t draw enough attention. Now it needs to take a different tack. Tone down the cross-promo for the moment. Concentrate on teaching creators how to find what works on the format and incentivizing them with cash and traffic. Develop some must-see IGTV and stoke a viral blockbuster. Prove the gravity of extended, personality-driven vertical video. Only then should it redirect traffic there from the feed, Stories, and Explore.

YouTube’s library wasn’t built overnight, and neither will IGTV’s. Facebook’s deep pockets and the success of Instagram’s other features give it the runway necessary to let IGTV take off. With 1 billion monthly users, and 400 million daily Stories users gathered in just two years, there are plenty of eyeballs waiting to be seduced. Systrom concludes, “Everything that is great starts small.” IGTV’s destiny will depend on Instagram’s patience.

Instagram’s CEO on vindication after 2 years of reinventing Stories

“I think the mistake everyone made was to think that Stories was a photography product” says Instagram CEO Kevin Systrom. “If you look at all these interactivity features we’ve added, we’ve really made Stories something else. We’ve really innovated and made it our own.” His version of the ephemeral slideshow format turns two years old […]

“I think the mistake everyone made was to think that Stories was a photography product” says Instagram CEO Kevin Systrom. “If you look at all these interactivity features we’ve added, we’ve really made Stories something else. We’ve really innovated and made it our own.”

His version of the ephemeral slideshow format turns two years old today. By all accounts, it’s a wild success. Instagram Stories has 400 million daily users, compared to 191 million on Snapchat which pioneered Stories. While the first year was about getting to parity with augmented reality filters and stickers, the two have since diverged. Instagram chose the viral path.

Snapchat has become more and more like Photoshop, with its magic eraser for removing objects, its green screen-style, background changer, scissors for cut-and-pasting things, and its fill-in paint bucket. These tools are remarkably powerful for living in a teen-centric consumer app. But many of these artistic concepts are too complicated for day-to-day Snapping. People don’t even think of using them when they could. And while what they produce is beautiful, they get tapped past and disappear just like any other photo or video.

Instagram could have become Photoshop. Its early photo-only feed’s editing filters and sliders pointed in that direction. Instead, it chose to focus not on the “visual” but the “communication”. Instagram increasingly treats Stories as a two-way connection between creators and fans, or between friends. It’s not just one-to-many. It’s many-to-one as well.

Instagram Stories arrived three years after Snapchat Stories, yet it was the first to let you tag friends so they’d get a notification. Now those friends can repost Stories you tag them in, or public posts they want to comment on. You could finally dunk on other Instagrammers like you do with quote-tweets. It built polls with sliders friends can move to give you feedback about “how ridiculous is my outfit today?” Music stickers let you give a corny joke a corny soundtrack or share the epic song you heard in your head while looking out upon a beautiful landscape. And most recently, it launched the Question sticker so you can query friends through your Story and then share their answers there too. Suddenly, anyone could star in their own “Ask Me Anything”.

None of these Instagram tools require much ‘skill’. They’re designed not for designers, but for normal people trying to convey how they feel about the world around them. Since we’re social creatures, that perception is largely colored by their friends or audience. Instagram lets you make them part of the Story. And the result is a product that grabs non-users or casual users and pulls them deeper into the Instagram universe, exposing people to the joy of creating something the last until tomorrow, not always forever. “We believe the future is the combination of feed and Stories” Systrom says.

Mimicking Photoshop reinforces the idea that everything has to look polished. That’s the opposite of what Systrom was going for with the launch of Instagram Stories. “There will always be an element in any public broadcast system of trying to show off” Systrom explains. “But what I see is it moving in the other direction. GIF stickers allow you to be way more informal than you used to be. Type mode means now people are just typing in thoughts rather than actually taking photos. Things like Superzoom with the TV effect or the beats — it’s anything but polished. If anything it’s a joke. Quantitatively people feel comfortable to post way more stories than to feed.”

That sense of comfort powered by Instagram purposefully pushing Stories to diverge from its classy feed has contributed to its explosion in popularity — not just for Stories but Instagram as a whole. It now has over 1 billion users, in part driven by it introducing Stories to developing countries Snapchat never penetrated.

“Remember how at the launch of Stories, I said it was a format and we want to make it original? And there was a bunch of criticism around us adopting this format? My response was this is a format and we’re going to innovate and make it our own. The whole idea there is to make it not just about photography but about expression. It’s a canvas for you to express yourself.”

Last week when Facebook announced its revenue was decelerating as users shifted attention from its lucrative News Feed to Stories, its share price tanked deleting $120 billion in market cap. Yet imagine how much further it would have dropped if Systrom hadn’t been willing to put his pride aside, take Snapchat Stories, and give it the Insta spin? Instead, it led the way to Facebook now having over 1.1 billion (duplicated) daily Stories users across its apps

So does he feel vindicated in that once-derided decision? “I don’t wake up everyday trying to feel vindicated. I wake up everyday trying to make sure our billion users have amazing stuff to use. I just feel lucky that they love what we produce” Systrom says with a laugh. “I don’t know if that fits your definition of vindicated.”