Insta-businesses are here for a good time, not a long time — so like ’em while they last

Entrepreneurs are building new businesses entirely on the back of Instagram, and while they get good engagement, they are at the mercy of an algorithmic overlord.


March 6, 2019

The number of startups building entire businesses on Instagram is on the rise. For now, these companies — which offer both news and products — are finding success thanks to Instagram’s huge, engaged user base.

But if history is any guide, startups that stake their entire businesses on other platforms often go the way of the dodo when their algorithmic overlords make changes to the status quo.

That new new(s)

Several former journalists — including Jessica Yellin and some others — are taking to the ’Gram to launch small “media companies” that provide engaging news that appeals to younger consumers with polls and rapid-fire content, Axios reports

Artists, chefs, and other small-business owners are setting up Instagram businesses to sell their crafts (some even take requests via DM). Downstream, drop-shippers are building elaborate online contraptions to sell their digital brands.

Definitely engaging, potentially enraging

Instagram’s 1B+ monthly active users are remarkably engaged: 80% of Instagram users follow at least one of the 25m brands on the platform, and engagement with brands on Instagram is 10x more than on Facebook, 54x more than on Pinterest, and 84x more than Twitter.

So for new startups, Instagram is efficient engagement. But, if IG’s algorithm were to change, all of these businesses would suffer from a shrunken audience and — wait a second, hasn’t this all happened before?

A case of déjà view

Dozens of startups that built their entire business models on FB were destroyed when it altered the algorithm behind its News Feed last year.

Viddy, a video sharing app valued at $370m, saw its audience drop from 35m to 500k and ultimately went out of business. The same thing happened to other startups like LittleThings.

But startup investors seem to have short memories. Most Insta-businesses are independent. But some are raising outside money: @thismuchiknowglobal is funded by the Guardian’s VC fund.

Insta-Commerce is a good side hustle, maybe… But a durable business? Hardly. 

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