This sounds like a company that would have benefited from a program like YC. It would have given them a peer group of entrepreneurs that would have pressured them to keep shipping product, filled in some of the totally understandable gaps in their knowledge (for example around engineering management and best way to time their Series A), and kept their success in context (just about everyone feels like a little fish next to Dropbox and Airbnb, and little fish swim harder.) If they'd had these things two years ago they might be in a very different position today.
I can't tell whether I should laugh, cry, or puke. A really well made, polished, fun app. Not innovation.
If we had meaningful innovation in the areas of education and computing, things like Hipstamatic and Instagram would just be fun hobbies, or even just well made grade school projects - not billion dollar businesses. That would open up avenues for true innovation in other fields like photography.
Kodak made plenty from popular photography in the twentieth century. Popular photography is a major part of most people's lives in the industrial west. I can understand why these apps/services make money.
The question for me from this article is why assemble the development team and then not integrate it into the rest of the company. The idea of programmers being left with nothing to do and no direction strikes me, as an outsider, as daft.
Fascinating profile, partly because I was under the perception that Hipstamatic was run by a couple of folks as a hobby...there was no other explanation for how such a popular app could do virtually nothing in adapting to Instagram's offering.
> Despite Buick’s resistance toward changing Hipstamatic’s direction, the company embarked on a series of toe-in-the-water attempts at social. The first was Family Album, which launched in the summer of 2011, a product that enabled users to create and co-curate photo albums together. The other, D Series, was an app that aimed to capture a retro, disposable camera experience on the iPhone. Friends could purchase various packs of digital cameras together for 99 cents, and take and share up to 24 shots per roll--before having to buy another pack of cameras. “It was definitely a reaction to the social photography wave,” Polkus says. “The products were in response to people saying, ‘Okay, well we can take pictures, but how do other people see them without using Instagram
It's bad enough that they didn't realize the bottoming out of the paid app market (who could justify paying $1.99 for Hipstamatic when Instagram offered the same product...and angry birds was just $.99?), but their pivots toward social were incredibly dumb.
Given the revenue mentioned in the article, it's obvious that many were willing to justify paying $1.99 for Hipstamatic, and then more for additional filters. Frankly, it's rather nice to see a company better value their work and become a strong success. I hope that happens more often.
Based on what I read in that article, I consider their failure to be that they neglected a successful, revenue generating product and instead joined the race for the bottom. $10MM/yr is fantastic revenue stream, and they were willing to throw it away on a whim… yes, a $1B acquisition is cooler than $10MM in yearly revenue, but $1B acqs are incredibly rare and at least Hipstamatic can claim they made money, a goal that Instagram can't claim to have reached. And making money doesn't rule out a fantastically large acquisition; just look at Yammer.
Hipstamatic could have intelligently reinvested their revenue in enhancements to Hipstamatic, built out other products and services alongside the cash cow, and might have scored their $1B++ exit later. And even if that acq never came, at least they'd still have a successful business doing tens of millions in revenue.
I don't see how you could look at an ~11 employee company that made $10M in 2011 and $22M in 2012 selling an iPhone app and consider it a failure. In the world of the App Store I would consider that a huge success.
But I guess after Instagram, any result for any other company short of "selling to Facebook for $1B" is failing. An unfair and unrealistic benchmark, in my opinion.
It's not entirely clear to me that the company is actually going bankrupt. The author of the article seems to imply it, but obviously he's never seen the company's financials.
Still, with 11 employees as of July 2012[1] (and fewer now), even assuming $200k/year salaries, that barely puts a dent into the $22M they made this year. They make an iPhone app, so I can't imagine them having many expenses besides people. The math doesn't really add up to me.
And that failure comes from incredible mismanagement. Blowing tens of millions on office space, parties, and trips to Vegas and NYC, all while building a talented engineering and design team that was then given no focused direction and subsequently laid off is what led to Hipstamatic's downfall.
My takeaway from that really well reported article by Austin Carr, is that lack of leadership and inability to focus is what help Hipstamatic back. They had the App, the mindshare, and the interest from acquiring companies - they just couldn't push it over the line, or, were unaware of their limitations and thought they could go it own their own.
Yet, nobody has really gone the long way to bridge the gap between the quick and 'hipster' photo retouching like Instagram does, and real cameras (point and shoot, DSLR). I'm pretty sure that there's a niche market there.
I have a hard time actually believing that Instagram killed them. It's just that Hipstamatic didn't do their job right.
