(00:00)
Today on built to stay, so being just kids in college, we that have no technical background at all. We just figured it out, put it out in the app store and from then is when we really took a very like hack approach to get people to understand that this app existed. Welcome to Built to Stay a podcast dedicated to sticking, staying and succeeding in the business world from the blip sound lab. Here’s your host, Bart Bradshaw.
Bart: (00:28)
Hey builders, you know what they say? If you’re looking for a business idea, start by looking for a problem to solve. That’s what college friends, Hector, Eddie and Omar did when they started InstaSize an app that automatically cropped your photos for Instagram. In the past six years, they’ve grown InstaSize into a full visual toolkit for content creators. Last year, InstaSize reached some impressive milestones, 14 million in revenue, 12 million monthly active users and 500,000 paid subscribers. Hector and team are constantly adding new features and refining their product to build their business. To stay with us today, CEO and co founder Hector Lopez
Hector: (01:08)
Hector, Thanks for joining us today. It’s great to be here. So we usually like to start kind of at the beginning. I’d love to hear what you were doing actually before you had the idea for InstaSize. Can you tell us a little about your background? Yeah. So your entrepreneurial things started really around I’d say 2010 around there. I was actually in that time Warner school and I picked up DJing. So I was a DJ for a couple of years and learned how to do that. I’d actually buy events centers or rented men’s centers out and we’d charge a cover fee for kids like, 17, 18 years old to like 20. And uh, we would basically just throw an event and charge people to get into the door and I would DJ them and probably make like, I dunno, like thousand bucks a night. So it was pretty cool little thing that I had doing and that’s what really started the whole entrepreneurial idea of trying to make money by myself rather than working for a business.
Hector: (02:06)
Yeah. Gave you a taste of it. Yeah, exactly. And then, so, um, during that time I was going to school, like I said, actually for medicine, my goal was to become a doctor. But, um, my friend Eddie, who I’ve known for since I was a little kid, um, I would just give him a crap because he was going to school for business and uh, doesn’t, wasn’t really sure what he wanted to do. And so I was just getting a hard time saying, you want to go to school for business and you want to just run your own business? Why aren’t you just trying to run your own business instead of going to school? And he kind of just thought about it and took a semester off to just pursue something and try it. So I decided to try it with him while I was still in school, just to see where we’d go.
Hector: (02:48)
And during that time we, uh, we would buy, we had tried to toothbrush subscription company where we would buy to purchase from China. That smelled awful. We were never able to source good quality to the verses. So we didn’t want to take the risk of giving people chemical issue chemical issues with our toothbrushes. So we’d rather scrap that idea. Um, we also tried, uh, like a review site didn’t work out. And then I learned about people making, uh, apps in 2012 where they would take, um, the paid version of popular apps and make them free, make a free version of it and add ads to the app and make money that way. And they were making roughly about $80,000 a month. And I was just like blown away. I was like, wow, $80,000 a month for apps just to put ads on it. So, um, we didn’t really have an idea.
Hector: (03:37)
And then one day I was at the gym and I was just looking through, um, social media and I, I figured out there’s an issue that everyone’s taking photos on their rectangle devices and you get a rectangle image, but when you go to post it, like on your Facebook or Instagram at the time, it would make you crop the image. So you’d only see a square of the rectangles. You have to pick either do I cut off my feet or do I cut off my head of whatever photo I’m taking? Right. Yeah. So you can really appreciate the entire photo. So I run to Eddie who was at the gym at the same time and I say, I have this idea, let’s, let’s uh, critics app reassesses your, your photos so you can fit them onto any square constraint. He’s like, well, what should we call it?
Hector: (04:14)
I’m like, let’s call it InstaSize. And so that was basically what the initial idea we went, um, to like a freelance website. I think it was like you might start com or something. And uh, we looked for a developer, we found someone and we’re able to build an app out, a quick iteration of it. And it, I guess within like a couple of days you had, we’re working at that. We had no idea how to upload to the app store. So the just kids in college, we that have no technical background at all. We just figured it out, put it out in the app store. And from then is where we really took a very like hack approach to get people to understand that this app existed where there are other apps like it at the time in the app store. Um, I think there might’ve been another one, but I wasn’t too sure.
Hector: (04:58)
I really, we were really just like trying to see if our idea worked out and going with it, but I can’t really remember if there were any competitors. So you were like, Hey, I don’t know if when let’s build this, see what happens, see if others like it. Exactly. Yeah. And how hard was it to get the app on the app store? Um, it was just like watching some YouTube videos and really going step by step of what it was. And then eventually it was up on the App Store and then couple days later we had lied and people could actually download it. But the problem was that no one was actually downloading it because no one knew about it. So that was our next issue. So we figured out where can we find people who have this problem? And it tells them 12, um, when Twitter was really popular and there weren’t many social networks in younger, the younger crowd was hanging out on Twitter.
Hector: (05:40)
Um, we saw people constantly Tweeting the like little phrases similar to like hate Instagram cropping or a, Hey, how Instagram crops my photo, or Hey, how Facebook crops my photo. And we will just search those different keywords and people would constantly new people. We just kind of have you refresh the page and more people would show up saying these types of issues. So what we did was we would initially start Tweeting them from our own accounts, but we would get like Twitter banned and just like our account would get paused. So this wasn’t really effective. So what we did instead, we would just create fake accounts constantly. So we will create new emails, go sign up for Twitter, and then just tweet people the link to the app store and over and over, over 24, seven, I wake up like at two in the morning, just tweet more people and then fall asleep.
Hector: (06:25)
And then we’re gonna begin tweet more people. And we’d all do this for a couple of months until eventually it started doing it on its own and people would tell each other when they have this problem, other people would want to come in and like, Oh, do you use InstaSize? So that was the initial, what we call it, Twitter hack, what we did back in 2012 to get initial traction. So that’s a really good example of like guerrilla marketing tactic, right? Like you just were using the tool that Twitter gave, um, not in a way that they necessarily wanted you to, but uh, in a way that was possible and you did it until you had enough traction, you know, for people to start sharing it. That’s pretty cool. Yeah, that’s really what helped us at least get initial traction with the audience that we’re looking for. And I think the really good thing was and something that people, I guess miss sometimes when they’re trying to sell something, is to really try to find the audience and where your audience lives and see how you can interject yourself in their day to day life in, in that flow of their life on like at least on the internet for us.
Hector: (07:26)
Right. For us, we understood that people who were social media heavy, we’re really able to express themselves on Twitter and that’s what we found our opportunity to be able to promote our product without actually going the traditional route of like buying ads on that first year was pretty good. Right. In terms of downloads. Yeah, it was a really crazy spike. Um, I think two months after that around like December, January is when we launched our Android version, which has a lot of users as well. So that really just kept the growing happy really fast that day. Probably hit a max probably of around 30 million monthly active users in August of 2015 wow. 30 million monthly active users. That’s impressive. Right. And do they even probably have around, just to give context would be about 180 million downloads total. Wow. Okay. And this is, you know, seven years later now ish, right?
Hector: (08:22)
Yeah. Okay. So tell us a little bit more about, so you know, that first year you got this app in the app store, you started developed the Android app, you used some, um, pretty clear guerrilla marketing tactics on Twitter to get the word out in the place. Like you say that your people were, where did you go to next? Did you just start advertising and you started getting revenue rolling in or how did it, uh, how did it develop from there? Yeah, so the joke that we have with, um, ever since we started was Eddie, when we released the first version, he’s like, so what do we do now? Are we done? Like, do we just sit here and wait for people to use the app? And it’s just the, it shows that, like how new we were to the space that we didn’t understand the idea of updates to our app.
Hector: (09:05)
So, um, as we started growing, we understood that we needed additional functionality. We needed more features within the app so that we can offer more than just the resizing tool. So for us it was more so trying to expand into different parts of editing. And I’d say through there we also had to like find ways to make money. So for us, the natural way that we understood, which was initially based on the idea that we went into Alice was to provide, um, was to sell ad space within the app. And for us, the good thing was that we have lots of users very quickly that we were able to generate pretty good revenue from the beginning. And so up until I’d say, uh, August of 2018 we hadn’t spent any money on paid social media or paid advertising at all.
Bart: (09:50)
Did you hire a team with that money that you were making?
Hector: (09:53)
Yeah, so we, our goal was to really try to expand and see how, how much more we could, uh, be useful in these, in these users lives. So we really expanded our team, try to, uh, find people we were, we thought were competent within technical. We got burned a couple of times at the very beginning because of our lack of understanding of what is the need for someone to handle a project or at least the technical aspects. So until we found our, um, who is our current CTO now, we found him through a freelance website as well. Um, we were a couple of times, but then we found Luca and then from then we were to expand our team technically. And we also expanded into our, our marketing team, our design team. And today we have a roughly about 45 people on working on InstaSize.
Bart: (10:35)
So you guys are like in college, um, you hadn’t really done a ton in business and I love this story because you just went for it. You’re like, Hey, I’ve got an idea, let’s do this. And that’s what a lot of people want to do. Um, a lot of people end up not doing that right out of the gates. They go and work in industry. And we had Scott Paul on a, um, one of our earlier episodes saying, Hey, it’s great to go work in industry. And I, I agree there’s a lot you can learn, but, uh, it’s fun to hear your story because this is like a lot of people’s dream is to just go for it, go build something. And uh, even if you don’t, you know, know everything about business or have a ton of experience, you can make things happen if you’re just willing to adapt and adjust it. Was that the case with you and Eddie and Omar, uh, you know, three co-founders you were willing to adapt and adjust and that’s kind of what a made you successful or what do you attribute that success to?
Hector: (11:32)
Yeah, I’d say for us, we were really just, we never really considered no, or like the option of like failing being a bad thing. You’re just like, let’s just do it, see what happens. And it turned out to be a really good thing. Um, so for us, because of the kids that you get the really fast, it made us learn and have to adapt very quickly. So we were constantly trying to understand the business and seeing how things were progressing. And the good thing was that in our space, at least, it was a very growing industry in the, weren’t many competitors happening at the time. So it gave us a chance to adapt. Um, so that was the benefit at least being in that right place, right time in the photo and video category for the, the app stores.
Bart: (12:14)
Now are you still using advertising as your main revenue source?
Hector: (12:18)
Yeah, so now since, uh, August, 2018 we’ve ramped up our ad spend. Um, that’s also just more so to compete with competitors and acquire customers. For now, our business model has completely changed from then to now. We’re now in an advert, a subscription based model, and from the ad based model that we used to be on. And that’s just more so to the changes that we’ve seen in the landscape, um, through the social media.
Bart: (12:43)
So you’re charging people through a subscription model monthly, um, subscription charge and then you’re using advertise to grow is what you’re saying. Exactly. Yeah. So Instagram started to allow you to do square pictures. When was that? And you know, how did that impact InstaSize
Hector: (13:00)
exactly. Yeah. So that’s where when I said that we hit 30 million monthly active in August of 2015, August of 2015 was when Instagram came out with their resizing feature and that’s when we started going down Hill in terms of the monthly active users. So that’s what we understood that um, this volume game that we were playing, which is the more people we can get on the app meant more eyeballs. We could serve ads too, which meant more revenue was a very hard game to play, especially for us. People are a team that had no funding, no, uh, no other backing besides the revenue that we were generating. And we were at three broke college kids who basically were running a business at 12 months prior where we want it, we’re going to class. So we were just really trying to understand everything at once. So I’d say that moved to subscription really happened because of what we saw in social media during the 2016 was when, um, also Instagram changed from an, uh, chronological feed where people will be able to see all the content based on the newest content being posted to algorithmic feed, where Instagram decides which constantly you get served up depending on multitude of factors, like if their friends are not, um, if it’s relevant or not.
Hector: (14:14)
And if based on the past content you’ve seen. So that created a big need for people who were creating content. So what we call it today are the social content creators. These are the people who spend their day creating content for other people to enjoy and be it for their own personal, a financial or emotional gain of Kinney more followers or selling a product or selling ad space on their own feeds. Um, these people now need it to create more visually compelling content that would help them convert more people to draw their own follower bases. That’s why we created InstaSize premium in June of 2017 to help them with that, which is, is that as premium as basically, um, access to premium filters over a hundred premium filters, um, unique borders and adjustments for people to really create visually compelling content that stands out and helps them convert on the feeds.
Bart: (15:04)
And what was that like? Was it, were people quick to sign up for premium?
Hector: (15:09)
Yeah, so, um, we had thankfully been a huge as your base at the time still, even though it wasn’t 30 million, but we said millions and millions of users using the app that we were able to sell them initially and that’s still spread out through other people knowing about it and wanting to buy it as well. And are still growing users a subscript discoveries every month. Right now to date we have about 500,000 paying subscribers and uh, we still have total about 10 million monthly active users as well.
Bart: (15:36)
That’s awesome. So early on you were very reliant on Instagram it sounds like. And then when they change something, which they, they do, it threatened your business, it, it changed how you thought about it. You, you moved to a subscription model. Um, and you started to think about how can we really do something more, you know, cropping an image was the first pain point you helped to solve, but there were others and the algorithm even helped you with that. Right? It caused other pain points. It caused people to focus even more on creating good content. [inaudible] is that accurate? Okay. And did you feel like, Hey, we need to make sure our company’s success is not reliant, completely uninstall [inaudible]
Hector: (16:23)
yeah, that’s, uh, what we’ve noticed, um, over the years as well, that we are very agnostic when it comes to these sharing platforms. We want to make sure that we’re able to provide to any platform that people want to share to. So for us, it’s, we’re really, we really see ourselves as a, as a editing tool that people can decide wherever they want to post that content in the end. And really try to be an all purpose of tool.
Bart: (16:45)
Do you see where your customers post? Like do you follow that or provide direction there?
Hector: (16:51)
We still know it’s based on just what people are doing today. And Instagram is still the heavyweight when it comes to sharing a lot of, there’s over doing people on Instagram. So naturally people are still wanting to take advantage of that, of that platform in that network to be able to grow their own basis. But we are seeing growth in like a lot of video sharing type of apps including like tech talk and um, but there’s still a bit of a resurgence in Snapchat, especially with the younger crowds. So yeah. But Instagram is still a main player.
Bart: (17:22)
Have you looked at all at video in addition to, um, the static photo?
Hector: (17:26)
So, yeah, so in, in societies we offer, um, photo and video editing. We’ve also expanded into made, which is our stories editing app. So it’s a story focused app with the whole entire idea that it’s meant for the stories platform. There are roughly 1.5 billion people posting stories on different formats every single day. This includes like the obvious ones that Snapchat, but also WhatsApp, Facebook, um, YouTube has come out with the stories feature and I even heard of LinkedIn, it’s possibly testing the stories feature as well, but that, um, high usage, which according to Instagram is roughly 20 to one, so people will post a story 20 times before they post a theme story. A feed posts means that the high usage is there. So for us it was just natural to create, uh, uh, stories first, uh, editing solution. And that was launched, uh, in may of this year, 2019 and today we have probably 1.3 million downloads on it and roughly 600,000, uh, active 600,000 monthly active users on it too. And is that a different app then? Yes, that’s a completely different app. But still what are the InstaSize
Bart: (18:35)
the premium membership that allows you to access both? Or is it separate?
Hector: (18:38)
So they’re separate? Yeah, so there’s a made premium and then there’s a InstaSize premium.
Bart: (18:42)
Got it. So you actually launched a new product with an, it’s on, um, revenue stream. Right, exactly. Wow, that’s exciting. So this is a cool story. Like I said, I love, um, where you’ve come from and you’ve been around for now, sounds like six, seven years. Help help our builders and me, you know, think through some of the challenges you’ve mentioned. What are the things that actually got you through those challenges? Like help us figure out how to overcome our own challenges?
Hector: (19:11)
Um, I’d say probably the biggest issue that people, I guess oversee, um, is just really taking like a systematic approach of what game you’re playing. Like I really view business as like a game and see where do I fit within this entire game and how does everything happen to make to make sure what I’m doing happens or doesn’t happen. So for example, like, uh, InstaSize exists because people want to, people take a lot of photos because I-phones exists because Andrew’s exists. But the reason people were taking a lot of photos because sharing networks exist. So w how can I interject myself in these people’s lives to make sure that in society is the solution that they’re wanting to use versus X, Y,Z , right? So it’s really just a game of understanding like this entire map and how do I fit in it and how can I basically fit in it more and how can I take up more, more market share and how can I take up different opportunities that hopefully my competitors aren’t looking at. So that’s, that’s basically my approach is really to try to map out your whole understanding of where you are and where you, where you should be going as far as like a company or product is the best. I think the best strategy to take.
Bart: (20:25)
Yeah, that’s really good. So you’re positioning your company in the right place with a solution for the right people in that market or industry. Tell us when it comes to a business that has been around for six or seven years, it’s kind of a long time for you guys, right? Like four for all of us. I mean, is there feeling of like, okay InstaSize this is, this is one thing and we’re going to move on to the next at some point, or is there just like the world is our oyster and we can keep on adding those features and, and solving the problems in the same market like you were talking about?
Hector: (21:02)
Yeah. Um, I’ll think for us, we really look at, um, what’s our next thing. We’re more so really into InstaSize and what it, what it’s doing and what our goals are at least for the future. For us, we really see, um, a lot of opportunity going upstream into the content creator workflow and trying to be a part of that in their lives. I think that, um, it’s really exciting what we’re moving into and expanding with not just so much in editing but also into just a whole different aspect of content creators and that whole world is very, very like intriguing. Once you’re in it and kind of like I said, it goes back to the game of trying to make how, how can you win and how can you prove that you’re right essentially. So that for me is what’s the funnest part is really trying to prove my hypothesis that I think something is going to be and how can I get there through the current strategies that we’re taking right now.
Bart: (21:57)
Have you used sort of a like lean startup approach to making some of those changes and making sure that you’re appropriately positioned like small feature releases that you test or how do you get that voice of the customer and then make sure that you’re actually responding in the right way?
Hector: (22:15)
Yeah, so I’m, we look a lot to what people are doing. We try to, we try to make sure that we have any, like for example, if you have an idea that, Oh, I think this is gonna happen, right? Like right now I’m telling that it’s big that we’re working on is we feel that creators, people who are creating content are very likely to want to share content that they capture when they’re traveling somewhere. That’s the hypothesis. So then we start trying to figure out what is this, is this true? How can we make sure this is true? So then we look at data trying to understand is this something that is happening in the world? Real world? Is this someone’s assumption? So like for example, we know that 97% of people who are traveling in the gen Z and millennial, uh, demographics share their share, their travels on social media.
Hector: (22:59)
Um, we also know that gen Z and millennials are people who are most likely to want to travel. They’re also the ones who are traveling and going to be the biggest demographic and the richest demographic to ever travel by 2025. So, and these people are also looking to social media roughly, I think it’s 70% rely on social media for future travel plans. So they look at social media to create their own travel plans in the future saying, Oh, this is a great place to go take a photo in Italy. This is a great place to go eat in Miami. Right? These people are, are using social media as a tool to be able to, um, create future trips for themselves. So for us it’s, that’s where we take inspiration and see, okay, this is something that has like some possibility and the market’s huge. There’s in the U S alone, it’s over a trillion [inaudible] travel market.
Hector: (23:48)
So for us is what we see as if creators are wanting to travel and they create content when they travel, which means they create photos of videos. Then nationally we should be able to facilitate that creation experience for them. So that’s when we created a, are coming out with InstaSize spots, which is locations around the world of user generated content of different locations that people can go and take their own version and, and basically take their own spin on any cool location that someone else has posted. And we’ll try to create that for them. So you’re kind of creating this, um, a way to share in a new way where a lot of different people might, or are you saying Instagram spots are like spots that are really good for creating content really like good for taking photos? Or are you saying that you’re taking those spots and saying, Hey, this is kind of a challenge.
Hector: (24:36)
You do, you in this spot. Right. So, um, for example, if I were to be in uh, Los Angeles right now, right, I can open InstaSize and hit the spots feature and instantly I can see top locations in Los Angeles where other people have taken photos and I can see the photos that they take in. For example, the, the big pink small Paul Smith wall in LA, there’s a bunch of people would take photos there. Um, we can see different people who have taken photos there and I can go there and myself get directions and take my own version of the past Smith pink wall and upload. It tends to size and then have you other people, my version of the wall and then for find other content that other people might find interesting and be what basically to help me create more is the goal. Interesting. So it’s your own network within your app where people can help each other share it.
Hector: (25:28)
Yeah. Interesting. This is a great opportunity for our builders to hear from someone who has built something from scratch with a great co-founders and you know, who’s weathered some fairly big setbacks and um, adjusted and adapted as he’s gone. Like that’s exactly what built to stay is all about. So what other advice do you have for builders who are trying to do the same thing beyond, you know, you mentioned it’s a game and you need to have strategic positioning and really understand where you need to be to solve some problems. What other advice do you have? Like whether it’s marketing and growth or you know, being smart financially, you know, to be a profitable company over time. Like what, what are some of the things that stand out to you as like, yeah, this, this has really helped us? Yeah, I’d say one of the biggest things that might be kind of obvious once you look at is try to find a beachhead for anything.
Hector: (26:20)
Like trying to find something that the wedge that can really get you into a bigger idea in the future. I think starting with the bigger idea might lead to failure because my people might not understand what you’re in is you’re actually trying to do and not solving an immediate need for them. And instead you’re solving something that they might need a couple of years from now. Like for example, if you take Google, Google was a search engine before anything. Right now Google is everything right? But they didn’t come out as everything that came out as a search engine. And now with that, they grew into everything. I think for us as the same thing, we started as a resizing tool and became an all in one photo and video editing app and now we’re moving into a different vertical. So I’d say if we had started with that idea in the beginning, we probably would not have been as successful as we are today.
Hector: (27:02)
So I think really is try to understand what exactly it is you’re solving for and really go after that hard. And once you accomplish that, then expand. It’s, it’s like a saying that says I’m let go a mile deep and rather go on depo Mt wide. You know, don’t spread yourself too thin and really try to make sure you’re, you’re shooting a nerve with people. Yeah, that makes a lot of sense. And in society. Yeah. It sounds like you definitely have done that, not just with your first product, but each time you’ve rolled something out, you say, what’s the big thing here? Let’s solve that and then let’s expand from there. So the land and expand strategy. That’s awesome. Cool. Well Hector, really appreciate you taking the time to speak with us today. This has been awesome. No thanks for some great builders. Visit bill to stay.com for show notes and exclusive content as well as link
(27:52)
to InstaSize and go check them out next week on bill to stay. We didn’t even know we were creating this person. It just kind of popped up when we started seeing our brand on all the major blogs, you know, New York times. I finance, um, pretty much every other major publication started talking about us as one of the big brands. Setting the trend for the disco girl re and review built a state wherever you listen to your podcasts. [inaudible].
