Rare beasts, “thunderlizards” are companies that exit the startup phase at greater than $500 million — at least in the vernacular of venture capitalists. Each year, 4,000 to 5,000 companies are funded at the seed stage. Only 15 to 20 become true thunderlizards.

“Startups is a business of exceptionalism,” stated Ann Miura-Ko, co-founder of venture capital firm Floodgate and instructor of the STVP “Spark” titled “Giving Rise to Thunderlizards: What legendary companies look like before they make it big.”

Miura-Ko, a lecturer in Stanford’s Department of Management Science & Engineering, invited Instagram Co-Founder Mike Krieger to the extracurricular, pop-up class in late January to discuss the thunderlizard that he let loose with fellow co-founder Kevin Systrom.

Instagram Co-Founder Mike Krieger (right) and Tommy Lee, parnter at Rothenberg Ventures. (Instagram photo by Eli Shell/STVP)
Instagram Co-Founder Mike Krieger (right) and Tommy Lee, parnter at Rothenberg Ventures. (Instagram photo by Eli Shell/STVP)

“When I was seventeen, I wanted to be a crime-beat journalist,” said Krieger. That passion led him to create Instagram — an app, as stated on Instagram’s website — to “capture and share the world’s moments.”

After graduating from Stanford with a degree in symbolic systems, Krieger was working on his Crime Scene SF app when he connected with Systrom, a fellow alumnus, who was working on his own app, Burbn. The two weren’t sure they could work together, but they decided to give it a try. After a few days, they decided they made a compatible team.

Burbn was the precursor to Instagram, but the technology was “a bit janky,” said Krieger. “People were uploading videos and photos nonetheless.” This and the fact that one user — Chantel — “was completely obsessed with Burbn” proved viability. The next step was to seek investors.

Recognizing that Krieger and Systrom were doing something the digital world hadn’t seen before, investors became interested, especially because the app was mobile and local.

But right when Krieger, a native of São Paulo, Brazil, received his visa to stay in the United States and quit his job to work on Burbn full time, Systrom announced that he didn’t think Burbn would set the world on fire. “We knew what we wanted to be, we just had a lot of doubt about how to get there.”

They crystalized their vision. “We wanted a fast, beautiful and fun way for people to share their lives with friends and family. And we knew we wanted to keep it simple.” With that idea in mind, they developed a product that would allow users to snap a photo with a mobile phone, then choose a filter to transform the image into a memory to keep around forever.

Today, Krieger and Systrom enjoy Instagram’s position inside Facebook, and continue to focus on product and staying competitive.

When launching a new venture, you want to get off to a good start. And racking up over five million users in the first eight months certainly counts.

Kevin Systrom and Mike Krieger launched Instagram, the wildly popular photo-sharing service for iPhone, in late 2010.  Since that time, the young company has attracted users who enjoy their simple-to-use application that allows classic camera filters to be applied to mobile photos before they are shared through social media.

While Instagram’s elegant product took hard work and many long hours to create, discovering solutions is not the hard part when designing a product, according to the co-founders. “The hard part is actually finding the problem to solve,” says Systrom. “Solutions come rather easily for most problems, not all, but most.”

“The hard part is actually finding the problem to solve.”

Kevin Systrom, Instagram Co-Founder

Rather than just designing a slick web application that was all sizzle and no substance, Systrom and Kreiger always saw Instagram as a solution to the top problems with sharing photos taken on mobile devices: 1) Mobile photos don’t always look great, 2) Uploads of mobile photos take too long, and 3) It’s hard to share these photos with multiple services at the same time.

While Systrom and Krieger personally experienced these issues with other photo services, the co-founders needed to verify that other users struggled in the same way. They got their gut-check by getting their product in front of early users and learning from these interactions. This process of testing your hypotheses is also a fundamental principle of the customer development/lean startup methodology.

Systrom and Krieger are Stanford graduates who also share a desire to tackle problems. While many people in tech claim only to be interested in taking on huge problems, smaller problems present unique challenges, according to the co-founders, as simple solutions are often harder to scale.

“You should not be afraid to have simple solutions to simple problems,” says Systrom. “If you delight people with even a simple solution, it turns out it will go really far.”

While at Stanford, both men also participated in the Mayfield Fellows Program (MFP), an intense nine-month work/study program that provides students with a life-changing entrepreneurship experience. During their DFJ Entrepreneurial Thought Leaders seminar in May, Systrom and Krieger encouraged Stanford students to not only apply for MFP, but to also take full advantage of many of the available entrepreneurship courses offered at Stanford.

Enjoy more videos of the Instagram Co-Founders on ECorner.