Why Instagram is A Cautionary Tale for Young Entrepreneurs (And Lottery Enthusiasts)

by Stella Fayman on April 26, 2012

A few weeks ago, I bought a MegaMillions lottery ticket. This may not sound like a big deal, but it is for me. I NEVER gamble or for that matter, buy ridiculous Mega Millions tickets with astonishing odds. But there was something in the air…something that prompted myself and millions of other rational (and irrational) Americans to buy lottery tickets and boost this mania even further.

Facebook’s acquisition of Instagram is doing the same exact thing for the next generation of entrepreneurs. Instead of encouraging people to solve problems and build out real monetization paths, the Instagram acquisition, with its naturally high profile and wide reaching power is doing quite the opposite. Now, entrepreneurs see a startup that was novel and completely pre-revenue, and see the opportunity that they too can have a billion dollar exit in less than two years.

The problem is that although Instagram made news all over the world, the visibility is encouraging people to seek the almost impossible. Many more startups grow, have decent acquisitions, or pivot than achieve the odds that Instagram did…however, we don’t hear about them. Entrepreneurs should not seek the “easy” way out but should instead focus on solving real problems with real revenue opportunities. Instagram’s outcome should serve as no more than a distraction or fairy tale as entrepreneurs remind themselves of the realities they face when they launch and grow startups.

In the same way that gamblers are aware of the crazy odds against them, but still end up multiple lottery tickets, entrepreneurs should not forgo the statistics about likely outcomes in favor of a fairy tale ending. I do hope Instagram’s story will encourage people to go after their dreams, but not with a fast and easy exit in mind.

PS. My ticket did not win the lottery.

Join our newsletter and get everything Unpluggd!