Instagram’s Existential Bet

They’re betting the farm on Reels. Will it blow up in their face?

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Hiya! Before this week’s essay, two quick notes:

  1. In case you missed it, I quietly announced the first ever Divinations workshop last week! It’s happening in early September and the goal is to help you conduct a market analysis of any industry you want—using my original fusion of the best ideas from strategy legends like Clayton Christensen, Michael Porter, and Hamilton Helmer. There are currently 17 reservations booked out of 30 total seats available, and registrations will close at midnight eastern on Friday. If you’re curious, sign up here for more info.
  2. There’s a new episode of Ordinary Astronauts out! (New podcast with my co-founder Dan Shipper that explores tech, product building, and the psychology of work.) This new episode is a fun one: I interviewed Logan Bartlett! You might know him from his funny tweets, or from hosting the Cartoon Avatars podcast, which has recently been the home of the “web3 use-case” debate, where web3 enthusiasts line up to debate Zach Weinberg.

Alright, on with the post!

I unironically love it when Kylie Jenner weighs in on product strategy issues.

Every time she does it—first with Snap and now with Instagram—she creates a brief, shining moment where this topic I spend all of my energy thinking about is thrust into the spotlight. “Put me in, coach!!!” I shout into my lonely backyard writing shed.

Shoot, I even wrote about this exact thing two years ago!

Back then, the question was whether Reels (Instagram’s version of the TikTok video format) was a good idea at all. Now, the question is whether Instagram should replace their default view with a “full screen video experience” that would basically complete their transition into a wholesale TikTok clone.

On the “pro” side of the argument: Facebook’s data shows that short entertaining videos are drinking photos’ milkshake, and if Instagram wants to survive they need to jump off their burning platform. On the “con” side: the entire internet seems to be united against Instagram’s new product strategy, and it’s possible that this change could ruin what people like about the service. As Kylie Jenner put it: we just want to see cute photos of our friends!

This is a tricky situation for Zuckerberg and Mosseri. Both sides of the argument imply a rather weak position. But then again, the last time they copied a hot new rival it was Snapchat, and that went extremely well.

This week on Divinations, I attempt to get to the bottom of things:

  • Is Reels even working?
  • Why / why not?
  • What’s with Instagram pushing it so hard?
  • Will the whole thing blow up in their face?
  • Or is this some weird, counter-intuitive genius strategy?

Let’s dive in!

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Is Reels even working?

Yes and no. Reels is now two years old and, according to my reading of the data, it’s only working about half as well as Stories was two years after it launched.

Back in 2018, when Stories was as old as Reels is now, Kevin Systrom was asked about the proportion of time spent in Stories. He declined to give a number but claimed it was “almost just as important” as the main feed. So I’m assuming it was probably somewhere in the 40–50% range.

Reels, on the other hand, only accounts for 20% of time spent—despite the fact that Instagram is pushing it a lot harder. The only thing they did to get us to use Stories was put that little row of circles at the top of our feeds. But now they’re actually sprinkling Reels directly inside our feeds so they’re impossible to ignore. If it was just a little row you could quickly scroll past, I bet that 20% figure would be much lower, perhaps below 10%.

But still, to go from zero to 20% of all time spent in the app is nothing to sneeze at for a network as large as Instagram. I personally know several people—most of them boomers—that love Reels, for the same basic reasons so many people love TikTok: it can be quite entertaining! And if you’ve never tried TikTok (which is the case for lots of people, especially older people) then Reels is great and you don’t feel like you’re missing much, plus, you don’t have to download a new app. 

So it’s not completely dead on arrival, but it’s not going great, either.

Why is Reels neither a hit nor a total flop?

Of course it’s complicated and there are many reasons, but here are the main issues, in my opinion:

First, as I noted with co-author Neel Sharma two years ago, Reels isn’t just a different format for the same kind of content people already share on Instagram. Unlike Stories, which matched what people already wanted from Instagram (photos and videos from people you know), Reels/TikToks are created for and by randos. The whole point is that anyone might see it, so you should make it entertaining even if they don’t know you. Relationships are secondary. 

The reason Reels/Tiktok works this way has more to do with the network structure than the content format. With these types of videos, the whole point is the “for you” page which shows you content by anyone. This is the key design decision that made people create content differently, and allowed the TikTok algorithm to be so effective: it had a lot of broadly entertaining stuff to choose from. The one big format thing that matters is the music and reusable sounds, because when you have unfamiliar people in most of the videos you see, it helps to balance that with familiar audio. This is also why memes, challenges, viral dances, and trends of all sort flourish on TikTok: they create familiarity, which it pays to piggyback off of.    

Instagram’s network is structured completely differently, and the content people share on it is a function of that. Instead of seeing videos of random people, you see photos and videos of people you are already familiar with. This changes what kind of content people share and makes it far less reliant on memes, music, and trends. I think this is the thing people are bemoaning when they say they miss the old Instagram: by changing the network structure to prioritize entertaining content from randos, they make it harder for people to share the kind of content they used to, which assumed more familiarity. This content was already inherently interesting because of the social—or parasocial—relationship you had with the person posting it. 

This is why Instagram has had so much more trouble copying TikTok than they did Snapchat. Snapchat invented a new content format that still existed within the same basic network structure as Instagram. With TikTok, the fact that it’s a new network is actually a feature, not a bug. There is an inherent conflict in the goals of creators for the different formats, and this tension is I think keeping a lot of people from posting to Reels.

But besides the whole “network structure” thing, another reason the Stories clone worked so much better than Reels is the simple fact that TikTok is way bigger, and it’s much harder for Reels to get someone to switch than it is to get people interested in the format if they’ve never seen it before. Once TikTok pervades a community, Reels is seen within that group as low status, and has anti network effects.

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