- Instapaper was created by Marco Arment in 2008 as a bookmarking service and reading tool.
- It solved three key pain points for users: slow mobile networks, difficulty reading content on mobile devices, and lack of good reading applications.
- Instapaper grew alongside the iPhone user base and gained popularity in the early days of the App Store.
- However, as technology improved and more reading applications became available, the market for Instapaper became more niche.
- Betaworks acquired Instapaper in 2013, with Marco Arment remaining as an advisor.
- The rise of free competitors, such as Pocket, and fatigue from running the service led Marco to consider a long-term home for Instapaper.
- He reached out to Betaworks, who agreed to invest in Instapaper and continue building it.
- In 2018, Instapaper was acquired by Pinterest.

- The speaker was hired as an iOS developer for Instapaper in 2013.
- They had previously started a company that did not succeed.
- Betaworks, the company they went to for investment, offered them a job at Instapaper.
- The speaker believed that Instapaper should be a free application, not a paid one.
- They proposed a plan to make Instapaper free and test its success through a free app of the week trial.
- The trial resulted in a significant increase in app downloads and subscriptions.
- The speaker was promoted to CEO and implemented a plan to make the application free and increase subscription pricing.
- The revenue initially took a hit but eventually recovered and grew.
- Pinterest showed interest in acquiring Instapaper, and after considering other offers, the decision was made to sell.
- The motivations of shareholders, users, and employees in the technology industry often differ.

- The speaker discusses the motivations and challenges in the technology industry, particularly in relation to acquisitions and partnerships.
- They share their personal experience with a failed acquisition deal and the impact it had on their team and plans.
- They then discuss how they eventually connected with Pinterest and successfully completed an acquisition deal after a 13-month process.
- The speaker advises caution and not getting too attached or counting on a deal until it is finalized.
- They also talk about their experience working at Pinterest and the opportunities and challenges of managing a larger company.

- The options for Instapaper were to put it in maintenance mode, shut it down, or spin it out as an independent company.
- The decision was made to put it in maintenance mode and have the speaker dedicate a few hours a week to maintaining it while focusing on Pinterest.
- In 2018, the speaker emailed the CEO of Pinterest to discuss the future of Instapaper and proposed either treating it as a business unit within Pinterest or spinning it out as an independent company.
- Instapaper was eventually spun out as an independent company, with the speaker running it in a similar fashion as before.
- $80,000 was raised from friends and family to support the independent company, with the goal of making it a long-term business.
- The investors were offered preferred shares that would automatically convert to common shares once they received a 25% return on their investment.

- The speaker predicts that they will reach their goals within 16-18 months.
- They aim to provide a 10% yearly investment return for their subscribers.
- The business is currently cashflow positive, but they need to account for deferred revenue.
- They discussed product integrations with Pinterest, but there were challenges due to the different nature of the links and recommendations.
- Instapaper has two main use cases: long-form reading and searchable archiving.
- They considered creating an offline reader mode for Pinterest but decided it was not viable.
- The speaker discusses the importance of focusing on specific features for different user groups.
- The team balances simplicity with new feature development and product expansion.

- The product roadmap for Instapaper is based on user requests for features
- Many of the requested features are power user features like highlights, annotations, and exporting to third-party services
- Instapaper aims to keep the product simple for the majority of users by hiding advanced features
- They have a voice-enabled mode for text-to-speech, but integrating with Google Home or Alexa may not be feasible due to costs
- Embedding third-party text-to-speech companies increased the size of the mobile application significantly
- Instapaper's growth hack was removing the paid app download, which proved to be a barrier to growth
- The focus is on delivering a good product rather than growth hacks
- The CEO's personal reading habits and productivity hacks are not discussed in detail.

- The speaker discusses the importance of making dedicated time for focus and catching up on saved articles.
- They mention that they used to read a lot on Instapaper during offline times, but with the increasing availability of internet, they now need to schedule dedicated time to read.
- The speaker shares a productivity hack for using Instapaper's mobile application, where they sort articles by shortest length and quickly go through them.
- They also mention deleting articles that are no longer relevant or interesting.
- The difficulty of finding time to revisit saved articles is acknowledged, and the speaker mentions the idea of building features to help with this.
- The conversation then shifts to discussing the speaker's hiking ambitions and training strategy for mountain climbing.
- They mention doing several backpacking trips and climbing mountains like Shasta and Whitney.
- The speaker shares their workout routine focused on endurance and hitting walls in the gym to prepare for mountain climbing.
- They express interest in climbing Mount Rainier and mountains in South America, but not extreme climbs like Everest.
- The speaker provides their Twitter handle as the best way to get in touch with them.

- Instapaper was created in 2008 as a bookmarking service and reading tool.
- It solved issues with slow mobile networks, difficulty reading on mobile devices, and lack of good reading applications.
- It grew in popularity but faced competition from free alternatives like Pocket.
- Betaworks acquired Instapaper in 2013, and in 2018, it was acquired by Pinterest.
- The speaker joined Instapaper in 2013 and proposed making it a free app, which led to increased downloads and subscriptions.
- They became CEO and implemented a plan to make the app free and increase subscription pricing.
- Instapaper was eventually spun out as an independent company, raising $80,000 in funding.
- The product roadmap is based on user requests, with a focus on simplicity and specific features for different user groups.
- The speaker discusses personal productivity hacks and their interest in mountain climbing.
- They provide their Twitter handle for contact.

Brian Donohue - https://twitter.com/bthdonohue - is President of Instapaper - https://www.instapaper.com/ - and a Product Engineering Manager at Pinterest - https://www.pinterest.com/

You can find him on Twitter - https://twitter.com/bthdonohue

The YC podcast is hosted by Craig Cannon - https://twitter.com/craigcannon

***

Topics

00:00 - The history of Instapaper

8:00 - Free competitors enter the market

10:00 - How Brian joined Instapaper

14:15 - Transitioning from paid to freemium

19:00 - Pinterest's acquisition of Instapaper

26:15 - Moving to California

28:45 - Working on Instapaper within Pinterest

32:00 - Spinning Instapaper out of Pinterest

42:15 - Jareau Wadé asks - What types of product integrations could Pinterest have done with Instapaper?

49:45 - Ryan Hoover asks - I’m curious how he and the team balance simplicity with new feature development/product expansion.

54:00 - Raymond Durk asks - I love the rapid reading mode but would also love a voice enabled mode where the Google Assistant or Siri reads it. Speaking of I'd use it on my Google Home to listen to news if that was a skill.

57:20 - Brian Kim asks - Any growth hacks that worked well?

59:45 - Gustaf Alströmer asks - How does it make time for focused time to catch up on everything he saves? What are his best productivity hacks related to this?

1:03:25 - Backpacking

All right, Brian, so Instapaper has a very curious lineage and history.

So Instapaper was started by a single guy named Marco Arment, and he built the entire product and service and operated it from 2008 to 2013.

Marco, beside Instapaper, was previously known for being the CTO of Tumblr.

And Instapaper was kind of his side project that he worked on while he was at Tumblr.

So my impression was he would work nights and weekends.

He eventually launched this thing, it had quite a bit of fanfare early on, even though it was just a bookmarking service at the time.

Just for- But it was early days App Store,

Markle launches this bookmarking service called Instapaper.

And essentially just a website and a bookmarklet.

So you could save articles using the bookmarklet and all it was was a website.

Coming into like March or April 2008, he launched the reading mode for Instapaper using its text parser.

So the text parser would take an article from a website, extract just the text and the images, and provide just the reading view and experience.

So if you use Instapaper, you're pretty familiar with this.

And then in August 2008, he launched, with basically the App Store launch, he launched Instapaper for iOS, which leveraged the bookmarking service and the text parser to kind of create the Instapaper experience that we're familiar with today.

And I think it was the first time where you had this combination of bookmarking experience, this text parser that would extract the important parts of articles, And then also the mobile application where it was kind of all the articles were saved offline and kind of available to you wherever you were.

I think in the early days of Instapaper in that 2008 App Store world, Instapaper solved 3 key pain points, consumer pain points.

The first 1 was, if you remember early iPhone days, their early mobile networks were really slow and it was like impossible to load a website.

So you'd be waiting forever, things were coming pretty progressively, And then when it did load, it was impossible to read the content because there was no such thing as the mobile web.

And so you'd pinch to zoom and try to zoom in on this column.

And then you'd be like panning around and it was like this really weird experience.

I think the third thing was that the iPhone was kind of primed to be a reading device because it was always with you, but for a lot of reasons it was not really a good reading device because there were no good reading applications, the screen wasn't really good.

And so Instapaper comes along and it lets you save articles.

You can sync the articles while you're on wifi and then access them from anywhere.

And so I think it solves, And then also, like back in the App Store days in 2008, there were not a lot of really useful mobile applications, I don't think.

There were like a lot of, I have Fart apps, and things like this.

And so I think at the time it became was pretty revolutionary and solved a lot of pain points.

And as such, kind of had a pretty huge addressable market, which is almost anyone with an iPhone, right?

And as the iPhone user base grew, Instapaper kind of grew alongside it.

Now you fast forward to 2018, most of those things are no longer problems.

You have LTE networks that are super fast, the mobile web has its problems, and there's various efforts to try to solve them, like accelerated mobile pages from Google, But at the end of the day, you can still load a website and read it pretty easily.

And then the third 1 is there's actually tons of reading applications now.

And the iPhone is a main reading device for a lot of people, whether you use Kindle or Apple News or New York Times or Wall Street Journal, or you use some aggregator like Reddit or Hacker News or Twitter, it's fairly easy to read on your phone now.

And so I think the market has shifted from something that had kind of like a pretty wide appeal in the early days to something that's far more niche now.

And basically the use case for Instapaper these days is you are kind of like a voracious media consumer.

You source content from a lot of different places.

That might be directly from publishers, it might be from news aggregators like Reddit, Hacker News, TechMeme.

It may be from social like Twitter or Facebook.

And you essentially need a place to stage all that content temporarily until the time that you have enough time to kind of read it in bulk, go through it in bulk.

And I think the market size for that is fairly modest.

I think that's part of the reason that Both Pocket and Instapaper wound up landing at larger companies back in 2016 and readability wound up shutting down because actually I think the market appeal for that product is fairly limited and it's not 1 that's like massively growing over time.

Did you notice when Safari launched the reading list, a decrease in users?

So when that happened, I believe it was 2011 or 2012, I wasn't involved in Instapaper at the time.

And I haven't looked at those historical trends to see if that was the case.

But it's not just Safari, it's actually a lot of applications Save for Later became a feature of a lot of things.

So like YouTube, New York Times, Wall Street Journal, Safari, all these things have like this reading list save for later.

Like I found this thing and I want to come back to it but I don't have time right now.

And so I think all of those things kind of chip away at the usefulness of this core service.

And there is a large user base who's still using it daily, weekly, monthly.

And it's been a big privilege for me to have the opportunity to service those types of people.

But let's go back to the intermediate time between the creation and now, because I think that's, Instapaper's story is particularly interesting.

So talk about the time, how Betaworks acquired it.

Sure, so the story that I've heard, and I joined BetaWorks shortly after the acquisition and joined the Instapaper founding team, the BetaWorks Instapaper founding team.

The story is that Marco wakes up at 2 in the morning, he's like a little restless, he's trying to figure out what to do with Instapaper.

I think there were a couple factors there, a couple reasons why, and I haven't talked to Marco about this directly, so this is kind of my hypothesis, but I think 1 was Marco was probably interested in working on some other projects like Overcast, which is his current podcasting service.

It's a mobile app and service that he runs.

I think also in 2012, And so the time frame for this is late 2012.

In April 2012 an important thing happens in this history which is Read It Later Inc.

Which was a read later company originally for Firefox, built for Firefox, built mobile apps and so on.

They wound up relaunching and rebranding as Pocket.

And in doing so, they launched, they, 1, had raised a lot of capital, they had several engineers working on it, and they had launched iOS and Android applications for free in the App Store.

Now Instant Paper had no Android application and the iPhone app was $3.99 to download.

And in relaunching Pocket in 2012, I think, you know, I've looked at the downloads for Instapaper and they just start tanking after April 2012.

And so I think you have this dynamic where you have this service that's really strong, but there's a free competitor that's also really strong, and people will always seek the free competitor.

So I think the combination of fatigue from running the service and Pocket Launching as a free application in 2012, led Marco to rethink what he was doing with Instapaper.

And so the story is he wakes up at 2 in the morning, he creeps downstairs, He's trying to think about what to do with Instapaper.

He reaches out to John Borthwick, who's the CEO of Betaworks.

Now, John Borthwick and Betaworks had invested in Tumblr in the very early days in their seed round.

John Borthwick had Marco Armit come to Betaworks and talk about mobile app development.

So they had a good relationship there already.

And Marco basically said to John, I've been thinking about what to do with Instapaper.

I've been thinking about a long-term home for it, and I think Betaworks could be that home.

And so they eventually worked out a deal where Betaworks would have a majority share of Instapaper and Marco would retain some ownership in Instapaper and continue to act as an advisor.

And Betaworks, the understanding was that Betaworks would continue to invest in Instapaper, staff a team around it, and continue to build it.

So that was announced in April 2013, and so you figure that probably took like about 4 months from December 2012, which is my understanding of the timeline.

Paul Friedman And at which point you get hired by Betaworks to run it, and then you run Instapaper within Betaworks for a couple years.

And then how did the Pinterest thing happen?

Yeah, So I think we should just back up a second.

I was hired as an iOS developer for Instapaper.

The company had never got more than a few thousand people to sign up for it.

It was a location-based social networking company.

I had gone to Betaworks for an investment And they had said, we're not interested in investing in this space, but we really like you.

And it doesn't matter if it's next week, a month from now, 6 months from now, a year from now, just keep us in the loop.

And so when the company folded, I went to Baytorx, I was like, look, I need a job.

And actually the person I was talking to was Nick Charles, who you know as well.

And the opportunities were done not done, which got shuttered within a few months of my joining.

This GIF search engine called Giphy, which I was like, GIF, GIF, this thing from the 90s, like this is crazy.

But I do wonder what that road would have looked like if I had taken that 1.

And Instapaper was this pretty prestigious application that was a long time in the app store.

I had used it in the past and I was kind of interested in it.

And I think a lot of the skills I had from starting a company and that perspective had carried over.

There were a lot of gaps in terms of who was writing blog posts, who was doing the marketing, who was building product strategy, and so on and so forth.

And so I just slowly started to pick up some of those things.

And there's a whole story about how I came into the leadership position that I don't know if you want to go into.

So essentially what happened is even in my first interviews, I had said to the person running it, who's a Betaworks partner named Andrew McLaughlin, I said to him that I did a competitive analysis across Instapaper pocket readability.

And I had said to Andrew that I didn't think Instapaper could compete as a paid application in a market with strong free competitors.

at the time, did they have a subscription model after the paid?

And so you had Instapaper, which had a 399 app download in 2013, and going back in time, it had actually been more expensive.

And then also $1 per month subscription for search functionality.

So it had this full text search feature where if you had saved an article about Obama, you could search Obama, and it would surface the article, right?

So, even in that early interview I basically said like, Instapaper should be a free application.

And as I was hired I kind of advocated for this direction.

There was a lot of pushback from it from Betaworks leadership where, because the app downloads were 40 to 50% of the revenue from Instapaper, there was a lot of hesitation around just eliminating it.

And so what I did is, I had been in touch with a representative at Apple via 1 of their education programs.

And I told her that we were interested in having Instapaper participate in free app of the week.

And so free app of the week is a program that the app store runs where they take a paid application, they make it free, they put it like right in the front page of the app store or what used to be the front page of the app store and give it like a pretty prominent treatment.

Couple weeks later she got back to me and said there was a slot.

And so basically I'd gone to Andrew who was running Instapaper at the time and I said, listen, we have this opportunity to do free app of the week.

I want to test the hypothesis of making Instapaper free.

And so what I'd like to do is give a 2 month free trial to Instapaper subscription for everyone who signs up during the free app of the week trial period.

And I want to measure how many of them we convert after the 2 months.

And what I want the hypothesis to be is to see if we can continue to build a business by transitioning from a paid application with a subscription to a freemium application.

And so we had a couple chats, we eventually went through with the free app of the week, we executed on this plan.

In that time, in that 1 week period, we had more app downloads than we had in aggregate over the past 2 years.

And we increased our subscriptions by like 10 to 15%.

And so we basically had it so that 3 weeks before it expired there was a little notification that came up in the app and then like a couple days before it expired there was a notification that went up in the app saying like, your free trial is going to expire, consider subscribing.

So what did that percentage break down of new users, how many subscribed?

Of the million downloads, I think only 650,000 people created accounts, meaning that people downloaded it.

So they never opened it, or they opened it and were like, forget it.

You do have to create an account to get the experience.

And then of those people, many churned out.

And then of the 15%, we got some of them became subscribers.

I don't want to talk about numbers because you can work out the percentages, but we had a 10 to 15% increase in our subscription base.

And so basically what it proved is that, I think it proved a couple things.

1 is that the paid app download was a major cap on our growth and that we were not able to compete in the market with strong free competitors as a paid application.

And then 2, when people use the application, we could convert them in a pretty predictable, reliable way.

And that they would convert and see the value once they started using it.

And so what I had proposed, and this is January 2014, basically after we executed this successfully, John and Andrew were like, you can be a general manager.

So I set out the plan for 2014, and the plan was pretty straightforward.

It was make the application free, and by the first step was creating more features for the subscription package, and then increasing the price of subscription from $1 a month to $3 per month and then making the application free.

And so over the next 8 or 9 months we built highlighting and then we capped highlighting so you can make, I think, 5 or 10 highlights per month.

But after that, you needed a paid subscription.

We built Text-to-Speech, which we offered for free, but we had a playlist feature where you could select multiple articles, new text-to-speech, and that was paid.

And so we tried to strike this balance between the free aspects of the feature and the more pro and what you would have to pay for.

And then we did a couple of other small things and then in September 2014, We made the application free and launched a new subscription pricing.

So we did that across iOS Android and web and and Then after that I was promoted to CEO in the leadership position and that's kind of That's kind of how I went from the iOS guy into the leadership position.

We took a pretty big hit, I think, which was expected on the revenue side for a couple months.

But within 6 to 8 months, we had recouped what we had lost on the monthly revenue, and we were actually back into a growth trajectory, which was awesome to see.

And then a lot of my focus moving from that late 2014 to mid-2016 when we sold it to Pinterest was getting the business fundamentals right, making sure that we had control over our costs and as we continued to grow our revenue, hit a place where we were break-even and profitable.

And that was my main goal moving through 2016.

And then, so I think that's kind of how it's set up.

And so do you know what motivated the acquisition interest from Pinterest?

Matt Arteris Yeah, so we had fielded some interest, even going back in 2015.

There were 2 large media companies in New York and 1 media company on the West Coast.

1 of the large New York media companies sent us a letter of intent for a large sum, very large sum.

And so we were at Betaworks and we were talking about it and talking about the long-term prospects of Instapaper and whether or not this made sense.

And I think everyone felt like this was a good outcome, at least for the shareholders.

So I think sometimes you think about the people who use the product, you think about the employees, and you think about the shareholders.

I think, unfortunately, in technology, the motivations of each of those groups are usually very different, or sometimes very different.

And so I think what's great now with the new incarnation of InstaTrader since we spun it out of Pinterest is those things are very in line.

I think we should spend some time talking about that.

But I think in this case, the motivation was largely around the shareholders.

And so we went ahead with this letter of intent.

We did all the diligence with these people.

I did like deep tech diligence with these people.

There's a picture on my Instagram from back in 2015 where I'm sleeping at my desk with my feet on the desk.

I remember it was like I had just launched a big app update and done all this tech diligence and I was exhausted.

And then I think we had an 8 week quiet period where they were doing diligence and so on and so forth.

And in week 6 they pulled out because of a strategic change in direction.

I remember it was actually Halloween 2015.

Because I remember getting pulled into a conference room and being told they backed out.

I went out and got pretty drunk that weekend and just tried to take my mind off of it.

I felt okay about it until the Monday I got back to work and I was like, oh man, I have to actually build this company again.

I was in the mode like, all right, we're going to do this thing.

Peter Halligan Not to mention the significant amount of money that would have been in the bank.

And so I think there were a lot of things where you were on a certain trajectory there and I was looking at houses in New York.

I was gonna put a down payment on a place in like Gowanus or you know, in South Brooklyn somewhere.

And I think it was hard too because the whole team knew about it.

The whole team, there's like 3 or 4 of us.

But still, I mean, it's kind of rough to go back to everyone and be like, hey, by the way, this isn't happening anymore.

And so, I was pretty deflated, I think, like as you might expect.

We went back to the other large media company, the West Coast Media Company, and started those conversations again.

And then Pinterest had been talking to Betaworks separately about things.

Their corp dev had been talking to Betaworks.

They mentioned that they were interested in news.

I had a meeting with Andrew and the guy who was running Corp dev at the time.

I didn't think the meeting went particularly well.

I was like, this feels like a waste of time.

I don't know why we're doing this, like spinning up new conversations, whatever.

And then eventually we got connected with the head of product at Pinterest, a senior PM at Pinterest.

There was some connection with Andrew and the senior PM from the Google days.

And so they knew each other and it was very friendly.

So but these initial talks were in December 2015.

And the acquisition happened, like signed and done in August 2016.

So you're talking about a 9 month process and it wasn't all on, I mean it was like we had talks and it cooled off and then we came back and then there was like a negotiating period or whatever.

But just to kind of illustrate, I mean, from the time that we fielded initial acquisition interest until the time that we sold the company was over a year, it was 13 months.

So these things like take a fairly long time and you may, you know, have a party that's interested and pulls out.

And so I learned a lot from the whole process.

So like psychologically, for someone in your shoes, you know, what do you tell them at this point?

Don't look at houses until you have a check?

Yeah, so I would say definitely don't count your eggs before they hatch.

I think it's tough when you are so close to something.

I mean, we were all like, when we signed this LOI, we were high-fiving and stuff.

See all Y Combinator transcripts on Youtube

Brian Donohue on Operating Instapaper Through an Acquisition