The Great Unbundling of Consumer-Social

When Netscape CEO Jim Barksdale famously quipped during their IPO roadshow in 1995 that there were “only two ways to make money in business: one is to bundle, the other is to unbundle”, TLC’s “Waterfalls” was top of the charts. There was no such thing as a “social app” a “creator” or (by today’s definition) a “meme”.

But for me, in 2022 there remains no better framework than “bundling vs. unbundling” to understand the dynamics playing out between our social media giants today.

This article is about how TikTok has successfully unbundled Instagram, how Instagram (try as it might) cannot successfully respond, and why this is creating a big long-term opportunity for truly “social” apps in the future.

We’re going to cover:

  1. What are bundling and unbundling?

  2. How Instagram is a bundle of two products

  3. How TikTok is unbundling one of Instagram’s two products

  4. Why Instagram is paralyzed and can’t respond

  5. Why this is could cause a Cambrian explosion of “intimate” social apps

Let's dive in.

Unbundling in theory

In 2017, Stratechery (Ben Thompson) wrote a seminal article that articulated the “unbundling” of TV by internet channels. 

So what did he mean by “unbundling”? Thompson argued that TV had five “jobs”: Information, Education, Sports, Story-telling and Escapism. These formed a “bundle” of different consumer needs, accessed through one simple cable subscription.

Source: The Great Unbundling, by Stratechery (Ben Thompson), 2017

To summarize Thompson’s article, TV’s “unbundling” would result in its long-term decline, because consumers could achieve its various “jobs” (read: use-cases) in a more direct way, without requiring subscription to the entire cable TV bundle.

In other words: the “bundled” solution (TV) would be defeated by the “unbundled” solutions (Google, YouTube, Netflix, Snapchat), because they address the specific use-case (information, education, story-telling, escapism) better.

So let’s step back into the theory. When do “bundling” and “unbundling” occur more broadly? 

Bundling takes place when companies can stack up customers’ willingness to pay by providing a package of services, rather than providing each service independently. Chris Dixon has a great microeconomic explanation of this. 

Unbundling takes place where the opposite is true: companies can extract more value by isolating one element from the bundle, and offering it as a standalone service. This allows the unbundler to disrupt the bundler by:

  • Method 1: The unbundler having more efficient pricing (because eliminating expensive parts of the bundle lowers the unbundler’s costs), OR

  • Method 2: The unbundler having better service quality (because the unbundler builds the product specifically around the unbundled use-case)

Remember Method 2. This is the one that we will return to, when we discuss how TikTok is unbundling Instagram.

The Instagram Bundle

Have a look at your Instagram feed. As you enjoy the ever-weaker dopamine hit coursing through your veins, note that two categories of content will quickly emerge:

  1. “Social” (your friends and family): Wedding photos, messages from friends, group video calling, perhaps even the odd “I’m humbled to announce…” or #TBT

  2. “Entertainment” (creators): Memes, cooking tutorials, pranks, shopping, influencer #ads

Do you see where I am going with this?

“Social” and “entertainment” are two distinct use-cases for Instagram, no matter how hard the friend-and-creator blended user interface might try to persuade you otherwise.

So Instagram is not just a social app, and it is not just an entertainment app. It bundles both of them together. 

This is supported by the data; a 2019 study (yes, that’s the most recent I can find) showed that “contact with friends and family” (67%) and “entertainment” (47%) were the most important reasons for Instagram usage.

Source: Audience Project / Statista (2019). All other use-cases were <35%.

This bundling of “entertainment” and “social” is especially acute on Instagram, but it also applies on other platforms (Facebook, Twitter, and even YouTube to some extent, were designed with a “social” use-case in mind and then transitioned gradually more to creators).

The TikTok Unbundling

TikTok Monthly Active Users (MAUs) since launch (iOS + Android, includes – Source: SensorTower). Note: the dip in mid-2020 is due to India's ban.

The TikTok For You page is a never-ending scroll of creator’s content, tailored by an algorithm that optimizes for engagement and watch-time.

So TikTok isn’t trying to connect you to your friends; it is trying to entertain you. That’s why Turner Novak has called it the “anti-social social app”; there is nothing “social” about it. 

In other words, TikTok has unbundled the “entertainment” use-case away from “social”.

So why has this worked so well? Recall the second benefit of unbundling, discussed above.

  • Method 2: The unbundler having better service quality (because the unbundler builds the product specifically around the unbundled use-case)

In this case, TikTok has dramatically improved the entertainment experience of its app by removing the social features that Instagram is reliant on. 

There are some specific product design choices that make TikTok it a great “entertainment” app, because it is not trying to be a “social” app (along with why it would hurt Instagram’s “social” features to copy them):

  • Being video-only:

    • TikTok ✔️: Improves engagement, and being video-only enables other features (universal “sound memes”, autoplay, duet button, etc.).

    • Instagram ❌: Instagram’s “social” users want to be able to post photo updates as well as videos, so Instagram cannot make this change.

  • Algorithm surfacing content from new creators:

    • TikTok ✔️: TikTok’s For You page constantly surfaces new content that suits your tastes. Users have been trained to see content from new creators constantly. This also encourages creators to make high-quality, viral content that the algorithm will prioritise.

    • Instagram ❌: Instagram’s core experience is based on keeping up with your network and favourite creators. This means most content is served directly from creators to their followers. Content from creators that users do not follow feels like an interruption.

  • No time sensitivity:

    • TikTok ✔️: TikTok’s user interface does not show when a post was uploaded in the For You page. Creators’ months-old posts can be surfaced to users. Users do not care; if it is entertaining, they will watch it.

    • Instagram ❌: On Instagram this is not possible; as a “social” app, people care a lot more about when their friends posted something. If Instagram took away dates from posts on the core feed there would be an uproar.

  • Metrics everywhere:

    • TikTok ✔️: Numbers are all over the TikTok app: views on posts, number of likes, total lifetime likes, number of shares / bookmarks, number of comments, number of likes on comments. This helps keep creators on their toes, and gives users instant live signals of content and creator quality.

    • Instagram ❌: Instagram’s social-focus interface would not do this; “social” users do not want to feel that they are being constantly compared with each other. Instagram has even allowed users to turn off like counts.

So, by a series of product decisions that sacrificed “social” features, TikTok has made a dramatically more entertaining product than Instagram (and, arguably, elements of Facebook, Twitter and YouTube, all of which started as “social” apps). 

Instagram is powerless to respond. As above, the exact features that make Instagram a good social app prevent it from becoming a good entertainment app. The more they push "entertainment", e.g. through Reels, the more they hurt their "social" product. It's a catch-22.

This issue is at the heart of the Great Unbundling of Consumer-Social. And it is why TikTok will keep winning.

But it could get even worse for Instagram.

Intimate Media in 2022: Unbundling "Social"

So we’ve covered TikTok, which unbundled “entertainment” from Instagram’s bundle. What might an app that unbundled “social” from Instagram look like? It could have some of the following features:

  • No creators in the core experience

  • Supercharged social interactions by gamification

  • One-to-one feel

  • Updates on where your friends are in the world

  • Rich messaging features

Ringing any bells?

These are exactly the product elements that BeReal (one-off daily tit-for-tat photos), Sendit (social games), Feels (interactive dating, our portfolio company), NGL (anonymous Q&A), Discord (supercharged group chats), Zenly (social maps), and to some extent, Snapchat (visual disappearing messaging), have created.

Because of their truly-social focus, we can call these apps “intimate media”.

Take BeReal as an example: the app is minimalistic, and does not feel designed to “entertain”. By encouraging users to take one photo per day to share with their friends, it allows people to keep up-to-date with their loved ones, while sharing their updates in a low-effort way.

This is working so far, with global MAUs reaching above 5 million per SensorTower:

BeReal MAUs since launch (includes iOS + Android). SensorTower data

Feels, Discord, Sendit, Zenly, NGL and others have similar social-first attributes.

So although BeReal and other equivalents remain in early innings, I believe that there is a generational opportunity to unseat Instagram (possibly with several apps to start, instead of one monopoly).

Why now? Because with unbundling: when it rains, it pours. Now that TikTok has taken leadership of “entertainment”, Instagram’s bundled offering becomes even less compelling, and competitors focusing purely on “social” have a unique opportunity to grow share.

As Creator Economy thought leader Hugo Amsellem puts it: we are in a “Loneliness Economy”, and these social apps can fill this gap.

This will be a key investment theme for us at Creator Ventures.


We began the description of unbundling with Ben Thompson’s (Stratechery) piece from 2017 predicting the unbundling of cable, and therefore its slow decline. Five years later in May 2022 he revisited this prediction (“Cable’s Last Laugh”). The conclusion was quite different; that people had written off cable too early, it is “stronger than ever and poised for growth”.

So where does that leave our prediction of Instagram’s unbundling? I’ll be sure to report back in five years…

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