Entrepreneurs

How these 20-somethings brought in over $1 million in a year with an Instagram-friendly app

Andy McCune and Alfonso Cobo, founders of Unfold
Unfold
Andy McCune and Alfonso Cobo, founders of Unfold

If you're noticing your favorite influencers using curated templates in their Instagram Stories lately, then you're familiar with Unfold.

The app offers a series of templates for polished, design-driven Instagram Stories, gets about 100,000 downloads a day, according to co-founder Andy McCune. It has been ranked as the No. 1 photo and video app in the App Store several times this year, and influencers and celebrities like Camila Cabello, Olivia Culpo, Selena Gomez and Ashley Tisdale, as well as brands like Topshop, Four Seasons and Equinox Gyms, use it, he says.

The two co-founders, Alfonso Cobo (25) and McCune (23), who met less than a year ago, say the business has already made over $1 million in revenue and received a recent offer that values the company at $10 million, according to McCune.

Since July 10, when Instagram released Q&As, where users can post a question and have followers answer, the app has averaged 75,000 downloads per day.

"That's when Unfold really got traction," McCune tells CNBC Make It. "Our growth tripled because people would ask these influencers in the Q&A what they are using for their Instagram Stories that were curated, and they would say Unfold." That month the app hit 3.5 million active users, its biggest spike yet.

And something else great happened. On Aug. 12, Instagram contacted Unfold. The company wanted to work together to help brands create better content for Instagram Stories. Instagram now features Unfold as a recommended app to help brands "easily create next-level Stories ads," according to McCune.

It's a tale of virtual overnight success, because Unfold began in earnest in May when Cobo sent McCune, then strangers, a private message on Instagram.

Unfold co-founders Andy McCune and Cobo Alfonso
Unfold
Unfold co-founders Andy McCune and Cobo Alfonso

"Unfold is actually a pivot from another app," co-founder Alfonso Cobo tells CNBC Make It.

In January 2017, Cobo, who is from Gran Canaria, Spain, was on scholarship attending Parson's School of Design in Manhattan , studying strategic design and management. Getting ready for a career fair, he realized there was no software or app that could create a portfolio of his work on an iPad.

"There wasn't anything that could showcase my work in the way I wanted. Because my background is in design, I thought I would just create an app with my design skills and put it out there for other people to use it, but I didn't have the skills to do the coding."

Cobo, whose only income was some food money from his dad, borrowed a total of $500 from him to hire a developer on freelance marketplace Upwork to code his app. Then called Portafolio, it was inspired by print publications and designed for people who love minimalist aesthetics. It was a basic version of a portfolio layout app, the first one to exist for iPad, launched March 2017 from his Brooklyn apartment.

Cobo thought it could be successful as a product, but no one else seemed to.

"Designers now had a portfolio app for iPad that came with templates — but no one was using it. Most people I knew didn't even have an iPad, and the ones that liked it wanted to share their work on an iPhone instead," says Cobo. "At the time, Instagram Stories was catching popularity. It sparked my idea to change the format of Portafolio and pivot to Unfold, where users could have templates to showcase their Stories."

That was June 2017, and according to Cobo, no such app existed and people were designing Stories in Photoshop or using basic collage apps, so he knew there was a market for a better way.

Plus, "I felt that people wanted to share stories a longer time than 24 hours," Cobo says (originally Stories disappeared after a day, but Instagram enabled archiving after 24 hours starting in December 2017). "When I built Unfold, you could create these beautiful, artful stories that looked like a print magazine and save them forever. I knew people wanted time to craft Instagram stories and keep them."

Unfold app for Instagram stories
Unfold
Unfold app for Instagram stories

Cobo borrowed another $500 from family and hired the same developer. And again, Cobo couldn't get anyone to use Unfold.

"I would go on Instagram every day and private message travel bloggers about my app, asking them to try it out. I sent hundreds of messages every day," Cobo recalls. "I didn't get a great response. I would get excited if I got four downloads in a day."

Everything changed in October 2017 when he sent a private message to Andy McCune, founder of social media platform Earth, founded January 2015, which has more than 1 million followers on Instagram.

"I randomly saw Andy using my app one day," Cobo says. "I messaged him, thanked him for using it, and he started asking questions.... I Googled him and saw that he had a popular app, Top Nine. Everyone used to use this app because it would tell you the most popular pictures [on Instagram] at the end of the year.

"I was doing Unfold all by myself, and I needed someone to help me with growth and marketing," says Cobo. "Andy and I wrote each other on Instagram in direct messages, and it turned out we lived just a few blocks from each other. So we got a coffee at Cafe Beit on Bedford Avenue in Williamsburg and talked through the whole thing."

Unfold

As it turned out the two men had similar backgrounds. They both come from humble backgrounds, both dropped out of college (Cobo dropped out of school in Spain but then earned a masters degree from Parsons after getting a scholarship to attend; McCune dropped out of San Diego State University in 2015 because he thought school was holding him back from devoting time to work in tech) and both started app businesses with little technical knowledge.

"I told him about my vision for Unfold and asked him right away if he wanted to be my co-founder with 40 percent of the company. It's the biggest risk I've ever taken in my life." (Cobo owns the other 60 percent.)

McCune accepted.

That was October 2017, and the two started promoting Unfold with Earth right away, Cobo says. "For months, we seeded Unfold with all these ... influencers." With no budget, Cobo and McCune relied on this word-of-mouth marketing, while continuing to make more templates and improve the app.

Then in February, "we saw the biggest celebrity influencer in Spain, Dulceida, using Unfold. She has 2.5 million Instagram followers," says Cobo. "We reached out to her, and she said she got hundreds of messages of fans asking her what she was using to create her Instagram Stories. She finally did a video promoting Unfold and a few hours later, it was the No. 1 app in Spain."

"We got up to 50,000 downloads in February, which was great." However Unfold saw no revenue because the app was free.

After Dulceida, other influencers started giving it a shout out on Instagram, says Cobo, "and it just went crazy viral." Normally such promotion would cost thousands of dollars, he says. Unfold have not paid any influencer or spent money on marketing, McCune says.

As of Sept. 19, Unfold has had 9 million downloads. Since Unfold debuted, it has had an average 3 million monthly active users, according to McCune. Unfold has ranked the No. 1 photo and video app in the App Store in almost a dozen countries, according to App Store's charts, including Spain, Italy, Argentina, Portugal, Croatia, Malaysia, Indonesia, Senegal and Czech Republic.

In May, Unfold released in-app purchases in the App Store (for 99 cents users get access to a nicer template collection) and is projected to do $2.5 million in revenue this year, according to McCune.

Of course, Unfold is new and apps tend to have a shelf life.

"Mobile apps have an infatuation period that can fade quickly," technology industry analyst Maribel Lopez tells CNBC Make It. "Today's multi-million download is tomorrow's throw away."

One of the few areas where this isn't always the case is with apps around photos and creativity, says Lopez, and Instagram has built a following so there is an opportunity for longevity. Still, says Lopez, "Unfold will have to be unrelentingly innovative and build stickiness with partnerships to avoid being yesterday's cool fad."

In response, Cobo says "I think people will always be telling stories in Stories." In an email, he references Facebook's 2017 fourth quarter earnings call when Mark Zuckerberg said Stories was on track to overtake feed posts as the most common way that people share across all social apps.

However since then, Instagram added IGTV, designed specifically for mobile video, though the idea is that it's for longer form content. It remains to be seen how this could affect Stories. But according to a transcript of Facebook's most recent earnings call, Instagram has 400 million people sharing with Instagram Stories.

McCune adds that Unfold is also focused on innovating and building outside the confines of Instagram, saying the company is "looking into deeper integration with Facebook as well as other platforms such as Whatsapp." (Both Instagram and Whatsapp are owned by Facebook.) He also says the app's users are "growing exponentially in countries which don't have the same sharing habits as we do. For example, we have a really large user base in Indonesia, and we've found out that they do not only love sharing their Unfold stories on Instagram, but Line [similar to Whatsapp] too."

Beyond that, McCune and Cobo are working toward a subscription model to continue generating revenue. And to this point, Cobo and McCune say they have never taken outside investment or loans, instead bootstrapping the business, which is now a team of 13, mostly working in development and social media strategy.

"You make bad decisions when you take other peoples money," says McCune. "When you raise money, there's this inclination to throw it around to see what works. We didn't want that. We've stayed as lean as possible. We built everything with money from our own pockets."

Correction: This story has been revised to correct that the $1 million was revenue, not profit; the Q&A feature is Instagram, not Unfold; and other details.

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