Why do people develop apps or services (like Instagram) that aren't initially revenue-generating?

Startups can be defined as a group of people gathered to solve a problem of common people through unique ideas and trying out those ideas to find the best suitable solutions.

It is important to remember that the first motive behind a startup is not to earn money but how can they offer an efficient and cost-effective solution to their target customer’s problem. If you have watched the movie “Social Network” (If not? you should) which is based on the beginning journey of Facebook. You might have noticed that Facebook started the earning opportunities after gaining large user traction that used the app on regular basis.

So the direct answer to your question is not everybody starts a new business with the only motivation of earning money but the main motivating driver behind Instagram like App Development is to provide a platform for users to entertain while also giving a huge opportunity to content creators to showcase their talent on the platform.