My take on the Instagram Facebook acquisition
Yesterday Facebook bought Instagram for a billion dollars. Last week, Instagram received funding that valued the company at $500 million.
So the question is, why did Zuck pay double the valuation for Instagram?
Mobile and photos.
Instagram, like Path, is a mobile-only network. And Zuck, like many of us, knows that mobile is everything.
And Instagram just happens to do better than anyone the one thing that Facebook users do more than anything – share photos.
Makes sense why Facebook would be interested in them. My worry is, what will Zuck do with Instagram going forward?
He says he’s going to leave it alone, but that doesn’t make any sense. He’s going to want to integrate it somehow into Facebook, because sharing photos is inherent in Facebook’s DNA. It’s not like when Yahoo bought Flickr in 2005. Storing photos wasn’t part of Yahoo’s DNA, so it made sense for them to leave it alone and not try to Yahoo it up.
My personal take is that this is a bad thing for Instagram users. I’d say there’s a 30% chance that the original founders of Instagram, now that they’re super rich, are going to be less motivated with all their money and their new bosses; a 50% chance that Zuck tries hard to integrate Instagram into Facebook and in the process takes away the essence of the platform; and a 20% chance that this all somehow makes Instagram better.
Thanks Jeff. You make good points. Sad, but solid statements. I hate that the money and less ownership over their platform could have adverse effects on Instagram and their team. It will be interesting to see what happens. We cannot change it now and I am actually excited to learn from the future of Instagram whether it is negative or positive.
I would love to compare this to any examples of past acquisitions that gone “wrong.” Do you know of any?
Be interesting to see how this affects their location efforts. FB recently mentioned at the ‘Where Conference’ that 1 in 4 FB users add location to their posts and those 200 million users tag on avg 10 locations a month. One of the major features of Instagram is the location tagging capability. I haven’t seen official numbers on the percentage of photos with a location associated, but have heard more than 50% often thrown around. It is also the biggest user of the foursquare API. With Facebook still trying to carve out a model to solidify a LBS strategy with users (especially with the new Timeline), this move is certainly a fascinating one. As they start tinkering with Instagram, I’ll be curious on what they do with the foursquare connection component.
Solid predictions, and I have to agree with you. The probability that Instagram stays as is or even improves is slim. Personally, I see it moving towards the Spotify model, where users will be required to have a Facebook account to use the platform. Instagram will essentially become Facebook’s proprietary camera tool where photos shared to Facebook is the end goal, and the posting to the Instagram feed is secondary at best.
[…] Case in point: Facebook buys Instagram for a billion dollars. […]
I think you are correct Jeff. Facebook has become “uncool” to young people in their late teens and early to mid 20’s. This is primarily driven by the fact that Facebook is now a corporate behemoth not the young lean startup it once was. They sell users information some explicitly some implicitly and users are not happy with that; therefore, young users adopt platforms like Instagram where they can simply share their pics with friends without them being stored in archived data warehouse hardware.
There are always replacements… MySpace, Friendster, Facebook, ……. What’s next?
I like the quote someone wrote in an article that stated from a 20 yr olds perspective when asked about Facebook: “Facebook is not cool anymore and hasn’t been for two years. I mean, how cool can something be if your parents are on it?”
So why does Instagram “do” it better than facebook re: sharing photos? That’s the part of alot of this that’s lost on me. I have to think that just based on the inherent size of the user base of FB that FB photos are shared more (if more is our measure of better) even if the process is only half baked. Or is it that for a savvy user Instagram is nicer app?