Photos = Social…and $1,000,000,000

I love where I work on days like today. AP is the place to be for breaking news, hands down. Upon seeing the breaking news tweet about Instagram being acquired for $1BB for cash and Facebook stock (right before IPO too…nice), I ran downstairs like a child on Christmas, with my air-rifle wrapped present being the background and insight that only these few people know. Everyone was already in a heated discussion around the price, strategy and reason behind the acquisition. One thing that came out of this: this is a smart move for both parties.
Facebook knows that photos have always been the biggest driver of social content and services, and combined with the mobile growth that we’ll continue see, it’s a great fit for Facebook.
Instagram was reportedly raising $20-30MM on a $500MM valuation. I thought that was a bit crazy, but hey, if you’re at that level with the top VC’s in the world, doubling that valuation and cashing out is a pretty smart move. Their very successful launch of Android, dealing with all of its fragmentation, must have boosted it considerably, and they knew they were in a great position to negotiate. Further though, their mission has been three things: 1) Upload quickly (their secret sauce is uploading in the background when writing your comment) 2) Make photos beautiful (filters) and 3) Share easily across various networks. Sure selling to Facebook advances the sharing to Facebook but the others will be a big question. At the end of the day, it’s their extreme focus on doing these three things so well that’s made them such a big community. There are other apps that have filters, there are other apps that have the ability to share and upload easily, but they do all these things together better than anyone. Plus their community is so vibrant, a testament to their stability and outreach. Side note: I highly recommend Kevin Rose’s Foundation interview of Kevin Systrom.
There will be challenges too of course. Instagram has to be very careful with their current user base concerned about big, bad Facebook taking over their beloved independent application, and not just the options to share to non-facebook networks. My latest Instagram photo regarding the acquisition is filled with thumbs down and negativity about the purchase. Facebook’s press release (which received 80,000 likes an hour) states: “We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.” That said, it will be on the Instagram team to push back on Facebook hooks, not to mentions ads. Is Instagram going to be the next Flickr, a site still used, but that stopped innovating when it was sold to Yahoo? Will be very interesting to see where they are in a few years, but a huge congratulations is definitely deserved!
H/t @JohnDeguzman for your thoughts and opinions as always.






