Here is why Facebook bought Instagram

189 thoughts on “Here is why Facebook bought Instagram”

  1. An HOUR a day on Instagram? I’ve been tracking your stories for a long time and it now seems you’re up to 26 hours a day on SOME platform or the other.

      1. “I know how they feel, and how they see the world. Facebook lacks soul. Instagram is all soul and emotion.”

        Seriously?

        Very poetic, Om. And sure Instagram is great, but it’s also a camera app with cool filters. The rest (of its worth) is about the users, and they couldn’t have found a better acquisition prospect than Facebook.

      2. “I know how they feel, and how they see the world. Facebook lacks soul. Instagram is all soul and emotion.”

        id dispute this observation! i have a distinct persona on Facebook, offering up humorous pics gleaned from friends on Facebook, Instagram, imgur, and Flickr. i have a core group on Facebook who apparently like my dry humor and vision. I also appreciate their humor and vision also. i have gotten to know people on Facebook without ever talking with them on the phone or in person–just through Facebook posting. i feel there is a TON of soul behind some of those profile pics and hope they experience me the same way.

        i do agree that Instagram is a better ‘add-on’ to Facebook than any other photo app and see this symbiosis as something transformative and complimentary to each world. It may even be ‘The Next Big Thing’ on the internets!

      1. Truely its a huge money involved and we will be hearing founder stories. How would this change the scene the way image sharing is now, like pinterest for instance ?

      2. I agree with your words written here, very accurate description of this acquisition.
        nevertheless, things are a bit different when its facebook that makes this huge bid, its more difficult to decline. as i see it in any other case they wouldn’t have sold.

  2. “But then the road from product and a platform to a business is long, twisted and full of potholes. Perhaps that explains why the Instagram team decided to cash in their chips.”

    While true some things can be done easier when working on scale. The question will be if FB’s execs are going to support it and let it happen.

    “Every day that passes, we see more experiences being shared through Instagram in ways that we never thought possible.”

  3. $1 billion today != $1 billion a year, two years or three years ago.

    Today’s dollar doesn’t by the same amount of stuff as yesterday’s dollar. We’re not just in a new tech bubble but a currency bubble.

      1. There is no big inflation in goods and services the consumer buys but one in shares and vc, the money that is printed by the FED has to go somewhere. Here is one example where it goes to.

      2. The only reason that there is no official inflation is that housing is *included* in the CPI, but “energy” and “volatile foods” are *excluded* (read: they don’t want you to be reminded of high gas prices, low house prices and paybacks to farmers, who benefit most from inflation). If we had measured inflation the way we do today back in the 70s, there would, officially, have been no “stagflation”. QED.

    1. ‘too soon to sell’ clearly you have no experience of a business exit. They join a group that numbers at best a handful of people globally! In the UK the founder of friendsreunited.com sold for circa 200m and the purchasers offloaded it for many times less than that. Instagram is massively overvalued and they have done remarkably to achieve this price. They have 8 employees For Gods sake.

      1. Clearly you didn’t read the article posted up top of the page there.. If Instagram really did pose a serious threat, and really planned to become flickr in the mobile space, a cool billion was quite likely on the low side of things and too soon.

        Then again, I’m still pretty sure this is a simple user/data buy up, in any case, who the hell are you to act like you know what Facebook was really willing to pay or how big Instagram could have been.

        PS, 8 employees for an app that takes pictures? Overkill. Learn something about the industry other than the $$$ signs, maybe you’ll understand things a little better, possibly even sound less like a douche while talking down to people over the internet.

      1. Nah he’s right. Isn’t pinterest a clone for any bookmarking service? Cheap clone btw. But very very good UX. In the end, what’s really important is always how you implement the idea and how much money/power/network you have to make the idea grow and be noticed by users.
        As said Nikolaus, given the valuation, tons of clones ( adding to the already existing ones ) are going to come out.

    1. Given the valuation, that’s what’s going to happen… 10 new instagrams will pop up. I imagine FB knows this and for that reason will leave instagram alone until it “won” against all these new clones….

      1. More clones will come, but lots (dozens if not hundreds?) of very similar services already exist – picplz and Hipstamatic are two examples that come to mind. Instagram’s stylishly simple UI/UX, focus on solving one problem extremely well and brilliance/luck/relationships in becoming “Twitter for Photos” won this race. Potential clones would be best served putting their efforts towards other efforts – video perhaps?

    1. Totally – Zuckerberg is just thinking about the question “what could replace Facebook” and instagram is on top of the list. Money is no issue given Facebook’s own (ridiculous IMO) valuation. I think FB is way overvalued but Zuckerberg is making the best of it with moves like this. This is no time to skimp.

    2. Sure, but let’s define competition in this instance. Would Instagram ever compete at a platform level? I highly doubt they would have ever grown to that capacity. Would they ever compete at a user level? Facebook laughs at 30-50 million users and I’m sure 99.99999% of Instagram users are Facebook users anyway. Where Instagram does compete is in time spent using the service, which is directly translated to lost advertising revenue for Facebook. With the IPO coming up, preserving revenue streams is of the upmost importance, which may account for the rash “make vs buy” decision. It will be interesting to see what they actually do with the service as it’s not in their best interest to let it remain as-is other than to save face… which they hardly care about :/

  4. It’s always easy to second-guess a deal. Easy to say after the fact “They could have got more”. Personally I think the valuation is way overblown. Seems like a symptom of the current bubble.

  5. Great article! You bring out a lot of key points. Facebook had to go after Instagram. They pretty much had no choice. I love instagram, and what I loved most about it (oh no I’m already using love as a past tense) was it’s exclusivity. FB is a platform for a heaping amount of craziness … I’m really hoping Instagram doesn’t fall prey to that.

  6. I think of this like the moment when Google acquired YouTube. FB is getting content, users, technology, and talent. The price is about right. I think Google probably got more value in paying $1.65b for YouTube, but times and prices have changed. Instagram is definitely one of the best mobile apps in the world right now, and will probably prove worth the price.

  7. It will be fascinating to see what happens over the coming months;

    – Will Facebook will try to integrate Instagram’s userbase and functionality into its own platform or keep it as an independent property and try to bring non-Facebook users over to Facebook through basic things like unified login?
    – Will Facebook kill the independent brand identity of Instagram, likely loosing users in the process?
    – What will be the user fallout resulting from Instagram users not wanting their photos to be owned by Facebook (or general discontent with Facebook itself) and how will this affect other social photo apps’ user-base growth?

    With a price of nearly $1billion it almost feels like the momentum Instagram has for capturing new users has been priced by Facebook as far more valuable than the marketshare it expects competitor apps/services to own and conceivably gain in the next little while.

    q./

  8. I disagree. http://www.quora.com/Instagram/What-about-Instagram-made-it-worth-a-1B-acquisition-by-Facebook is my answer. Printed here too:

    Facebook has a problem. After its IPO completes it needs many quarters of strong revenue and profit growth to report to convince investors to stay put and convince new ones to buy the stock.

    Zuckerberg is aiming at turning the $80 to $100 billion valuation that will happen at IPO into a $500 billion to $1 trillion company. How will he do that?

    Look at mobile. That’s what.

    Today Facebook has NO revenues from mobile. None. That’s amazing, since so many people, hundreds of millions of us, use Facebook on mobile clients.

    That will change very quickly after the IPO. Instagram will play a huge role here, plus Facebook gets a very talented mobile development team that has built world-leading mobile apps on iOS and Android (which got a million users in its first day).

    Let’s say that Facebook can turn on monetization on mobile clients. That could mean $500 million in revenue on first quarter, $700 on second, $900-$1 billion on third. Looking at it this way paying a billion for Instagram makes a LOT of sense.

    Especially when you consider that the mobile team Facebook just acquired is going to be able to build a range of apps.

    But that’s just the beginning. Remember, Facebook is a new media company: one where the media comes to you based on what it knows about you.

    Instagram adds some important new pieces of data to the Facebook databases:

    1. It knows who you like seeing photos from. That gets Facebook a dramatically better photo “graph.” That keeps it ahead of Google+, which wooed photographers strongly in its first seven months on the market.

    2. It knows where you are when you shoot the photo. That is very important info for Facebook to know about you.

    3. It shows a range of passions that you have. If you are a skiier, you take pictures of snow and skiing. If you are a foodie you take pictures of food at high-end restaurants. If you are into quilting, a lot of your photos will be of that. If you are into mountain biking, the same. Facebook’s databases need this info to optimize the media it will bring to you. This data is WORTH SHITLOADS! Imagine you’re a ski resort and want to react skiiers, Instagram will give them a new way to do that, all while being far more targeted than Facebook otherwise could be.

    4. Instagram will let Facebook develop a new kind of Open Graph advertising. One where Facebook will be able to offer mobile developers a lot of money in return for opening their apps up to Open Graph. Venture Capitalists in Silicon Valley are slobbering over this new potential revenue stream, so having lots of VC buyin (they just got a nice payday) will be very important. Imagine that Benchmark now “asks” all of its member companies to support such a new advertising scheme? This could result in billions of revenues for Facebook and member companies.

    And, there are probably a few more things elsewhere that this acquisition will do for Facebook.

    1. I disagree with your disagreement: I don’t believe this acquisition was fueled by a concern for generating mobile revenue.

      1. Instagram has not shown any knack for monetizing their usage
      2. If Instagram and Facebook user-bases overlap considerably (I’m assuming they do), Facebook is not gaining significant incremental data from this newly acquired “photo graph.”
      3. You really don’t think that with all the cash Facebook has and will have after the IPO they can’t hire talent to create a photo-sharing mobile experience like what the handful of employees at Instragram created?

      My assessment of this move was for Facebook to 1) Weed out their biggest threat, 2) To show investors, present and future, that they’re in-it-to-win-it, and 3) Show the world that they’re still “hip”

  9. Om, I’m not quite clear on the distinction you’re making here: “It has created a platform built on emotion. It created not a social network, but instead built a beautiful social platform of shared experiences.” Couldn’t you say that Facebook is also a social platform of shared experiences? Conversely, couldn’t you categorize Instagram as a social network?

  10. Depending on how it turns out, I may stick with using Instagram or I might dump it. I don’t post that many to FB as it’s my least liked social networking site and if they make the default to automatically post to FB..well, nail in the coffin for me. FB is not where the cool kids play, great for pages etc, target audience but.. but no.

  11. Doesn’t this whole post ignore the fact that, for the vast majority of people, Instagram wasn’t a real “social network” but simply a way to take pictures with a sepia filter? Pictures that they then, of course, shared on Facebook?

    This will be a punchline in a few years. Guaranteed.

    1. Corey

      How much time have you spent on Instagram? If you have then you very well know that is not just a filter/photo app as you are describing. I think there is a massive difference in how folks interact with photos and build social experience around them and what is a classic social network like Facebook.

  12. Just look at Apple’s App Store: Camera + and Camera Awesome are arguably better cameras apps and filters that needed community, but then Mobli came along and started eating Instragram’s lunch with it’s fast growing community/social features (all three camera and camera social apps were featured in the App Store). What I’m saying is, Instagram was smart to sell now, the competition is nipping at its heels among the early adopters and influencers.

      1. After using both, Instagram has a bigger community, but Mobli does integration and feeds better – at least for my needs. The point being, competition was building so IG was smart to sell now.

  13. As it moves towards its IPO Facebook has to show it continues to have momentum on the user numbers and engagement. $1bn is not much insurance to pay to muddy the waters and to hide any possibly damaging churn in its numbers.

  14. The biggest reason for which I loved Instagram was that it was light, simple, and with a single purpose. Now it isn’t.

    There’s no shortage of ways to take filter/effect photos and upload them to Facebook. Now Instagram is just one more of them.

    I am uninstalling the app and will wait and see what Facebook does with it before deciding whether to return or not. I strongly suspect that I will not be the only one.

    To me, this actually reveals a bit of a strategic blindness at Facebook – one of the features that can drive competing social networks (especially narrowly-focused ‘social networks’ – social platforms?) to great success is their lack of forced integration with Facebook. It’s the ability to have more than clearly distinct facet to one’s digital identity. The blindness mostly applies, of course, if Facebook’s goal is to acquire Instagram with the hopes of retaining and growing Instagram’s current positioning. If it just wanted to kill a powerful competitor, it probably just did so pretty well.

    1. I have to agree with that idea, the “non-forced” integration to Facebook as a selling point. Not everyone wants everything on Facebook – at all. And, I’m sure Instagram won’t become the ghost town that Google + is, why? Because my mom is on Facebook, my mom is not on Instagram, which tells me while Instagram has a big community, it’s not the winner just yet.

  15. One thing I kept wondering about was how IG would start making money after the funding money ran out. I think that the staggering growth seen up until and continuing past the Android launch only would only see them burning through money even faster. I can’t fault IG for wanting going through a door that would repay the investment and make them some money at the same time. I agree, though that anyone who sees IG as just a hipster filter photo app really didn’t see the incredible social network that emerged. It is still my favorite community to belong to because these pictures offer a glimpse into someone’s life that a simple status update cannot possibly give you.

    But I do feel like I was bought and sold, not unlike some customer list. I guess it had to happen at some point and it either was going to be Facebook or Google with IG’s value going up and up.

    Hellooo Path…

    1. People are too ignorant to care about their personal information anymore these days. Why hasn’t anyone tied together the whole face & picture recognition projects that Facebook and Google are working on… This isn’t about business, it’s about data ownership and now Facebook has the BIGgest slice of data pie!

      1. They have the largest slice of generic and “public personna” pie. Facebook is a collection of people putting out what they want other people to think of them. Not truly who they are. As an earlier poster admitted “I don’t want everything on Facebook” because not everything should be in public.

        Google still owns the lions share of useful data.

  16. Good point you raised on the prospect of Instagram selling too early. It’s such a hard call for the company at this stage. Plus the $1B price tag is indeed an offer that few could refuse. With the public markets being so mercurial and the uphill road that this young company still faced, i think it was a sound decision all things considered.

  17. Great article, but still disappointed about facebook acquiring instagram. over the last couple months, i’ve become annoyed by facebook and their confusing layouts/features, I wonder what Zuckerberg would do to instagram. I can only see the app going downhill from here. Also, only an hour on instagram? That’s nothing!

  18. Great insights, Om. Going forward, would be interesting to note how Facebook manages to translate Instagram into increasing ad revenue in mobile.

  19. Sold too soon! I agree, but $1B (even if half is stock) is pretty tempting. The bottom line is that Instagram could have challenged Facebook directly in its space for all the reasons mentioned above, but with deeper pockets due to their IPO, Facebook would likely have figured out how to crush it some way or another. It was smart to cash in and move on. At least this way, some of the elegant Instagram technology will live on inside Facebook. I doubt the “soul and emotion” feature will survive the advertising juggernaut that Facebook corporate has become, however.

  20. If this is true why sell out? I’d eat Facebooks lunch if I could. As a venture backed company I understand that some liquidity event was inevetible. Really surprised that FB thinks sharing photos is such a large part of their business. I really dislike the prominence of the FB/Google/Amazon business model that is undortunately becoming a norm in the tech/web realm. Essentially feels like the equivalent of some troll following you around and recording everything you do, read, eat, wear etc and then selling that info. to generate revenue.

  21. I’m still missing it. Facebook has a much larger user base. They could have spent 100 million creating a photo-sharing service specific to Facebook. An insane amount of money for that specific project. AND STILL SAVED 900 MILLION DOLLARS.

  22. Strategic move and it’s all because of Pinterest.

    Pinterest is growing so fast… knocking down Facebook on two major fails ~ : pictures’ sharing and being a well thought, efficient, interesting market place (they don’t even need to monetize their websites with boring ads).

    Instagram’s acquisition is the only guarantee to slow down Pinterest’s a bit. Sure, There’s still a long way to reach Facebook users’ base, BUT, things could have been messy if it was Pinterest who got Instagram instead. Plus, they’re not using the same model… they’re not even direct competitors.

    Mark Zuch. should have see the future and freaked out…

    Will Facebook boost their photo sharing system? We’ll see…

    I won’t be surprised if they tried to buy a market place using Pinterest’s logic. Won’t be that easy to find though.

  23. Hshshhaha instagram emotions??????? No half the people do shout outs all the timeto get more point less followers and oo many challenges to post things on days but no one really cares! No people are shallow and follow people just so they can get a follower….

  24. Wow, this is how our “companies work”. They see a competitor and think ” ohh time to buy them out using all the money we have from selling identities and doing the same to others we buy out” ewww just no, Facebook is taking over the works ahha :p

  25. Youre an idiot. Its all about the rev generation, and as far as i can tell, there is exactly ZERO revenue coming in from Instagram. Put that in your $1bn valuation and smoke it.

  26. Every business model needs another model for perfection, but are we claiming that Facebook is going to be perfect. Whatever may the future cases be, we stay and see if these integration models work well.

  27. Wrong. Wrong. Wrong.

    This was a move Microsoft would have made: buying simple software w/ a Brand name attached. It devaluates the FB Brand entirely. In the long term, decisions like this make it easy for a FB competitor to come in and take the social media pie.

  28. I THINK THIS IS RIDICULOUSNESS !!! Instagram was just fine before Facebook came and had to make a mess of things!!!!! Before this happened I had no problem uploading a photo on Instagram and now like I have with facebook, I have many problems. Its not disappointing, its aggravating. Facebook ripped off Instagram off!! They were worth 300 billion dollars. And Facebook only bought them for $ 1 billion? This is just crazy. What will happen now to Instagram? Will it take the name of facebook? And will there be any changes.

  29. This feels like a story built around an attention grabbing headline. Cmon they spent at least a few days pondering this purchase, and you figured out the reason within a few hours of the story breaking?

    Especially with lines like “Because Facebook is essentially about photos”…

  30. WOW having looked at Instagram and found nothing to interest me (I am a 47 year old male from Australia) I find it amazing that Facebook would pay just over $30 per acquisition for a list of users who would largely already HAVE a Facebook account – IMO this is the start of a spiral out of control, buy Instagram, then maybe Pinterest all because the User Experience at Facebook is becoming tired and somewhat annoying to both individuals and businesses, heck if you’re not playing games, liking somebodies comments about the weather or looking at other mind numbing stuff Facebook is becoming quite shallow, 30 Million (Instagram) Users is a tiny 0.04 percent of Facebooks… I think I would have waited a little longer before I got the cheque book out, unless of course the sharks were already circling 🙂

  31. WOW, I can’t believe that Facebook can see the value in this, at just over $30 per acquisition and with many if not all of the Instagram users ALREADY on Facebook this would add little if any value to Facebook (unless of course you count the fact that Facebook is boring and stale) – with a mere 0.04 percent of the share of users that Facebook has it would take a lot to convince me to part with this much money without having a sound crack at making a clone first – be very interested to see how many other people think that a Instagram clone might their ticket to success online, I don’t think we’ve heard the end of this yet.

  32. Instagram sucked. I used it and didn’t like it at all. People download all of the top 25 free apps. I have over 400. I delete them quick if they dont catch me. I guess people liked the instagram one. I think that it was more bandwagon than anything else. Still, it was good to see their lives changed. Apps are people. Even though we see them as simply apps.

  33. Agree completely. Facebook is about photos and Facebook lacks mobile expertise. Both enough reasons to acquire Instagram. But I also think the move and price tag is influenced by the fact Facebook is about to go public. In a way, it justifies the $100 billion valuation. It feels like a strategic buy to drive the public markets psychology. Smart move albeit quite pricey.

  34. Great article. Fantastic reading! I hear you about Kevin seemingly “selling out”. But does it not seem like Zuckerberg and team bullied Kevin into selling using all their clout?

  35. It is a bullshit comparison. Both the companies have their own identity, and why every point of view has been written as a jealous lover (for FB). FB bought Instagram because it has the resources to do so.

  36. It seems your entire argument is hinged on this one statement: “Because Facebook is essentially about photos”. Even if I ignore the overly-poetic, sensationalist drivel in the rest of the article I still see little or no journalistic merit to the post. What it seems to say is that you think Instagram is cool and that you have some resentment for Facebook.

  37. What Nonsense!! Facebook Is trying so hard to run other companies into the ground! What could this mean though? Does this mean we’re going to post to Facebook via instagram? (°_°) I know what should happen, we should do ,like, an online petition/ maybe Zuckerberg will try something else.! Wimp

  38. I guess Facebook was fascinated more by a small module of Instagram so that they could include it (impressive how they thought) , but ended up spoiling the actual purpose of Instagram (pissed off !!)

  39. Will we ever see user exhaustion from Facebook. Aristotle said “Man is a social animal” and that is a need that Facebook is fulfilling and that too quite well, but with its record of user privacy, will it continue to be on its juggernaut?

    In my opinion for some users independent services in bits and pieces are better than one whole solution.

    There might come a time when people will move to a combination of Hotmail, LinkedIn, twitter and Pinterest.

    Mrinal Singh

    Web Presence
    http://www.linkedin.com/in/mrinalsingha

  40. True to be told – the number of posts from FB users are declining while instagram users are posting even more experiences. Mark know it and react before its too late.

  41. Facebook was afraid of Instagram? That’s your theory? I find that very hard to believe, Om, but I’ve been searching for a reason why they would overpay by so much and I still don’t get it. I’m not buying the idea they feared Instagram that much. Perhaps because I’ve never gotten into Instagram I don’t get this, but this seems a bit over the top to me.

  42. Plumbing is only a component of the house. Similarly Instagram is only a component of the mobile online experience. No matter how well u so your plumbing, beating the guy building the house (in revenue) is not possible

    The big Q is does Facebook enjoy the position of main contractor. As other contributors have suggested, there’s a big gap between idea and business success. Let’s think what other aspects of Facebook may need injection of genius (the photo filter is done)

  43. If “instagram” becomes synonymous with online photo sharing, like “googling” is for search, that’s incredibly valuable and goes a long way to justifying the price tag.

  44. I hate typing things in twice… the outsourced identity management seems to have a few kinks…

    I will never understand what becomes trendy in the US. A MMS replacement based on the internet. With Filters, Filters? No one uses sepia on their actual digital camera, why would they use it on shared pictures? These acquisitions are usually for the user base, surely instagram users are a subset of FB users with a high degree of overlap, it can’t be for the technology which doesn’t seem like it would take much effort to duplicate.

  45. have you guys ever heard of Photorankr.com? While instagram sells out to facebook, Photorankr hasn’t hit mainstream yet, and is still a great place to post your work and get real feedback for people who love photography. It’s got the social networking side too, because you can follow other photographers to build your own photostream of your favorite work. Anyone can sell their photos and you maintain the copyright. check it out http://photorankr.com

  46. Great article and in my view entirely true. Facebook has become a social utility and Instagram is a social passion. The same could be true about mobile, at one time Facebook has one, that’s right one developer that created its iPhone app. Mobile will rule everything some day and Facebook knows that.

  47. Instagram is not the key of this assimilation. It is the overnight meteoric rise of Pinterest that Facebook is really afraid of. Instagram is fb’s only chance at maintaining parity above the pin…

    Regards,
    Mikel King

  48. When you get a bunch of developers that understand emotional design as well as great technical design you’ve got a killer combination. I’ve met a lot of brilliant programmers that don’t have the emotional IQ to build for the emotional needs of their users, Instagram did, I only hope Facebook doesn’t strip that away from them.

  49. “Because Facebook is essentially about photos” – really? I’m not seeing that. Yes, lots of people share photos in Facebook. But I see much more status updates, likes, and comments than photos going on in Facebook.

    Definitely a smart move by Facebook … but also definitely NOT direct competition either.

  50. Instagram is a platform to share your images, and if you want to visualize your career achievements there or at Pinterest you can use this new recruiting visual service ResumUP.com and create your infographic resume in one image and share it at Facebook.

  51. Facebook wants to be the internet and we all know Fb is all about photos but seriously was way behind in mobile section. instagram had both the things and what better for FB than just grab it up.
    A offer that Instagram couldn’t have refused 😉

  52. First, congrats and sure thing hard work was put into this app. But $1B is obvious circumstantial luck, whether the founders do think or not that they’ve always chased that (most of us entrepreneurs think that anyway). Some good thoughts captured in this article http://goo.gl/H6U6F

  53. I still don’t get Pinterest or Instagram. We’re creating thin-air business that don’t do anything but entertain us. When is someone actually going to make a USEFUL product? USA makes nothing!

  54. I am having a hard time understanding how a photo sharing community with “artistic” pretention can compete seriously with the kind of photo everybody shares on FB?

    I am a modest but fatithful Instagram user and I totally separate the two experiences (and target audiences).

    This sounds like panic to me: “FB can’t grow anymore in developed countries, let’s buy niche apps one by one and kill them off”.

  55. They acquired their own users. How many Instagram users do not have a Facebook account? Did they pay a billion to (a) not look like copycats, and (b) keep the king of photo apps out of competitors’ hands?

  56. Please. Instagram is phototwitter, and Facebook didn’t go down with twitter. It has way more users, it just doesn’t have the proprietary filters. there’s no way Instagram would take down FB. Did twitter take down Facebook? Instragram is a small portion of Facebook’s ultimate objective which was shown with their timeline feature – to take over your life. Whether it’s through “stories” or “photosharing” or posting stuff you like when you liked it. It’s a time capsule that captures you in that period of time. Photos is a small percent of that.

  57. Great analysis there OM. Really nice move by Mark n as for team Instagram, nothing lost cos if they ve got such ideas to put up something as wonderful as dt. They sure can do better! Let’s all remember this is business!!! A whole lot of crazy cash o.

  58. What people are missing in the equation is that a whole group of younger people were suddenly shifting their time to Instagram. They started using Instagram as their way of communicating. Its an app with a moderate amount of value but when your friends suddenly hop on it, it starts having much more value (Sound familiar to Facebook 5 years ago). No amount of logic can persuade you that a photo sharing app, of which there are dozens, that has no revenue and no logical future revenue stream is worth $1 billion. Unless of course your worth $100 billion, people are now viewing you as “lame” , and are defecting. So who’s going to fork over $10 billion for Pinterest because they actually have revenue potential, are growing faster, compete on both web and phone, and have metrics that are far more impressive than Instagram with a customer group that actually controls household purse strings.

  59. And Instagram is solving what problem? I didn’t realize there was this huge problem of scanning random photos or sharing photos. There is a word for services that don’t solve any problem: Fad

    1. You have got to be shitting me with
      Apple + profit = philanthropy

      Totally off topic, but Jobs killed all charitable donations and never reinstated them. He never agreed to give anything back per the Warren Buffett billionaire pledge, and has done nowhere near the philanthropy of Bill and Melinda Gates.

      GTFO!

  60. Interesting article. Rather than the photo sharing experience, it’s just strategically blocking someone that can do something better than Facebook, itself! Well played, Zuckerberg, well played.

  61. Or maybe the real reason is not the amount of users, but instead the ability to take advantage of GPS based location information from images taken with smartphones and many digital cameras too. It has been surprising Facebook hasn’t had this feature, and you have had to manually enter your location information to uploaded images.

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  63. In your answers to “why FB bought InstaG at double the evaluation price..?” you forgot – “Facebook was scared shitless” that Google would beat them to it, and then maybe somehow possibly G+ could become actual competition…

  64. Has anyone taken a look at Instagram from a potential eCPM perspective? Something like instagram increases the number of impressions drastically for Facebook. From an advertiser perspective, the ad impressions are horrible quality though. They potentially can make the $1billion back on the purchase just through ads. Given the type of filters on Instagram is it safe to assume the majority of users were born in the 70s or 80s? Could this be a way of solidifying Facebook’s reach into a slightly older user’s pocket?

    1. 90% of the people I see using Instagram are ~25 or younger. The older people remember how bad their pictures looked, and EMBRACE technology that gives a more true-to-life image, i.e. no crap filter.

  65. Oh boy. Sounds like you’re a big fan, but this isn’t likely to be why Facebook acquired Instagram. 90% of Instagram users are on Facebook and I would say most of Instagram photos end up on Facebook. Instagram had no tech that was desirable and no engineering team is worth a billion dollars.

    Facebook bought Instagram to keep it out of Google’s hands. If Google acquired Instagram, it’s a totally new demographic that can be eased into Google+ … the 50M or so users Instagram might have in the next 3 months or so is entirely insignificant to Facebook and has huge overlap… not so with Google+. It would have been a huge leg up for Google, and this was an (overpriced) coup for Facebook.

  66. I hate it when an evil company buys a good one. Google did it with YouTube. Guitar Center did it with Musician’s Friend. You cant control the evil as a consumer.

  67. Bull. Instagram isn’t a beautiful anything. It was trendy, and now everybody wants to use it cause their friends are. I’ve seen nothing about it that is good. I could see putting a aging/old camera filter (see:garbage filter) on maybe one photo a month, but these people who are trying to make their entire life seem like a washed out dream? Oh well, clearly I’m not the target demographic.

  68. I agree with your remark that Instagram has “soul”. I’ve just joined, as I’m an Android user, and already feel a sense of kinship with like-minded photographers (from amateur to pro) from all around the world. I’ve shown many photos to my husband, which I found to be awesome, inspiring, funny, thought-provoking, and more…but I know he doesn’t really get it. I’m in love with ig so far and am spending way too much time with it, but I came into this world with a certain set of eyes. Only another person who is similar to me would truly understand. I see beauty, perspective, light, colors…. I’m an idealist, romantic (to me, the same thing), poetic, and creative. Thank you Instagram. I hope Facebook doesn’t force changes on ig users it doesn’t want. I’m a former user of Facebook. It just wasn’t my “shtick”. Something for everyone is a great idea, to me, as I dare you to find two people on this earth who think and feel alike regarding all topics. Have a fantastic day!

  69. my co-worker’s mom brought home $15369 last month. she been working on the internet and got a $453400 house. All she did was get fortunate and set to work the steps explained on this web page (Click on menu Home more information) http://goo.gl/DAH5n

  70. my best friend’s ex-wife got paid $15929 the prior week. she been making cash on the computer and bought a $541800 house. All she did was get lucky and set to work the clues given on this website (Click on menu Home more information) http://goo.gl/YhUkf

  71. I remember sitting with you in early 2010, Om, and you asking me where Instagram was going… seems it was going well… so this begs the question, why spoil it on Facebook?

  72. The real reason Instagram is so valuable, according to me, is because of tags. Right now, Facebook photos have no segmentation. The fact that Instagram users tag so heavily allows segmenting of that data, and will eventually allow very targeted advertising. Photos are just one of many important features of Facebook’s platform – not necessarily it’s Achilles heel.

  73. The FTC/SEC should absolutely block Facebook from buying one of its strongest competitors — Instagram.  Instagram is a photo based social network that now has 50,000,000 users. its one of the strongest competitors facebook has seen to date. Facebook has network effects. Without network effects Mark and Co. would have had strong competition a long time ago.  Instagram is one of the few companies that found a hole in Facebook’s armour through its early jump on mobile platforms.  It would be a shame to simply watch Facebook buy away the competition. Do the right thing FTC/SEC and block the buyout.  Make Facebook compete.

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