Two years is not a long time. Chances are that in 2010 most of us would have been doing pretty much the same stuff, as we are today. But for Instagram the period stood for a lifetime. Facebook?s purchase of the San Francisco based photo-sharing app for a billion dollars is the quintessential start-up fantasy. To think that Instagram was a 550 day old company with 13 employees and no revenues?when it was gobbled up by Facebook?is just incredible.
Some think that Facebook CEO Mark Zuckerberg was crazy to write out a cheque of $1 billion to buy a start-up. Not exactly. Facebook had one issue to deal with. It involved mobile photo sharing, something Instagram excelled in. One of Facebook?s greatest features is photo sharing, but it needed Instagram?s expertise in the mobile platform. And what if Google or some one else bought Instagram? That would have been scary for Facebook. Zuckerberg knew the power of a fast rising start-up only too well. For him it was important to take Instagram off the park. He didn?t want to choke on it. So he took a year?s worth of cash flow and offered it on a platter. The sum of $1 billion was twice Instagram?s recently concluded Series B venture round, valuing the company at $500 million.
Interestingly, Facebook will let Instagram be. Zuckerberg wants it to operate independently. What excited him was Instagram?s connection to other services beyond FB. ?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,? says Zuckerberg. It is clear that the Facebook CEO does not want to tamper with Instagram?s popularity. He does not want to impose FB on the start-up. After all, Instagram has 30 million members and its followers love it.
Instagram increased its appeal ever since its Android app launch. Plenty of new users jumped on to Instagram after this. As far as taking and sharing photos on mobile devices was concerned the start-up was a threat to FB and Zuckerberg knew it. ?For years, we?ve focused on building the best experience for sharing photos with your friends and family,? Zuckerberg wrote. ?Now, we?ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.
?This is an important milestone for Facebook because it?s the first time we?ve ever acquired a product and company with so many users,? the CEO concluded.
?We don?t plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.?
The next five years will tell us whether the marriage has worked or not. While there are critics who are panning the investment, one will have to admit that Zuckerberg knows best about his own baby. He has led Facebook remarkably well so far. And the amount is not astronomical, considering we are talking about a firm that is going to go public soon?that too one of the much awaited IPOs ever. For the time being, the focus has to be on Instagram. Its CEO Kevin Systrom has become a bank himself! Systrom is taking home $400 million, while the other full time employees will get to split $100 million.
This is what a good idea can fetch you in a couple of years!
