This morning the world woke to news that Facebook was making its first large-scale, high-priced acquisition, Instagram. The smash hit photography app has garnered serious traction in less than two years and for a significant period was the creation of just two people, Co-founders Kevin Systrom and Mike Krieger.
The acquisition price is a staggering approximately $1 billion, made up of cash and some of those valuable pre-IPO Facebook shares. The deal is expected to close later this quarter.
The story behind Instagram is a good one, CEO Kevin Systrom (@Kevin) skilled up as a developer out of hours and built Instagram with no formal training. This kind of success graphically demonstrates just how amazing of a resource the internet is for learning anything you set your mind to.
With an acquisition this size, questions will always be raised about the price. Did Facebook overpay ? On the surface, $1 billion is a pretty ridiculous figure for anything, but a company of only 12 people, it is astonishing. With a growing number of competitors, Instagram is much more than a camera app with filters. More than 1 billion photos shared by more than 50 million users, its true differentiating feature is the cult-like community that has been built.
With such a small development team, its not entirely surprising that the Android version only shipped last week, making that a total of 2 supported platforms. Amazingly there’s still no website to logon to and see the photos posted by you and your friends. There’s no way to link someone to your Instagram profile, right now Instagram is a pure mobile-only experience, hopefully this investment allows for increased development speed and platform and device support.
Back in October, Jason Calacanis interviewed Systrom on This Week in Startups, where they discuss Instagram Facebook acquisition rumors, competitors and additional platform support.
Many Instagram users heard the announcement and immediately raised concerns about Facebook ‘ruining the app’ or worse, shutting it down as we’ve seen in other acquisitions. Fortunately this won’t be the case, rather it allows Facebook avoid the bad PR around ripping off features and pickup the extremely talented team.
Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.
We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. 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.
These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram’s experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook’s strong engineering team and infrastructure. – Mark Zuckerberg
Facebook may be the largest photo sharing site in the world, but Instagram users have already shared 1 billion photos. expect to see Facebook’s mobile and web support to improve over the coming months. Facebook, has to integrate photo filters and effects, that’s a given. What would be an exciting development would be fully fledged photo editing options for photos. This would add to a long list of improvements in photos for Facebook like increasing quality, lightbox viewer and cover images.
With Facebook’s recent IPO filing, the amount of capital estimated to be raised is around $5 Billion. With that bank balance and the high-priced acquisition of Instagram, it’s unsurprising that discussion of future Facebook buyouts are being discussed. Zuckerberg attempted to pro-actively water down this speculation, with his post this morning outlining that they don’t have any plans for additional acquisitions.
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. 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. – Mark Zuckerberg
The announcement was made Facebook’s Newsroom site and Instagram company blog.
