Why did Facebook pay $1 Billion for Instagram?

There are many well-informed answers on Quora.  Some snippets follow.

Robert Scoble: “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… 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).”

Scoble goes on to point out that Instagram knows who you like seeing photos from, where you are when you shoot a photo, what kinds of things you take pictures of (i.e., your passions) all of which can translate into a huge advertising revenue stream.

Sean Mulholland: “Instagram is effectively Twitter’s photo sharing function.  I know other apps/platform do it (even baked-in Twitter photo sharing) but Instagram is the leader there. Facebook is the world’s largest photo sharing platform.  Twitter is the only real social networking threat to them, and with a heavily popular photo sharing app it could easily whittle away at one of Facebook’s core functionalities and possibly siphon off users.  And now Facebook owns that piece of the pie.”

Randy Vinluan: “To put it simply, because Instagram was and is becoming the new Twitter. With 30 million users in the iPhone, and with the new Android support almost guaranteeing they’ll get to 60 million easily in a few months, a lot of mobile users are spending a lot of time on Instagram that they were previously spending on Facebook (both on the web site and the mobile app).”

Craig Walker: “Simple…kids discovered Instagram and were using it  much more than Facebook for their social network. Facebook became “too much” and Instagram allowed exactly what they wanted.  I noticed this effect with my own kids and heard similar stories from other parents.  To protect the future of your $100B business, paying $1B is not too much.”

Naveen Subbaraman: “If viewing Facebook photos was compared to a walk in the park , looking at instagram photos should be compared to a walk into an art gallery , people admired instagram photos they looked at it as a work of art.

Users clicked snaps on their mobile phones, but how many of those snaps landed on FB pages (maybe some) what instagram did was the pushed the user of the app to click snaps /use their filters and “SHARE” that the reason FB saw a huge opportunity, cause instagram facilitated photo sharing capabilities directly on FB.

Amateur photographers became pro’s using the app, and their FB friends wanted to use the app and turn pro too (peer group influence).”

Jon Lebkowsky: “As a culture of online sharing has evolved, sharing photos has been a powerful aspect of that culture.

Some part of Facebook’s success can be attributed, I think, to its support for sharing photos, but photo functionality of FB has (arguable) been klunky. Instagram has been anything but klunky; it’s a sophisticated mobile photo sharing app and a compelling alternative to Facebook. Or a potentially powerful complement, which I suspect is what Zuckerberg et al are thinking.

That said, I’ll repeat what others are saying – that this sort of thing takes us in to bubble territory. Instagram isn’t worth a billion dollars by any stretch, and Facebook’s IPO will be overvalued. It’s interesting in a deja-vu way to see this news after a couple of weeks hearing from various corners of the online universe, that people are tired of drive-by socializing online and are beginning to drift into deeper, more substantive pursuits.”

 

Me:   People love things that are simple, easy to use, fun, and sociable. Instagram provides all of that. Facebook is heavy and complicated by comparison. Pinterest has also zoomed to popularity in a short time, in parallel to Instagram, and for similar reasons.

I don’t have an answer as to why Instagram succeeded so wildly when other similar things have not. Being there at just the right time (not too early, not too late) with just the right product has a lot to do with it. But then there’s the question of how to reach the “tipping point” where something grows from a niche player into a “must have” for millions of people because that’s where all their friends are. A lot of companies would pay huge sums to know the recipe for that special sauce that makes an app go viral.

I’m not sure there is such a thing, though. Or if there is, it may be a recipe that only works once. The next social media phenomenon needs to come up with its own recipe.


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