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What Facebook Really Acquired From Instagram

Facebook just purchased photo-sharing app Instagram this week for $1 billion dollars in cash and stock. The deal will bring Instagram staff to Mark Zuckerberg’s fold and will continue to make improvements for Instagram while Zuckerberg’s engineers are itching how to integrate it to Facebook. Instagram is one of the most-used visual engagement platforms, while close rival Pinterest is now the number 3 social network in the planet today, Instagram is spearheading the photo-sharing revolution on mobile. Instagram launched its iOS app in Q4 of 2011 then released an Android app last week. So what’s so special about this deal aside from being Facebook’s first acquisition?

Facebook buying Instagram for a billion dollars isn’t really the deal of the century. But Facebook knows that Instagram would be a threat because Facebook is a bit on the mediocre side in terms of mobile functionality. As the world becomes more social everyday, we don’t just live in a world of instant, people use visual platforms because the world is build on emotion. Heck, Instagram could’ve been named “Instamotion” but that’s a bit ambiguous which people might mistaken it for a video-sharing site. The Instagram acquisition is a no-brainer, the Timeline format was made mandatory early this month which hints the direction where Facebook is headed to – visual engagement.

Image via groovyPost

So when Mark Zuckerberg posts a statement like this: “This is the first time Facebook has acquired a company or product with so many users. “We don’t plan on doing many more of these, if any at all.” Zuckerberg said. “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.” You can’t help but wonder what these two companies will be doing together. Here’s the translation of that quote in math, according to Don Dodge, Facebook acquired Instagram for about $30 per user. In simple math, $30/user X 33M users = $1B.

So it occurred to me that its users made Instagram what it is today. Facebook didn’t buy the company, it bought the service. And when you purchase the service, you acquire the users. Well played, Facebook, well played.

Google, it’s time to buy Pinterest.

Join The Conversation

  • Mac Ocampo's picture
    Apr 18 Posted 5 years ago Mac Ocampo SQB

    Appreciate the comment, Tammy. Looking forward how they'll monetize the service and enhance their mobile ad platform using Instagram.

  • MarketMeSuite's picture
    Apr 18 Posted 5 years ago MarketMeSuite

    Great article Mac.

    "$30 per user. In simple math, $30/user X 33M users = $1B" 

    Hadn't thought of it that way. Makes a lot of sense. I think Facebook made a good move.  Will be interesting to see how it all integrates.


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