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Instagram definitely did not raise tons of money before figuring out their market. They brought an amazing product to the iPhone first.

by rudiger 14y ago

sparknlaunch12 14y ago
Therefore the conversion rate is the challenge. How can Facebook turn this userbase and technology into driving revenue? Most Instagram users are likely to be Facebook users. So the userbase argument is not strong (ie they are not gaining many new users). However you could argue time spent is of value. Users spending time on FB instead of instragram. The technology may encourage FB users to stay longer on FB. It may gain some new users. Is this worth $1b? FB do generate significant advertising revenue ($1.06bn last 3 months). Revenue has been dropping off. Can Instagram fill the gap?
- soup10 14y ago
  Zuckerburg was scared that instagram would dominate photosharing on mobile. Photosharing is key to facebook's success. That's why he bought instagram. Nothing more nothing less. Monetary Value = how much someone is willing to pay. Facebook was willing to pay $1B, so yes, instagram is worth $1B. Instagram may never produce any significant revenue, it's value is that it's a strategic asset to facebook. Just like the patent purchases they recently made. I think Instagram got pretty lucky with the timing(since we are in a bubble) and the purchaser. Facebook's mobile app is not very good. Facebook should of been more aware of it's competitors and acquired them earlier on. And facebook should of negotiated better. That said if they put the instagram guys to work improving the facebook app it may well end being worth 1B$ in actual revenue. (Though this was clearly primarily strategic, not talent acquisition). Instagram seems like a company designed for acquisition, on it's own it probably could never monetize very well. But it has undeniable strategic value for a company trying to expand or maintain their social and mobile presence.

Instagram definitely did not raise tons of money before figuring out their market. They brought an amazing product to the iPhone first.

by rudiger 14y ago

Instagram definitely did not raise tons of money before figuring out their market. They brought an amazing product to the iPhone first.

sparknlaunch12 14y ago

Therefore the conversion rate is the challenge. How can Facebook turn this userbase and technology into driving revenue? Most Instagram users are likely to be Facebook users. So the userbase argument is not strong (ie they are not gaining many new users). However you could argue time spent is of value. Users spending time on FB instead of instragram. The technology may encourage FB users to stay longer on FB. It may gain some new users. Is this worth $1b? FB do generate significant advertising revenue ($1.06bn last 3 months). Revenue has been dropping off. Can Instagram fill the gap?

soup10 14y ago
Zuckerburg was scared that instagram would dominate photosharing on mobile. Photosharing is key to facebook's success. That's why he bought instagram. Nothing more nothing less. Monetary Value = how much someone is willing to pay. Facebook was willing to pay $1B, so yes, instagram is worth $1B. Instagram may never produce any significant revenue, it's value is that it's a strategic asset to facebook. Just like the patent purchases they recently made. I think Instagram got pretty lucky with the timing(since we are in a bubble) and the purchaser. Facebook's mobile app is not very good. Facebook should of been more aware of it's competitors and acquired them earlier on. And facebook should of negotiated better. That said if they put the instagram guys to work improving the facebook app it may well end being worth 1B$ in actual revenue. (Though this was clearly primarily strategic, not talent acquisition). Instagram seems like a company designed for acquisition, on it's own it probably could never monetize very well. But it has undeniable strategic value for a company trying to expand or maintain their social and mobile presence.