It’s always a strange feeling when a popular startup reaches its exit, you don’t know whether to cheer – or not. Everyone loved Instagram. In fact, some iPhone fanboys loved it so much they became hostile when the Android app was released. Only a couple of days later, Mark Zuckerberg, the CEO and founder of 800+ million users large social network Facebook decided to buy your beloved Instagram.
What will become of one of the most beloved photo sharing networks? No one can tell; Zuckerberg claims that the app will stay the same:
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.
Kevin Systrom, co-founder and CEO of Instagram says the same thing on the Instagrams blog; the Instagram will only get better:
It’s important to be clear that Instagram is not going away. We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.
The Instagram app will still be the same one you know and love. You’ll still have all the same people you follow and that follow you.You’ll still be able to share to other social networks. And you’ll still have all the other features that make the app so fun and unique.
Let’s wait and see!
Can you even imagine how big that number is? Well, that’s the price Facebook had to pay to acquire Instagram. As The Next Web approximated, the deal is worth one billion dollars, or to put it in numberical form: $1,000,000,000,00 – amazing for a two years old company with only 11 empolyees. The amount is a combination of cash and shares, making every Instagram user (at the moment of the deal) worth $33.
Insanely popular photo app and social network Instagram has been acquired by Facebook for approximately $1 billion in a combination of cash and shares. The service will remain running as it is for now, and CEO Kevin Systrom says that it’s “not going away”.
This intent to acquire means that it took roughly 551 days from Instagram’s launch to its sale for $1Bn. This is incredible growth for a tiny company that only has 11 employees. The transaction will go through some time later this year and makes the deal worth roughly $33 per Instagram user.
However, a lot of people disagree that Instagram is a billion dollar worth startup; 30 million users isn’t that much compared to Facebooks 800+ million users and filters, well… filters are just the technical part. But Facebook still saw Instagram as a threat. In fact, it was such a big threat that it took only two days to complete the and seal the deal between Zuckerberg and Systrom, The Verge says:
Apparently it all came together over a matter of two days — Zuckerberg called Instagram CEO Kevin Systrom last Friday and said he wanted to buy the photo sharing service, and by Sunday all of the details were worked out. Zuckerberg’s phone call was just days removed from the release of Instagram for Android (which wasdownloaded over a million times in a day) and a $50 million funding round that brought the company’s valuation to a total of $500 million. Ultimately, it took Facebook $1 billion to claim the photo sharing service.
The New York Times has a full story on how Instagram was actually created and how it grew so fast. It’s a three-page article, but it’s definitely worth reading:
Benchmark Capital, whose partners Mr. Systrom had met while in college, led an investment round of $7 million in February 2010. Mr. Dorsey and Mr. D’Angelo joined in. Last week came a second round of financing that valued the company at $500 million. Mr. Systrom told associates in recent months that he was not interested in selling.
Then Mark Zuckerberg called.
You see Mr. Dorsey here, the person who founded Twitter? Well, Twitter was also interested in getting Instagram, it seems. You can read get that from the context, so maybe that’s the reason why Facebook rushed to get things sealed ASAP? The Verge:
By selling to Facebook, however, Systrom may have lost an ally: Twitter founder Jack Dorsey, who had supported Instagram and allegedly expressed interest in buying it in the past few months. Since the acquisition, Dorsey has apparently stopped using the service, though his company declined to comment officially.
So, why exactly is Instagram worth a billion dollars? Because it’s mobile. It’s not a web app, it’s not a combination of two platforms – it’s a mobile app. Mashable did a fine review on why was Facebook willing to give out that amount for a photo sharing app; because it needed something mobile and done right:
Instagram was beating Facebook at its own game, and the social network needed to stop it before it was able to do more. Instagram was already huge. With the launch of its Android app last week it was poised to get even bigger, fast. While the company was valued at $500 million just before the Facebook buyout, it could certainly have grown to a $1 billion valuation on its own.
To Facebook, being part of the mobile game means being one of the apps you’re using on your phone most regularly. So while Instagram the app is a huge win for the company, the bigger win for Facebook is the staff of the company who built it.
Title image credit: Ivan Brezak Brkan