Facebook Acquires Instagram for $1bn
Today was a day of many firsts and perhaps lasts for the mobile industry. Companies rarely get acquired for $1bn, though it happens. But a company with one mobile app and 13 employees getting acquired for $1bn? After today, it may never happen again.
Mark Zuckerberg, CEO of Facebook, essentially said as much when he announced Facebook was acquiring Instagram today for nearly $1bn in cash and stock. The massive only-in-Silicon Valley deal has led many to make comparison and reminisce about Google's whopping $1.65bn YouTube acquisition in 2006.
Facebook isn't wired for mobile from the ground up. It came from the desktop era and that legacy still shows in its lackluster mobile offering today. The company needed a new play in mobile. And what better place to start than photos? Facebook's bread and butter.
With Instagram, Facebook does get a more modern-looking, mobile-first user experience for photo sharing, an activity considered primary to the Facebook experience.
There are plenty of alternatives that would have cost less than $1bn. But Facebook had to pay a big premium for this deal because, let's face it, it's Facebook and it had to buy a mobile photo sharing company with a brand, a success story and users. Lots and lots of users. According to the price Facebook paid, each of Instagram's 30 million users are worth $33.33. Not bad for a company that launched its app 18 months ago.