(MySpace founder, for the few who would not know :)) has been posting less about business than photography lately (I guess we have to blame for that :)), but his posts are still very interesting.
So check this one out on the Instagram acquisition by facebook. No revolution, but a clear way of seeing things.
Reshared post from +Tom Anderson
Facebook Did not Panic, Why Instagram is Worth $1 Billion… To Facebook.
Original post at 10:17am… See Update at the end.
Facebook Just acquired Instagram for 1 Billion. Mark Zuckerberg just announced that Facebook is buying Instagram. You may be wondering why… I've noticed that people don't seem to get the value of this app. I thought it'd be a good time to link to my story from Techcrunch about the value and future of photo-communities: http://tcrn.ch/qa5CPQ
I still stand by this statement from my article, "for you entrepreneurs out there, here’s a wakeup call: you want to ride one of the trends that still has massive room to grow? According to one estimate, 10 percent of all the photos ever taken were photographed in just the last year. We are just at the beginning of the photo explosion. A company designed to serve different aspects of this trend can still be a great idea, and will be for quite awhile, I suspect. " The only question is, who will be the next one to do it? Will it be you?
Btw, follow me on Instagram. My username is "myspacetom" — it's great fun.
Also notice in Mark's blog post about the acquisition, he indicates that they are not going to subsume Instagram. They're going to leave it as is and let it operate as a standalone app and community. With Facebook about to collect a warchest of cash from their IPO, that means they will no longer just be Facebook.com the website. They'll be more like a Google or Microsoft and able to maintain and sustain multiple products that feed into their overall mission. This departure from "acquire and subsume" is the biggest news in this acquisition — it's the first hard evidence that the company's ambition is to be more than a Facebook.com.
UPDATE: 12:30 As I've been reading comments on G+, Twitter and FB, I guess I missed some obvious things worth saying.
1. The Price People think "wow" that's big. That didn't even cross my mind, and it should have, of course. The reason it didn't is because 1 Billion is officially chump change to Facebook. It is a lot of money, but not for Facebook, so I didn't think to mention it.
2. Facebook is (was) scared of Instagram. Facebook did this not because they think they have something to learn from Instagram, but because they're worried about Instagram's community growing and posing a threat. It's a nascent threat, but a real one. If you were able to completely neutralize one of your biggest nascent competitors for 1$ Bil and your company is "worth" $100 Bil (at least) in the public market, wouldn't you make that acquisition?
3. Remember when Facebook was "schools only"? That's how it grew – by focusing on small pockets of users who felt a common bond. Who knew that iPhone users felt that way? Well, they did. While some people thought an iPhone was just a phone, it's actually a status symbol for the well-heeled. When Instagram opened to Android a few days ago, there were was quite a bit of talk from iPhone users who now felt like their exclusive social club was over. "Now we're going to have to see what poor people eat for lunch," was the famous Tweet from an idiotic iPhone user. It all reminds me of Facebook vs. MySpace back in the day. In this analogy, iPhone users = college kids. I think Zuckerberg and crew realized that opening up Instagram to Android was like the day Facebook went completely open to everyone and started to take real market share from MySpace. At that time MySpace had about 120 million active users per month and FB had 14 mil. Did it seem like a real threat when it was so much smaller? To me it did. No other competitor was even close. I was totally scared of Facebook, and had been since the middle of 2004.
Instagram reportedly had 27 million users before it launched on Android. There are more Android phones than iPhone, and Android is growing more quickly. Anecdotally, as an Android user, I can tell you I've gotten a ton of follows and new activity after it launched a few days ago. I wouldn't be surprised to see Instagram at 50 million users in a few months. 50 million active users may not seem like a lot when Facebook has 800 million (or whatever its at now)… But it's the beginning of a real, credible threat for Facebook. So the point is, 1 Billion is worth neutralizing that threat. For sure it is.
4. This is not just about the threat of another large community it's about owning a purely public social network. Once Facebook dominated the "friends only" side of things, they've grown increasingly scared of sites like Twitter that focus on public, one-sided follow models. Google+ scared them in this regard as well. Zuckerberg wants things to be more open, and that's hard to do if you're only talking to your friends. Facebook's recent moves into Twitter's follower-model are confusing for some. Facebook, Inc would like to own the "private" network of choice (Facebook.COM) and the "public" network of choice (currently Twitter is the most popular). Twitter is too expensive, but Instagram is the next best thing when it comes to "public" networks that are for sale… I wouldn't be surprised if Instagram (with FB's cash) also becomes a website, not just a mobile product.
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