Facebook buys Instagram for $1 billion in cash and stock

“Not since Google bought YouTube has an acquisition grabbed the world’s attention the way Facebook’s $1-billion deal to buy Instagram,” Jessica Guynn reports for The New York Times. “And it’s bound to get tongues wagging again about startup valuations shooting into the stratosphere.”

“‘It’s unprecedented on almost any metric you look at,’ said Paul Kedrosky, a senior fellow at the Kauffman Foundation. The San Francisco startup has just 13 employees. That works out to be $76 million per employee, Kedrosky pointed out,” Guynn reports. “At the same time, Instagram had no business model, no revenue. ‘That’s going to make some people’s eyes roll back in their heads and connect to their ears,’ Kedrosky said.”

Guynn reports, “Instagram may not have given Facebook a run for its money, but it was sure giving Facebook a run for its popularity, and on the most important platform of all: mobile… Which is why Facebook did the deal in the midst of its federally required quiet period, mucking up what had so far been a very orderly and neat march toward a $100-billion initial public stock offering… ‘Getting it done beats losing Instagram to a competitor,’ Kedrosky said.”

Read more in the full article here.

[Thanks to MacDailyNews Readers “Fred Mertz,” “Lynn Weiler,” and “FabFab” for the heads up.]

24 Comments

  1. If you can’t innovate, buy it.
    This only proves Facebook is trying to tread water, thus killing Instagram along the way (if they don’t screw it up first with a lame Facebook-like GUI).

    [copied myself from Cnet]

    1. Agree. For about $20 million anyone could build their own Instagram in <6 months time. Facebook's purchase for $1 BILLION tells me Facebook knows something about its own infrastructure that they're not telling the rest of the world – their product is crap and the flash is rubbing off their pan.

  2. I still don’t see the value in Instagram – strange purchase – I really do not want another account on some obscure service to just share photos..

    1. It’s NOT just about sharing pictures, it is about pushing mobile photography, interacting with others, minus all the corporate whoring and tracking. At it’s best it is communities of artists interacting, sharing and pushing each other. At it’s worst it is vapid duck faced tramps posing provocatively.

      If you were into mobile photography, photography or sharing your art, you would get it. It was never about money, money (Facebook) will eventually ruin it.

      1. It’s the same app plus endless Farcebook whoring, tracking and signup.

        BTW- people, unless the EULA has changed all pictures uploaded to Farcebook are the property of Farcebook. I’d be pulling everything off of Instagram unless you want Mother Zucker to own it.

  3. Great. 🙁 So I guess now all photos will be hosted on Facebook and you will have to use your FB account to use it.

    Oh well. A great windfall for the Instagram devs though!

    I thought this was interesting:

    “Its Android app was adding 1 million users a day, its IOS app 25 million.”

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