Reblogged from Bamcis Business Development:
So the key question is “Why would Facebook pay so much for Instagram?” What is the motive? What is the payoff? What will happen next?”A lot of people are saying many things about this purchase. The theory I hear floating around for the past couple of days is that Facebook got scared and decided to take out a major competitor with a cool billion. Wish I had such options. Others believe it is for the data. Still a few are tweeting that Facebook wants the photos for dastardly deeds of dubiousness.
“Delete ur instagram!! The Feds own it now!!” “I had a higher opinion of you Instagram.” “Soon as I delete my Facebook they decide to buy instagram #FML.” (actual tweets)
Some of these are theories are sensible, others ridiculous. There is one thing, however, that people who think in terms of pure competition, or downright paranoia, usually forget.
Facebook is about the code.
Let’s clarify. Yes, by making this acquisition Facebook did secure a hugely popular social media app. Yes, they did “defeat” someone who was playing the same game of sharing photos online. I admit and agree with that. I just don’t think that the reason for it was because Facebook was scared of anything.
Let’s look back at another recent acquisition by Facebook to see if we can see what their motives may be. My first witness … Beluga. Beluga was an app that was used as a social messaging application that allowed a person/group the ability to create a group out of their contacts and start a text-based conversation with the entire group. This application was absolutely fantastic for small work groups (called Pods), especially ones that didn’t mind bothering each other all day. I remember using it with my team and it was like it solved all my problems. When something important happened a simple text was sent and the whole team was aware of the change/question/update/major catastrophe. Instantly, no matter where we were or what we were doing, the team had the communication we needed. Until one day when the team got a text: “Facebook has recently bought out Beluga, and our service will be shutting down.” ( A single tear could probably be seen rolling down my cheek at that time.)
But what was interesting was watching what happened next at Facebook. Over the next few weeks you started to see Beluga like actions occurring all over Facebook. Facebook Messenger was launched. This allowed you to hold a messenger conversation on your computer, and also for the conversation to be sent to your phone via text. Ever notice now that if you comment on anyone else’s post or picture that you are now also updated every time someone else comments on it as well? These features and several others are the direct result of Facebook’s acquisition of Beluga, and not just Beluga’s talent, but their technology as well. Beluga marked the first acquisition of a start-up by the web giant where they didn’t just buy the talent, but also the tech that makes it work and it seems that this is what they plan also to do with Instagram.
I truly believe that Zuckerberg has something in mind for the little app with a big pricetag. We know that soon you will start seeing web savants start filtering every photo in their albums, but what else is going to happen? I’d like to remind you that all Beluga was intended to do by the original creator was to create a social based texting app. In the hands of Facebook it became much, much more, technologically speaking. It’s capabilities were augmented and filtered and refined and applied to numerous things that Facebook was already doing. That is what I think the Instagram purchase will produce in the next few months. As for Instagram users, well, bad news. While Facebook has recently said that it intends to keep the application alive for the time being, they also said this when they first acquired Beluga as well. In time they implemented the technolgy where they wanted it and shut down the simple service. Now people who loved Beluga are torn. They either had to migrated to Facebook and accepted some of the drawbacks and some of the new benefits, or they had to seek out other apps. In many ways the Facebook Messenger is too much and not enough. They took the old capabilities and broke them up and spread them out throughout the entirety of Facebook, but made it more difficult to do the one thing that Beluga specialized in, having a conversation with small groups without all the rest of Facebook. ( If you are looking for an app that does this I suggest Groupme, in a lot of ways it is even better than Beluga used to be.) Facebook has said that it will continue to operate the app independently. Don’t expect that to last long. Perhaps the fact that now more than 40 million people are on Instagram and that they are making such a potent disagreement with being forced into the Facebook super community will prolong its independent lifespan. Good luck to those users though.
As for the rest of Facebook’s users, they will get that huge boon to their photo sharing capabilities. But besides the filters and super easy uploading process, I wonder what else the Zuckerman clan will discover (or have been waiting on for some time) in the code of Instagram. What are they going to do with all that lovely code?
Let’s think real business here. I don’t think that Zuckerburg did this just to take out a competitor. I don’t think that it is even just about the new tricks that we will get to do in Facebook. Goofy as he is at times the kid is good at business. I truly believe that if he bought if for $1Billion he believes there is at least $10 Billion more in potential capabilities coming to his Facebook, not a bad thing for massively valuated company gearing for it’s first IPO…
- Facebook snaps up Instagram for $1 billion (zdnet.com)
- Instagram surpasses 40M users, adds 10M in 10 days, according to API (venturebeat.com)
- http://news.cnet.com/8301-31322_3-57411422-256/facebook-buys-instagram…but-for-what/ (cnet.com)
- http://www.quora.com/Facebook-Instagram-Acquisition-April-2012/What-was-it-about-Instagram-that-made-it-worth-a-1B-acquisition-by-Facebook?srid=OQY (quora.com)
- http://www.youtube.com/watch?v=ig_qWk5oJIc (Loaded)