How Instagram's lazer focus snatched $1B from Facebook

Krystal Peak · April 10, 2012 · Short URL:

The slim group behind Instagram proved that attention to detail is worth its weight in gold

I can only imagine the celebrations that are still commencing over at the Instagram offices, where the lean team of 13 employees have secured themselves in the Silicon Valley elite with their quick acquisition of $1 billion in cash and stock on Monday, just days after getting $50 million in funding and a valuation of half that sales price -- $500 million. 

Now the tech world is finally absorbing just what a big deal photo-sharing is and how serious Facebook is in keeping its fingers clasped around the social networking ecosystem.

In a note posted to his Facebook Timeline, CEO Mark Zuckerberg said that Facebook wouldn't absorb Instagram into Facebook since the company's application experience is so highly touted as a pleasurable one, instead, Facebook wants to integrate Instagram features into its products to “offer the best experiences for sharing beautiful mobile photos with people based on your interests.”

And many had suspected that Facebook was going to create or snap up a service to provide better photo options online as well as in the mobile sphere, but no one would have ever imagined the price tag that they were willing to put on such an effort.

Even as many in the tech world cried outrage at the sizable price tag and scorned Facebook for snatching up a company that seemed so small and hip, the Instagram followed up the acquisition announcement with even more good news: the company's still very new Android app has attracted 5 million downloads in just six days. That is light speed -- we're talking iPhone and iPad purchase numbers now. At this rate Instagram could see its more than 30-some million usership double by May -- as long as that Facebook backlash does;t take hold.

Facebook specified just what a big part of its service is centralized on the sharing of photos and images -- with 250 million photos uploaded to the site every day -- in fact, it is the most popular photo uploading service on the Web. Facebook, in its S-1 filing, also pointed out that it would spare no expense in product development investments that would increase engagement and I think it shown just how much it meant that.

So now any concern that Facebook had in lacking innovation and growth in the photo uploading and sharing environment has been extinguished, as Facebook continues to prove to its investors and future stock holders that no concern will be to big for the company to solve.

Why Instagram?

The two-year old photo-sharing service that made its name by offering sepia-toned filters to give every image that layer of nostalgia, has proved that a simple idea, executed well is still a successful strategy in the pivot-focused tech world. Instagram, which held strong to its iPhone focus for nearly two years, did just one thing -- let people upload photos and apply filters for sharing online. That's it. And they did it just for Apple iPhone users -- no Web app, no Facebook app and no Android app until last week. 

Launching just as the iPhone 3G was hitting shelves, Instagram hit one million users in three months. That usership, then quickly became two million, and swelled from there all organically from social network exposure and word of mouth. The company founders were even featured in this year's Super Bowl Best Buy commercial about tech innovators that have changed how we use mobile devices.

This simple but brilliant focus on making an enjoyable and easy app for photo sharing created tremendous buss for the company, which swelled to 30 million users in 20-some odd months and all with only a dozen people behind the curtain. The company stayed true to what it knew and had enough avid fans with a love for the vintage aesthetic that people were clamoring for the company to expand to other devices and platforms -- and when it did, they lined up to join. Instagram has even reached the coveted level of becoming a verb -- "I'm going to Instagram that photo." Every entrepreneur dreams of that level of success.

Now the company's co-founders, Kevin Systrom and Mike Krieger, can Instagram pics of them rolling in all that cold, hard cash -- while, uniquely, still being gainfully employed. 



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