Instagram — one of the hottest startups in the galaxy just got acquired by Facebook. The Insta-team should be absolutely ecstatic about the deal. So far they have hooked 30+ million users on taking pictures, adding filters and sharing their instagrams. With the recent Android app, Instagram should be hitting 50 million users soon enough.
The interesting part about this acquisition is that Instagram doesn’t make a dime — no business model, no revenue. I’m sure if they had stayed independent they would have tried some ways to make money, they had ideas in the pipeline. But as of now they have focused fully on creating something beautiful and growth — did an amazing job doing so. Facebook bought them for their popularity, talent and potential synergies.
Deals like this must make people wonder if some companies even have to make money to be worth a lot. Maybe Insta-team’s plan was to always sell when the time was right — and $1 Billion in cash and stock right before Facebook’s IPO and days after new funding at $500 Million valuation seems perfect timing. I’m sure after this deal, more and more startups, like many already, will just try to create something popular — the hell with business models. I predict Path to be next.
Get millions of users, make people notice and big shots like Facebook, Apple, Google and Microsoft will buy you off. Not a bad strategy I’ll say.