Instagram, The $1.8Million-A-Day Company
I woke up to the news that shook the Valley, that photo sharing app instagram had been bought over by facebook for a billion dollars. I found this trending on twitter and thought it was some sort of joke.
Yes, the app had a million downloads on the first day on Google Play and yes, it had been the #1 app on iOS for a long time, but $1Billion? This was me an hour back, since then I’ve read at least 15 articles on all the top tech blogs and official announcements by both, Kevin Systrom and Mark Zuckerberg.
First, to put things into perspective…
1. Instagram took 551 days to reach $1Billion. That is $1.8Million for each day of hark work.
2. Instagram did this with just 13 employees.
3. Last week Instagram launched their (much awaited) android app and got a million downloads in the first 24 hours.
4. Soon after, they got another $50Million in funding from the best in the industry taking their valuation to $500Million.
5. A week after that Facebook acquired it for $1Billion cash. That’s a 100% ROI in 7 days for the investors and is 1% of facebook’s valuation. They just gave away 1%.
AND
6. A 551 day old photo sharing network, Instagram is worth $1Billion. A 116 year old publishing company, New York Times Co., $950Million.
This acquisition comes at a crucial time. A time, just before their IPO when most companies would be very careful about how, where and how much they spend. This just shows the confidence facebook has, both in their own product and that which they’re buying.
Instagram is arguably the best (mobile) photo sharing service there is. A big reason for their success is the simplicity. till they opened up their API last year, there was no way to see a user’s photo stream on the web, that’s how simple.
They stuck to their core competency, photo sharing. They didn’t clutter their app with ads or go for the now-so-common freemium model nor did they over-socialize. I call it the Keep it free, keep it good and the users will use business model.
This should be a lesson for all startups, a lot of who after a few months of launch get lost. Sticking to your core competency is the first rule of success.
Today, all strong tech products have the opportunity to get funded. Make a strong, unique product, keep it good and the users will use and investors, invest.
There isn’t much out about what the future of Instagram will be but both the companies’ official statements say that the app is here to stay. Let’s just hope it doesn’t lose it’s simplicity.
Congratulations to Kevin Systrom and the entire team. You’ll are such an inspiration.
Further Reading…
1. Kevin Systrom’s official announcement – http://goo.gl/fNi7f
2. Mark Zuckerberg’s official announcement – http://goo.gl/o6Zb0
3. Why Facebook bought Instagram on the way to it’s $100Billion IPO - http://goo.gl/S1VH5
4. Did Facebook Panic? An alternative perspective to the buyout by CNN - http://goo.gl/lyjjA
April 10, 2012 Leave a comment