Why Did Facebook Acquire 12 Employee / 30+ Million Users Instagram?

@thebigk • Oct 21, 2024

Oct 21, 2024

1.1K

Instagram, the most popular iOS app for sharing photos through mobile has been #-Link-Snipped-# by Facebook for cool $1billion in a combination of cash and stocks. That now brings us to following points for our discussion -

Instagram had no revenue model
The Instagram had only 12 employees on board
The company did not have an Android app until now. They only had iOS app.
Post the Android App launch, Instagram added 6 million users in just 6 days.
Instagram had recently raised $50 million from deep pocket investors.

Now, given all the above points, why do you think Facebook acquired Instagram? Your thoughts, please?

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Ankita Katdare

@abrakadabra • Apr 9, 2012

Instagram was famous as a 12 employee company. I think Facebook will want to retain the same team.
Facebook, lately has become a more of a "photo-sharing site" for millions.
We have seen multiple changes in the interface of the photo-viewer on facebook (eg: the all black background slideshow & now the one with comments in right sidebar)
Zuck knows that 'photos' is the prime focus on Facebook.
Here are some excerpts from what Zuckerberg said when he announced the merger:

Keep Instagram's strengths and features rather than just trying to integrate everything into Facebook.

We're committed to building and growing Instagram independently.

We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.

We will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure.
So, basically we have to wait and see how this merger helps millions of Facebook users (who don't use Instagram) to start using this service.
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Kaustubh Katdare

@thebigk • Apr 9, 2012

...or because Facebook was scared to death because of the rising popularity of Instagram. Facebook mostly about photos and failed to go viral on the mobile platform. Instagram just did what the FB couldn't do and if more people switched to Instagram for sharing photographs; Facebook would find it difficult to attract the 'lost' users. Facebook knew that they should stop Instagram and the best way to stop a competitor is through acquisition.

I don't think FB acquired 12 employees; I'm quite sure FB has more talented developers and could have easily built another Instagram for under a million dollars. But the main aim of this acquisition was to keep check on Instagram's growing popularity. One of the major concerns was; Instagram's Android App that attracted over 6 million users in just 6 days and if Google+ attracted those users; then Facebook's future was in danger. I'm quite sure Facebook knows how important 'photos' are for their service.
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Ankita Katdare

@abrakadabra • Apr 9, 2012

You are right. The motive behind this merger was "viral growth on mobile" , something Facebook was failing terribly at.
Whattay strategy!
If you can't compete, acquire the company and kill competition. 😁 #awesome

I wonder, are the original Instagram users happy with the merger?
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Kaustubh Katdare

@thebigk • Apr 9, 2012

A lot of Instagram users are opting out. Several services have popped up to allow users to port their photos out of Instagram Ex. #-Link-Snipped-# . It looks like while FB continues to grow a lot of early adopters are now looking for something new and better and even quitting FB. I'm quite sure a new service will start eating FB's lunch in coming months.

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Kaustubh Katdare

@thebigk • Apr 9, 2012

Awaiting more comments. I hope everyone's read the news by now 😀
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manishks

@manishks-AZybhs • Apr 9, 2012

The_Big_K
...or because Facebook was scared to death because of the rising popularity of Instagram. Facebook mostly about photos and failed to go viral on the mobile platform. Instagram just did what the FB couldn't do and if more people switched to Instagram for sharing photographs; Facebook would find it difficult to attract the 'lost' users. Facebook knew that they should stop Instagram and the best way to stop a competitor is through acquisition.

I don't think FB acquired 12 employees; I'm quite sure FB has more talented developers and could have easily built another Instagram for under a million dollars. But the main aim of this acquisition was to keep check on Instagram's growing popularity. One of the major concerns was; Instagram's Android App that attracted over 6 million users in just 6 days and if Google+ attracted those users; then Facebook's future was in danger. I'm quite sure Facebook knows how important 'photos' are for their service.
I agree big! Lately, fb have become more about sharing photos. For the first time as pointed by many valley people, fb had found its real competitor. I dont know how zuck is planning to implement instgram in fb!!
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Kaustubh Katdare

@thebigk • Apr 10, 2012

We need more chatty engineers, it seems 😁
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avii

@avii-TGGs8o • Apr 10, 2012

The_Big_K
failed to go viral on the mobile platform.
AbraKaDabra
The motive behind this merger was "viral growth on mobile" , something Facebook was failing terribly at.
What makes you guys say this ??? Any source links
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Saandeep Sreerambatla

@saandeep-sreerambatla-hWHU1M • Apr 13, 2012

I agree, instagram has become a popular one on mobile, so to kill competetion merging 😀

Now, as biggie said, they comes something which eats FB share of users and money. Acquisition is not solution always.
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Gurjeet Singh

@gurjeet-LUX7B1 • Apr 13, 2012

Let's see how fb implements this into their existing functionality ,As of now even i face many issues while sharing some pics in FB from my android App
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Prasad Ajinkya

@prasad-aSUfhP • Apr 27, 2012

Hey, if you take a look at Facebook's financials (available on SEC site, since they are going public in May), then you will realize that Facebook's Revenues from Mobile is a big zero. Yes Z-E-R-O.

Combine that fact with Mary Meeker (earlier Morgan Stanley, now at Kleiner Perkins), the god of all tech analysts, statements that by 2015 the number of smart phones connected to the internet will exceed the no. of computers.

Having a revenue stream from mobile is essential for Facebook's growth. Thus, they have bought not just Instagram, but also Tagtile (a mobile start-up by co-founded by an IITian). The structure of both the acquisitions is the same, the core team join Facebook as employees with rich salaries and stock options.

FB wants to secure its mobile revenues, and fast. Instagram was a no-brainer, all of its users are mobile users, and so is the same with Tagtile. Have you checked out the FB android app? It's one of the slowest app out there on the market. I doubt whether it can generate any revenues on its own. FB needs other such start-ups.
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Kaustubh Katdare

@thebigk • Apr 27, 2012

Instagram and Tagtile don't add up to Facebook revenues. Instagram doesn't even have a revenue model. As I said, Facebook is all about photos and if I'm not wrong more than 70% of FB revolves around photographs. It's true that mobile presence is a must these days and FB totally didn't take off in spite of having talented engineers.

FB realized that if Instagram grows in popularity then it'd just eat up Facebook's lage part of lunch. They know it because the company must sustain shareholder's confidence after IPO. I personally think Facebook won't have the popularity it enjoys today; after say about 3 years from now.
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Prasad Ajinkya

@prasad-aSUfhP • Apr 27, 2012

They don't add-up. But with FB behind them, they can definitely bulk up and define the mobile revenue stream for FB (which is non-existent at present).
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avii

@avii-TGGs8o • Apr 28, 2012

kidakaka
Hey, if you take a look at Facebook's financials (available on SEC site, since they are going public in May), then you will realize that Facebook's Revenues from Mobile is a big zero. Yes Z-E-R-O.
Dude FB mobile apps doesn't have ads. Obviously revenue will be Z-E-R-O !

The_Big_K
It's true that mobile presence is a must these days and FB totally didn't take off in spite of having talented engineers.
I don't know why you say this. I asked earlier the same. have any source to back this up ? Last time I read FB Mobile is being actively used by 450 Million people. You call that they didn't take off ?
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Kaustubh Katdare

@thebigk • Apr 28, 2012

I should have been more specific: Mobile usage for the photo activities on facebook.
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Prasad Ajinkya

@prasad-aSUfhP • Apr 29, 2012

avii
Dude FB mobile apps doesn't have ads. Obviously revenue will be Z-E-R-O !
There are other ways than advertising to monetize. Look at Square, Tagtile
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manishks

@manishks-AZybhs • Apr 29, 2012

Hmm. Instgram do have many options to raise money!
1. They charge for pro or premium features either as one time sale or subscriptions.
2. They can sell premium camera filters, special social status features, or access to detailed analytics.
3. Display advertising or sponsored photos.
but there will be any purchase intent while browsing instgram,doubt!. and adds may anger users or send them elsewhere. so instgram guys (and facebook guys) will have to come up with some ideas for new types of advertisement!
4. Charge developers to use its APIs. Instagram says that 2,500 apps are already using its APIs.
But it would probably also discourage people from using the Instagram APIs.

lets see how facebook uses instgram to raise revenue!
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Ankita Katdare

@abrakadabra • Apr 29, 2012

How many of the new CEans have read our exclusive interview with one of the founders of Instagram?
We published it last year. Little did we know that there would this little company will make it so big in the news a year later.

Check this out guys:

#-Link-Snipped-#

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manishks

@manishks-AZybhs • Apr 29, 2012

Yeah and later bbc mentioned about this interview and ''crazyengineers'' in one of their reports 😁
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