What is Instagram and Why Did Facebook Pay a Billion Dollars to Acquire It?

Photos are the next wave of social media, and Facebook, as the virtual creator of social networking, is all over Instagram.

Two Stanford graduates dreamed up the idea behind Instagram, which is similar to Pinterest in it’s desire to become a social network that focuses on photographs and images.  Mobile apps for popular mediums like the iPhone and Android smartphones have made Instagram an instant success, with people enjoying the ability to send photos with snapshots at a moment’s notice to their friends and family, including the addition of silly effects.  It has no revenue to report to date and has around a baker’s dozen employees that are making miracles happen from San Francisco.  Not even two years old, it is making a splash, but one wouldn’t think it was that big of a deal.  But the social network masterminds at Facebook know a gold nugget when they see one.

Today, Facebook agreed to terms to acquire Instagram for the unbelievable sum of one billion dollars.  Talk about holding out?  Early investors in Instagram are about to become millionaires overnight.  Quite likely, Facebook has been noticing the growing trend.  Competitor Pinterest, a favorite medium of Common Sense Conspiracy, has become a social network stronghold in its own right, and Facebook seems to want a piece of the Instagram pie as Pinterest’s numero uno competitor.  But a billion dollars?  How many companies could even attempt to buy something for a billion dollars?  Well, Facebook can.  It is a global juggernaut of epic proportions, and it has the cash lying around, apparently.

Instagram has taken off in an enviable way.  Over 30 million users participate in the medium which transmits over 5 million photographs and images a day.  Not exactly a lightweight, but people are wondering how on Earth even Facebook could drop a billion dollars on an upstart web and mobile utility in California.  The answer will probably make your mouth drop wide open.  Facebook is going to be opening itself up for public trading soon, and the company is currently valued at $100 billion.  That’s right, we said it.  $100 billion.  For Facebook, dropping a billion on Instagram is like you or I buying a television or a really fancy can-opener.  No big deal, no risk, there are 99 billion other reasons to think that they will be perfectly safe if Instagram turns out to be a failed investment.  On the other side of the equation, if it works out, the profits could be unimaginable.

It’s every Internet entrepreneur’s dream, to develop something and have it sell for millions, or in this case, a billion.  Could Common Sense Conspiracy be next?


4 thoughts on “What is Instagram and Why Did Facebook Pay a Billion Dollars to Acquire It?”

  1. Are we missing something or do we all live in a alternate reality where a company that has shown no revenue stream whatsoever be bought for 1 Billion?

    And people ask what is wrong in the world.

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