by Hauwa Gambo
You might have heard of Instagram – it’s the website that Nigerian celebrities such as Naeto C have flocked too in the last year. Just as we were getting used to the photo-sharing site, Facebook has now finalised discussions to buy the network for $1 billion in a combination of cash and stock. The deal was announced barely an hour ago. This gives Facebook access to the medium’s 30 million active users—the largest audience of any start-up Facebook has purchased.
This is Facebook’s biggest acquisition ever, in both price and reach. And it’s for good reason; one of Facebook’s abiding strengths has been its capacity as the world’s largest photo-sharing site. Instagram was competition for that. “We don’t plan on doing many more of these, if any at all,” Facebook CEO Mark Zuckerbag said in a blog post, “but providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.”
This is a surprising buy. Whilst Instagram is wildly popular and has a lot of buzz, it still doesn’t boast of a workable business model that can generate profits. In contrast, Yahoo paid just $35 million seven years ago for Flickr, and that site is still perhaps the Internet’s most popular photo network.
Instagram, famed for having just about 13 staff, was founded barely two years ago by Mike Krieger and Kevin Systrom. What it is a photo application that lets users add distinctive filters and visual flair to photos they’ve snapped on their smartphones. Just last week, it released the long-awaited Android version, which immediately got more than 1 million downloads in 12 hours. It also got backlash from iPhone users, who previously had exclusive access to the service.
As CNN reported today, Facebook likes to scoop up hot startups, kill their products, and redeploy their staff on other projects. That’s definitely not the plan for Instagram, all the players insist.
“It’s important to be clear that Instagram is not going away,” Instagram’s founders wrote on their company blog. “We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.”
Zuckerberg seems to agree. “We’re committed to building and growing Instagram independently,” he said. “Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.”
Interestingly, it was just last month that Instagram’s creators claimed they had no interest in selling. “We’re pretty focused on remaining an independent company right now,” Systrom told CNN. “It really excites us to come into work every day and be able to work on Instagram,” he said. “I think that’s going to be the case going forward as well.”
Not that this turnaround is that surprising, considering how the company itself was formed. “I remember what I’ll call ‘pivot day.’ We sat down and said ‘what are we going to work on next? How are we going to evolve this product into something millions of people will want to use?'” Systrom said last year. “What is the one thing that makes this product unique and interesting?”
What they decided upon was Instagram. And as it turns out, that was a $1 billion decision.