Facebook – Instagram Deal Roundup

We’ve been talking, reading and watching a lot about the Instagram deal this past week. Here is a quick roundup of some posts we’ve seen on key aspects of the deal.

Instagram logo

Facebook buys Instagram for $1 Billion

Valuation
The billion dollar acquisition triggered a lot of discusion about another tech bubble. One billion dollars for a two-year old company with 9-13 employees (roughly $100 million per employee) does seem lofty. But when you think about the number of current users, and factor in the rate of user adoption, the $28-$33 dollars per user acquisition price seems more digestable and in-line with other social media valuations.

This post does a nice job breaking down the numbers and comparing the acquisition to other notable tech deals: Instagram’s Buyout: How Does It Measure Up?

A few more good reads about the valuation.
WSJ: Instagram Valuations for the Social Media Crowd
Guardian: Instagram and Facebook: the next tech bubble?

Backlash
The acquisition has caused some discontent in the Instagram community. Not only have they seen their once iPhone-only app launch on Android, but now it has been bought by Facebook — all within a week’s time. As of this post, Instagram has been downloaded more than 5 million times already from Google Play.

Reading about the backlash calls to mind one of my favorite quotes.

“If you are not paying for it, you’re not the customer; you’re the product being sold.”

Here are a few links to posts covering the backlash.
Instagram Users Fail to Welcome Their New Overlord
Instagram fans backlash on $1bln Facebook deal
The Instagram-Facebook backlash

Rationale
So why did Facebook acquire Instagram? The rationale covers some broad territory: buying a competitor as a defensive / threat elimination play; a knee-jerk response to Instagram’s rapid adoption on Android; acquiring talent; fortifying its position and capabilities in mobile; and even helping Facebook penetrate China.

The following posts provide a good roundup of the rationale.
Why Instagram Was Worth $1 Billion to Facebook
Did Facebook panic?
Will Instagram Help Facebook Crack China?

 

And of course, The Daily Show provides a thorough analysis of the deal. Happy Friday!
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