A popular app with only 11 employees and no revenue shocked everyone a bit when it sold for $1 billion to Facebook. My initial reaction was that the deal is insane0 but later I wrote a post on why it actually makes sense.
So how sweet was this deal for the investors in Instagram- well, to put it into perspective how much money was made, Ben Horowitz, a venture capitalist and co-founder of Andreessen Horowitz, made an investment of $250,000 to Instagram 2 years ago, back then it was just a fast growing app with potential; that investment is now worth about $78,000,000 after the deal with Facebook is finalized.
That sounds like a good reason to break out the champagne and it goes to show how small investments can pay off big– opportunities or acquisitions like Instagram-Facebook don’t come often, especially for a company with no revenue.
But it goes to show- mobile is the future, Facebook has seen half of it’s users log on through mobile devices.
It also shows how insignificant the Android device is in building a successful mobile app– Instagram managed to gain about 40 million users and a billion dollar acquisition all without making an Android version.
What can Android do to become more significant? I say pay- give developers higher percentages of advertising as an incentive to build more apps for Android, it may not solve the problem but it is a start.
Will Facebook monetise Instagram in the future- In the short term probably not- Facebook are not going to ruin the Instagram experience anytime soon so don’t worry. I believe Instagram will truly be monetised when Facebook figure out a way to monetize their users on mobile devices.
Image credit: execdigital.com