Possibly Joseph Heller, but please remember that Instagram received a rather poor reaction from Android users.

The app. appears to be a direct port from the iPhone version, following none of the design guides and providing poor sharing options. Many complain in forums of confusing and misleading interface. Their icons have little resemblance to the function they are representing & there is non-existent support for the native menu itself.

So if not for mobile, not for social media & a relatively tiny user-base, the $1 billion valuation is nonsensical.

My educated guess is that Facebook have bought hype - not functionality or knowledge.

It's never about the company, always about the market.
Never just about what you can do with the business but also about stopping others doing what they could do.
Always about the journey, never the destination.
Rarely about what is, more about what might be.

yes - there are that many social media site out there the one that uses the most modern techniques at the right pricing to advertisers is the one that will win

we are not a social media site but we can offer global advertising for one year from £500 or 5years for the price of 4
that price is unbeatable for advetising on a scale that large

How many shareholders does FB have, that it would over-pay for Instagram rather than pay them a dividend? I believe it prevents another competitor buying IG.

Userbase & backend technology or a defensive play to keep Facebook at the No1 spot for sharing photos? G+ is gaining rapidly although still a long way behind.........

Facebook may be clunky & boring but they have the user base & people do share much & interact unlike platforms like LinkedIn where very people actually engage - most simply lurk! ;-)

Ivor

Product augmentation, Norm

Photo-sharing is such a core activity for the Facebook generation that instagram was a strategic risk for FB inc.

Buying it both takes out a potential competitor and denies it as a weapon that could used by a rival like Google.

The valuation is of course ridiculous in real money, but FB inc is going to float for funny money too. What would FB be worth at a one times sales or three times pre-tax profit, the typical starting metrics for the majority of businesses?

Far from giving money back to shareholders, it has not even floated yet. All this is about 'owning' the internet - high stakes indeed. They all hoover up companies like this. MS did it, Google do it (YouTube was a buy like this one).

Moral: create a business these guys feel is a strategic weapon towards their internet domination and bank the big bucks. Sales are optional.

You mean how Instagram made any profits?
No, I can't see how either. One thing's for sure, now that FB own Instagram it'll be downhill all the way. They only bought the company due to the userbase and the potential advertising revenue.

We're discussing this currently: ukbusinesslabs. co.uk /forums/graphic-design-web-design-photography-print/10885-facebook-buys-instagram-1bn.html

I think Facebook's been stagnating for years. It's pretty much dead in the water - for me anyway. I mean, come on... it's now just like MySpace. Clunky, slow, over complex and so utterly dull!