Facebook dropped a bombshell when it announced the acquisition of Instagram for a billion dollar. People are wondering if this is another bubble in the making. We know that Instagram hasn't made a dime even though it has 30 million users so the question about the valuation is valid. Nobody can predict how this move will turn out for facebook but there are some key takeaways for all of us.
It is all about platform
Instagram made it big mainly because it was "the photo sharing platform" on mobile, specifically on iPhone. You could build the greatest photo sharing app for desktop but nobody would have noticed. Whenever there is a platform change, big opportunities emerge. Google, youtube, Facebook, and Groupon are all examples of how companies reap cash during big platform changes.
Focus and simplicity help new products
When you are entering a new market (mobile photo sharing, in this case) reduced feature set becomes your advantage since it increases the adoption drastically. However, in matured markets you probably will be forced to add more and more features to differentiate your offering.
Looks matter
People like to share things that make them look good among their friends. The filters of Instagram was a key feature which helped in "beautifying" photos before sharing them online. If Facebook had implemented this feature on time, the history might have been different.
Expect great ripple effects
This aquisition is a big deal at many levels. This will really boost startup community in many ways. On the other side, Google will be scrambling to compete with Facebook probabaly by acquiring pinterest.
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