Weekly New/Digital Media (67)

 How Much Would Facebook Be Worth Today If It Hadn't Bought Instagram?



https://www.forbes.com/sites/ericjackson/2017/04/30/how-much-would-facebook-be-worth-today-if-it-hadnt-bought-instagram/#2f582af69d77 

Summary: post in regards to the anniversary
Key facts/ statistics:

• Facebook just did an update last week that Instagram is now up to 700 million monthly active users.
• A little over 5 years ago, Kevin Systrom - Instagram's founder - agreed to sell his company to Mark Zuckerberg for $1 billion of cash and stock. At the time of the deal, Instagram had 30 million users.
• I've often made the argument that Instagram was/is a generational company - is there a better poster child for a "mobile" company than them? - and that they made a huge mistake selling out to Facebook.
•  Flickr was yesterday's photo-sharing app. Instagram was today's. It also had all the major celebrities using it.
• Not only was it clear that they were going to be the dominant mobile app, but it also seemed like Facebook was going to be negating the one company that had the best shot of unseating it as the dominant social network. 
• Facebook needed an effective mobile strategy 
• Ask anyone under the age of 15 if they use Facebook. You'll get laughs. Instagram and Snapchat though? All the time.
• In my plea to the FTC 5 years ago, I argued that Facebook would shut down Instagram. Zuck was much smarter than that. He left it alone to grow to become a 700 million user service today.
• And now they're using the fact that the government let them buy their biggest existential threat in the last decade to copy and attempt to squash Snapchat. Maybe Facebook will succeed. I hope they won't. That won't be good for users.
• Twitter didn't get its act to go public until a year after Facebook. Twitter could have been a scary competitor today going toe-to-toe with Facebook today if they'd bought Instagram.
• Yahoo - in one  single deal - would have gone from a perceived desktop laggard to one of the most exciting and relevant names in tech. Their market cap was around $20 billion at the time.
• Instead, Facebook - who was still private when they struck the deal - stepped into the breach.
• Facebook had a market cap around $58 billion. It bottomed out a couple of months later at $38 billion.  Today, Facebook's market cap is $435 billion.
• Is it unrealistic to say that $200 billion of Facebook's $435 billion market cap is due to Instagram owning the younger demographic that Facebook doesn't interest?

My opinion:
Mark Zuekerberg played his cards perfectly. He knew he needed the NDM expertise of instagrams mobile app success in order to succeed themselves.By merging they managed to learn this as well as develop an amazing app that provides facebook with massive advertising and user data. It also allows for an audience reach that is not reachable through facebook. This therefore highlights the importance of competition in the industry and how the development of NDM makes the social media environment extremely competitive that needs to be responded to instantly. There is also the highlighting of snapchat potentially becoming a massive threat for facebooks power as a company, if snapchat manages to stay ahead in terms of innovation even if instagram and facebook tag along behind there is bound to be some sort of increased power and credibility for snapchat, maybe leading to more investors in shareholders.