INSTA RICH
Instagram frenzy lured Facebook to pay big bux
HOW DO you become an overnight multimillionaire at age 28?
Create an easy-to-use photo-sharing app, quickly amass tens of millions of users — and sell out to Facebook.
P.S. It doesn’t matter if you haven’t earned a dime yet.
There are plenty of photo-sharing apps like Instagram, the less-than-two-year-old tech startup just purchased for an eye-popping $1 billion by Facebook.
But the Silicon Valley tech company, co-founded by Stanford University grad Kevin Systrom stood out from the pack because of its explosive growth in a place where Facebook needs to be: mobile devices.
“For dedicated users, Instagram is addictive. It has a very large user base that has made it a brand,” Altimeter Group industry analyst Rebecca Lieb told the Daily News. “Facebook has said explicitly that it needs to bolster its mobile strategy. It is currently making no money from Facebook on smartphones or tablets. But increasingly that is how people use Facebook.”
Launched in 2010, Instagram, which lets users transform the look and feel of their photos before sharing them, was an instant success.
It now has 30 million users who upload more than 5 million photos every day — fans include Justin Bieber — and its white hot growth shows no signs of slowing down.
This past Monday, just one week after it was released on Google’s Android platform after being exclusive to Apple devices, Instagram logged 5 million downloads.
That kind of popularity presented a competitive threat to Facebook, which is set to go public next month.
The big winners are Systrom — a former Google employee who had turned down a job offer from Facebook founder Mark Zuckerberg — and his Instagram co-founder, Mike Krieger. Systrom’s stake is now worth $400 million, while Krieger is $100 million richer today.
“This is one in a million, the Schwab’s Drug Store myth of Silicon Valley,” Lieb said.
“They really stuck to their principles,” added Brian Blau, research director at Gartner. “They kept the user experience simple and fun.”
Not everyone is happy. Yesterday a backlash that began as soon as the deal was announced continued as Instagram users worried about what would happen to the company under a new, big owner.
“They are concerned that something small and cult-like will go big and commercial,” Lieb said.
“In the short-term not much will change,” she added. “Eventually Facebook will build robust photo sharing capabilities into their mobile sharing platform.”