The Instagram buyout: charts!

Andy Baio breaks down Facebook's $1bn buyout of tiny image-sharing competitor Instagram. It reveals much about the rationale behind what appears to be an inflated price: while the cost per employee acquired is high, the cost per user is surprisingly low. Instagram is, put simply, unbelievably successful. [Waxy]


    1. I saw a talk given by a pro photographer that touched on this subject recently. “Kids these days” don’t see an overused “vintage-effect” photo, or a “washed out Polaroid”, they see a “cool” (to them) photo. Many were’t alive when photos looked like this naturally so this is a new look to them, and they’re eating it up.

      Also, Instagram (on Android, at least) seems to save a copy of your “clear” shot as well as the processed version, so you get the best of both.

      1. I did wonder about that (the original). To massacre a moment in time with stupid Photoshop effects just seems madness.

        I don’t mind it as an effect, if it’s non destructive.

    2.  I seem to be the last person who doesn’t understand the appeal of making my nice and clear photographs look like they’ve been cropped or processed in a darkroom.

    3. I feel that way about my lovely fluorescent lighting that lets me actually see things indoors. I get the candle-lit dinner thing, but mostly I enjoy seeing a full spectrum of colors.

      1.  CFLs have improved so much. I’m very sensitive to flicker (amongst other things like high frequency audio whine) and when CFLs first came out I couldn’t bear them. Now I have two lights in every room, the brownish relaxing low-output bulb for relaxation and the high-output daylight for finding things and sorting my socks and so on.

    4. Photos taken with a phone are not ‘nice and clear’ by any standard – even the latest iPhone’s camera, which is quite good. There’s a whole range of issues which give such photos an artificial, very digital look. 

      We BB readers know better than most, perhaps, that digital art can look great – but it takes a lot of work to get it that way. In most cases, digital stuff looks like crap. Analog stuff is seemingly inherently pleasing to humans (it’s the same argument with vinyl vs. mp3s).

      Further, even if your phone photos were actually nice and clear, the technical quality almost never matters in photography as an art form. There’s a lot of shitty photography out there being done by people with digital SLRs. Perfectly clear, but shit aesthetically. 

      Conceptually it seems silly to degrade the quality of an image to make it look better, but these types of filters are designed to smooth out and hide the ugly qualities inherent to small-sensor digital photography, and to make the colors and contrast and so on more pleasing.

      1. Hey,  I am actually degree-level trained in photography and design (great career move!), and I actually completely do get the gist of this stuff, but it’s seldom applicable to photos that aren’t formal studies.

        When I take casual snaps to show, say, the nice little place I went to visit with pretty blue skies, bright red flowers and bright green leaves, simply making it that “pleasing” soft retro magenta/brown colour doesn’t make the subject matter any more important to my viewers on facebook, it just makes it another chromatically indistinguishable drop in the endless ocean of soft magenta/brown Instagram snaps.

        Perhaps it says something about our disapointment with mundane reality that we have to put everything through such severe rose-tinted filters to elevate it to acceptable. Maybe it also says that we are taking too many damn photographs and need to add a gimmick because the subject matter is so trivial.

        I believe the phrase I’m looking for here is “polishing a turd”.

  1. where’s the chart showing acquisition cost vs. revenues?

    oh, found it:


    but that totally doesn’t matter. in related news, OMG isn’t the latin invasion awesome because it’s 1998.

    1.  Yes, this is what I was going to say. I don’t understand how you could possibly make a chart about a $1 billion acquisition and fail to include in that chart any discussion of revenues. Sure, instagram has a shit-ton of users, but none of them are paying a dime for the service, and likely never will. And, unlike YouTube. there is no scope for expansion of services that might include revenues.

      It sure FEELS like a bubble, and we know that speculative capital is dying for another bubble to inflate. And thanks to the JOBS act, this one is probably going to start re-inflating rapidly.

    2. In 2006, YouTube had 34M users, zero revenue, and were bleeding $1M/month for bandwidth alone. Was Google was crazy to buy them, too? Sometimes, it takes another company to be able to find the revenue model.

  2. I think I remember the last time tech companies were being valued by “users” or “eyeballs”. I just forget whether it was that was a better deal by that metric, or WebVan.

    1. Instagram’s functionality was such that I doubt Facebook will be getting many (if any) new users from Instagram. Most of those I know that use the app use it like I do, for one-stop posting to Facebook, Twitter, Flickr and so on. If anything they slowed down the number of users abandoning Facebook to only browse through the Instagram app itself.

      This buy only reinforces the concept of Facebook becoming the next AOL.

  3. I see this notion mentioned quite a lot… that the cost per employee is high.

    But why is that a problem? Every company under the sun is cutting staff numbers, and knows the wage bill is the the biggest cost of a company.

    To have more users with less staff costs… it’s exactly what a company would want.

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