Possibly the single biggest attraction of Instagram was its rapidly expanding user base. In a very short while it had amassed 30 million users on the iPhone. When it launched for Android, it captured a million downloads the first day, and hit the 5 million mark in just six days – contrast this with the iOS launch which reached this level only after six months! This surely must have made Mark Z. sit up and take notice.
And in all fairness, Instagram was not just a rank unknown tech outfit which struck out lucky on its product. It had already gone through Round 1 funding by reputed private equity investors and a few days earlier had sewn up $50 million in funding in round 2. This latest round valued the company at $500 million. Zuckerberg had the advantage of leveraging the diligence that had already been completed by the PE investors.
In his inner heart Zuckerberg probably also admitted that Instagram was quite easily the best photo app out there to use with mobiles. He knew the power of photos and what a significant role they had played in Facebook’s own meteoric growth. Not to ignore the fact that Instagram brought a whole new behavior pattern to digital, and particularly smartphone photography – visual curation. Users could now harness the application to modify, embellish, and add any number of special effects to seemingly humdrum and low quality photographs taken impulsively on their phones, and then send them out to share. This was social networking brought to photos in a way far superior to Facebook’s own somewhat clunky processes for uploading and sharing.
With such a big user base, no longer could anyone, and certainly not Mr. Zuckerberg, ignore the wealth of personal and location data that would come along with the application’s purchase.
The icing on the cake must have been Instagram’s battle-tested and talented team. Never forget that Zuckerberg’s previous acquisitions almost always focused on people. He was usually candid about the fact that he bought ‘teams’ not ‘products’.
With these strengths, it was probably easy to choose between Instagram as an expensive acquisition now, rather than as a potential competitor later.