I’m not entirely sure why Facebook bought Instagram for $1 billion. It doesn’t solve a personal pain point. But someone asked me about the deal, so … here we go.
Instagram’s user value is instant gratification:
- The time I most to want to share a photograph with friends is right after I take it. If I have to interact with other apps on my phone, or (heaven forbid) upload the pictures to my computer, photo sharing becomes less fun and more chore. Or I’m just going to forget to upload / send the photo to my friends. Instagram makes it easy to share the picture immediately, all within one app.
- It’s hard to take a good photo on a phone — even if the phone has high quality camera, the phone may be shaped awkwardly, hands are unsteady, etc. Instagram’s filters quickly makes photos “acceptable” for sharing. Of course, I could edit the photo in a photo-editing app on my laptop, but that means I can’t share my photo right away.
- Likewise, let’s say you take a photo of your friends and it’s sort of “meh”. Should you take another photo or is this fixable with some Photoshop filters? You can’t ask your friends to hang around while you fool around with Photoshop. On the other hand, Instagram lets you know right away.
- Instant gratification generates positive feedback loops. If you take a photo and Instagram makes it look awesome, you’ll want to take another photo. You’ll also want to share it. Sharing makes the Instagram community seem more active, which attracts new users. It also makes existing users want to come back and check for new content.
So why would Facebook buy Instagram?
In a nutshell, it’s because Instagram is good at encouraging sharing. It’s not entirely frictionless, but it’s gotten a lot closer to that experience than Facebook’s own app.
Specifically, Instagram’s app captures three types of data that Facebook badly wants:
- Location data – Photos are often geo-tagged
- Data with “real time” relevance – Instagram photos are shared soon after the event, so Facebook gets a better sense of when an important event is happening.
- Whom your “real friends” are – you might post on the walls of a “Facebook friend”, but you only take photos of people you hang out with in real life
Facebook already has one way of getting this data — e.g. if you directly post photos to Facebook. But Instagram just executes better here — if only because it was built for that purpose.
Interestingly, Facebook is letting Instagram maintain some level of autonomy and brand identity (sort of like YouTube and Google), as well as letting Instagram users share on social networks that compete with Facebook’s. Odd, but I understand the logic — I’d bet Instagram’s brand has better favorable-unfavorable ratios than Facebook’s. And either way, Facebook still access to Instagram’s data. Moreover, to the extent that Instagram encourages sharing on existing social networks, Facebook is the primary beneficiary of this.
By contrast, imagine if Google bought Instagram and auto-shared all Instagram photos on Google+. Facebook would be pissed.
Finally, at least some of the purchase price value is for the team. Good user-experience designers are incredibly valuable. You want people who “get” what makes people happy and how to establish an emotional connection with a user. FB doesn’t always get that — e.g. just look at how often FB users seem to be pissed about something or another. I don’t know how closely Instagram’s designers will be working with other FB designers, but if they can teach Facebook about what makes a good user experience, that’s worth a lot to FB.