Monday, April 9, 2012

Facebook followup

Following yesterday's post...

From The Guardian:

Social network giant Facebook has bought Instagram – a profitless, two-year-old photo sharing website – for $1bn. 
Instagram is a mobile sensation that counts Twitter co-founder Jack Dorsey among its backers. It has been downloaded by over 30 million people. When the Silicon Valley startup released a version for Android phone users this month, it was downloaded a million times in its first 12 hours.
Though Zukerburg mentioned that these kinds of acquisitions weren't likely to continue, that seems difficult to believe since Facebook's spending reports shows low R&D costs, implying a reliance on individuals to improve Facebook's quality.

So isn't there incentive for "social entrepreneurs" to create the next Instagram and sell it for high profits? And isn't there large payoffs for investors to finance them? 

Not that it's necessary for analysts to flip out over one buyout, but it could be a situation where everyone wants to sell to the big rich giant. And this certainly isn't helping the Silicon Vally bubble debates. 

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