Why Facebook Bought a Company That Made No Revenue

By Noreffyzan Izziaty

“Action without study is fatal. Study Without action is futile.”

                                                                                                    -Mary Ritter Beard

Facebook, a huge company in the social media world made a shocking decision by deciding to buy Instagram a social media app with only 13 –person in its organization and zero revenue at eye-popping costs of $1 Billion dollars. But in the end the final acquisition is closed at $715 million (due to decline in the value of Facebook’s stock).

The decision was made by Mark Zuckerberg, CEO of Facebook in the midst of its Initial Public Offering (IPO) roadshow about to begin making potential investors wonders about his decision and whether he is matured enough to handle publicly-held corporation with his impulsive decisions. Mark proves them wrong by making sure Instagram is the next big money-making engine apart from Facebook. Although Facebook refused to reveal the revenue made by Instagram during its fourth-quarter earnings report even though Instagram was the star of the day. Facebook COO also admits that  almost 98% of advertisers in Facebook also advertised in Instagram after they have rolled out all the advertisers in Instagram and allows outsider to advertise in Instagram too.

Longevity. It’s also proven a very wise decision made by Mark as he can predict how Facebook might face the same fate as Friendster or MySpace if nothing is done to quickly adapt to the younger generations of Facebook user which mostly prefers Instagram more than Facebook and also how online sellers also prefers Instagram to do online business than Facebook since Facebook started to implement payment to make sure posts on FB Page is viewable in personal FB instead of being deleted or hide by Facebook.  Another reason is users can instantly take photos or videos and with various style available in Instagram and uploaded it there and then which something Facebook doesn’t provide for.  Instagram also caters photos sharing for those with the same interests.

Best Photo Sharing Experiences. 5 years after the acquisition, Facebook have started to incorporate the look and feel of Instagram by updating the apps to be able to have live video like Instagram does. Vice versa was also done to Instagram with the ability to upload multiple photos and videos in one post as users are able to do with Facebook. Mark have foreseen how younger generations love simplicity and ease of use in Instagram and also the privacy of Instagram. Most of younger people opted to have Instagram account instead of Facebook since their parents does not have Instagram account or not an avid Instagram users.  Those who have had existing Facebook account will make keep their account mostly as backup in the event their Instagram account is hacked or deleted by no reasons they can still see all the memories they have created in years. Plus Facebook also committed in growing Instagram independently with the users are given the freedom of sharing their photo to other social media apps such as Twitter, Flickr and Swarm and not only limited to Facebook only.

Soul. It was also stated the other reason for this acquisition by Facebook because it wanted to buy soul, because since Facebook have  been put up for IPO, the investors find it hard to take Mark Zuckerberg seriously when he publish his letters to the investors : “The Hacker Way”. Instagram have the “soul” in its core, the hardest things to fake; sincerity. This is because the users of Instagram at the time of the acquisition news goes public were outraged when they knew Instagram was put up for sale to Facebook. Many of the users started to delete their Instagram account and finding ways to download their photos and videos in Instagram.  This is one thing that Facebook  doesn’t get from their users.