We’re assuming that if you’re reading this blog post that you don’t live under a rock, in which case we also assume you heard about Facebook’s one billion dollar acquisition of Instagram. Now, we live in an age where the 24-hour news cycle keeps us abreast of the trillions in national debt, the billions in oil company subsidies, or the mergers of massive multinational companies where hundreds of millions of dollars exchange hands overnight, and so on the face of it that number – one billion dollars – might not seem as exceptional as it does when put into context.
Instagram as a company went into business a mere eighteen months ago, in an unimpressive warehouse in the San Francisco Bay area. At the time, the founders Kevin Systrom and Mike Krieger were the only employees. While impressive, their respective resumes weren’t unlike thousands of others in the California tech community, and while both had high hopes for their photo-sharing app, neither of them had a real appreciation of the size of what was to happen next. The app’s initial download volume crashed the servers, and both Systrom and Krieger desperately contacted friends in the tech community to handle all the problems that accompany unexpected success. Eighteen months in, Instagram has racked up an impressive member community numbering greater than ten million, which is why it managed to command such an impressive price tag.
A couple things bear mentioning. To the layman, this may have seemed like two giant tech companies merging after a complicated negotiation, but at the time of sale, Instagram only had thirteen employees, making the sale worth seventy-seven million dollars per employee. Second, development of the app didn’t require a great deal of technical sophistication. It is basically an app that edits photos and makes them easy to share. Our point here is that if you have an idea for a mobile app, you don’t need massive amounts of capital or an army of computer geniuses or even an especially revolutionary idea. Instagram successfully found a niche that spoke to our little nagging needs and exploited it. If you’ve got something similar in mind, drop us a line and we’ll get you started.
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