How Instagram’s $1 Billion Sale Helps Other Photo-Sharing Startups
When Facebook decided to acquire Instagram for a whopping $1 billion on Monday, the two companies weren’t the only ones with reason to pop open a bottle of champagne.
The acquisition has lent legitimacy to a whole genre of startups — photo-sharing apps — previously accused of being a fad.
“Every time we went and talked to investors, they always complained about how low the exits have been for photo startups,” explains Andres Blank, co-founder of Pixable, that aggregates important photos from across a user’s social networks.
Before Instagram, the most recent photo startup to make a notable exit was Photobucket, which was acquired by MySpace’s parent company for $250 million in 2007.
Now Blank and other photo startup founders can point to Instagram’s $1 billion exit as proof that there’s money in photo apps.
As Blank puts it: “Video startups have YouTube. Now photo startups have Instagram.”
Brian Blau, a Research Director for the Consumer Technology and Markets Group at Gartner, agreed that the acquisition puts most photo startups in a better position than they were last week.
“It’s going to open up the eyes of these bigger companies that want to do something similar to Facebook,” he says. “It just makes it seem a little more legitimate than it did before … I wouldn’t be surprised if you see more similar acquisitions in the future.”
Large technology companies have demonstrated similar shopping preferences in the past. Google, Facebook and Skype, for instance, all bought group messaging apps last year. Could photo-sharing apps be this year’s flavor?
“It encouraged us when we saw it,” says Twitpic founder Noah Everett. “It validates what we’ve been wanting to do lately.”
Twitpic, a website and API that makes it easy to post photos to Twitter, will unveil a standalone app in the next few weeks. While Everett says there are currently no plans for filters, the new app, like Instagram, will combine social features and photos.
Where Instagram encouraged sharing across a range of networks, Twitpic’s new app will integrate closely with Twitter. Comments and photo tag notifications, for instance, will be delivered both through the app and as @ reply Twitter messages.
Everett doesn’t say Twitpic is aiming for a Twitter acquisition (“I think Facebook has more resources than Twitter,” he notes), but it’s developing what sounds like a good candidate nonetheless.
Lucas Buick, the co-founder of another photo filter app called Hipstamatic, is less optimistic than Blank, Everett and Blau about the influence Facebook’s purchase has on the startup photo space in general.
“It’s always been legitimate, which is why Facebook made this move,” he says.
Maybe so, but it’s hard to imagine the string of articles from 2011 that have titles such as “Are photo-sharing Apps Like Instagram and Path Just a Fad?” running this year.
Instagram’s acquisition is far from a universal stamp of approval for all photo startups — the app never did, for instance, figure out how to make money from its service– but Facebook’s purchase of the service does suggest that something as simple as social photos with filters can be valuable (whether or not that value is the result of a bubble is up for debate).
“Before there were two examples to be made,” Blank says. “The first was that photo startups don’t have big exits. The second is ‘where is the business model?’ At least Instagram can be the example for the first.”
More About: Facebook, hipstamatic, instagram, Pixable, trending, twitpic
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