The recent acquisition of Instagram-a popular photo sharing application, by Facebook for a whooping sum of $1 billion in cash and stocks is something I find very interesting considering what critics have always said about Facebook and even Instagram as startups.The businesses are similar and are focused at making users have a unique experience with their product
For Facebook this is their biggest acquisition so far and with the much talked about IPO, Facebook will be valued at about $100 billion or so. The truth is as the users of Facebook grow, its value grows too, simple!
It gets my attention more knowing that Instagram is just two years old, the most downloaded application on iphone and with a user base of 30 million, ahhh !what other statistics do you need to know that this product is a viable one. Before their deal with Facebook, read what Instagram said about how they intend to make money:
” we believe that the core of our product will always be free. There will be opportunities to consumers to buy extra add-ons like special filters etc. However, we plan to experiment with different models as we grow and learn what special value we can provide to the community to make their collective experience more engaging, exciting and useful”
Am just thinking what lessons can Africa Startups/App developers learn from this, it’s easy for us to get the education of the west, learn their pop and rap culture and even learn to speak like them but it becomes difficult to learn from them how to start, grow and sale a Startup.
Like Sramana Mitra, an experienced Silicon Valley Business consultant and the Founder of One Million by One Million, will say that great Startups or businesses are not built on power points they are built on great products.
I have learnt that the core and viability of a Startup is the value of the product, what value does your product bring, how many eyeballs (users) are on it, for online Startups, eyeballs bring the money. With eyeballs you can always figure out how to make money like Instagram has just done and prove pundits wrong always!
So African Startups don’t figure out how to monetize in your early years, figure out how to attract millions of people to start using and feeling your product, and offering it for free will help you get there faster in growing the user base and soon the money will come. This model works all the time on the Internet where eyeball is king!