Industry bubbles eventually have to burst - Monocolumn | Monocle


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10 April 2012

Kevin Systrom, CEO of Instagram, must be an exceptional negotiator, or just lucky. Today it was announced that Facebook has bought the 18-month-old mobile-based photo-sharing app for $1bn (€763m).

If you’re not one of Instagram’s 30 million users, simply explained the application incorporates a social element to photo sharing, allowing others to “follow” your photo feed and “like” and comment on posts. And, in the spirit of the layman-as-artist ease offered by digital SLR cameras, its easy to use filters makes photos, “gorgeous,” says Systrom, something you’ll “want to keep forever” (on a website or a hard drive, that is).

Instagram, a company of just over 10 people, will be Facebook’s biggest acquisition by far, though the American Farm Bureau Federation made an easy $8.5m (€6.4m) when Facebook aquired the domain name “” in 2010; the farmers switched to “.org”. But it’s not the biggest of all tech acquisitions in the industry, not now or during the dotcom bubble of the late 1990s, it does make you question how some of these often unprofitable companies are being evaluated.

Maybe I’ve misdirected what limited creativity I have. Lucky are those that dream of being a tech entrepreneur – I doubt a bakery will ever sell for a billion dollars. But whether or not this is the start of a new social networking business bubble – the likes of which we saw just over a decade ago – it begs the question when will the bubble burst?

We haven’t seen the exhaustion of social networks yet, says Systrom. Why can’t 30 million users be 500 million – and what could you have sold Instagram for then? The worth of the companies that are at the forefront of the social media wave is so immense it’s nearly abstract. Of course, Instagram isn’t like The New York Times, which is 150 years older. That company’s $967m (€738m) worth is based on a reputation built over decades not months. Instagram’s appeal isn’t because it has stood the test of time, it’s simply the idea of it that Mark Zuckerburg likes.

Instagram is inspired by the casual simplicity of the Polaroid – the idea that a faded, overexposed, blurry photograph sidesteps the need to master the artistic and technical skills of professional photography in giving an image its worth. The message is that if we want to share moments, than laid-back is best.

The type of album may have changed – it’s not a book or a box but a website or phone app – hopefully the market value of Instagram’s retro-revival aesthetics reminds us there’s still a place for technologies past.

And if what we want is our pictures to look as if they’ve been taken on film or with a Polaroid, then hopefully we’ll be smart enough not to megapixel either of those into extinction.


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