Facebook/Instagram deal; signs of a dotcom bubble?

The tech and business world went crazy at the news of Facebook buying photo sharing app Instagram for 1billion dollars. One of the questions on most minds (expressed or otherwise) was; “is Instagram really worth that much?”  For some, it was “why Facebook?”

As I watched a TV programme discussing the deal this morning, some were of the opinion that we are about to experience a bubble like that of the millennium 2000.

Silicon Valley has had a history of finding money where most people can’t see it and if there’s any one person who will understand the “disruption” model of building a business, it has to be Facebook’s Mark Zuckerberg himself.

So the questions we keep hearing are:

  • Was the app overpriced?
  • Is there a dotcom bubble?
  • Was it a wise move for Facebook?

Reports show that many Instagram fans are not exactly thrilled at the news of the deal as some have privacy concerns. Others believe it may become to “Facebook-ey” and eventually ruined.

I can’t say I’m particularly miffed as I don’t use Instagram and this kind of deal had to come at one point or the other.

So… was $1billion dollars too much?

I don’t think so; Instagram has a large number of very loyal fans who use it very much. There really is no telling how big it may grow. With that database of users and information, improvement comes easier (like a barrier to entry). 

Was it a wise move for Facebook?

With a platform like Facebook, I think Instagram is likely to be complimentary. Of course like everyone else, I am hoping it won’t lose its addictiveness after this deal.

Is there a dotcom bubble? Again?   

It’s very likely although the lines are blurry right now. Some products seem to have incredible value and some just appear like products of over-active imaginations which will not go far.  More than ever, investors need to keep an eye out for what would be a wise move looking back. But that has always been the riddle, hasn’t it?

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