The truth about Instagram.
There wasn’t a building high enough for me to jump off of when I first heard about Facebook acquiring Instagram for a billion dollars two weeks ago. I know that sounds extreme, but I’m honest enough to admit that I could not see straight for a couple of days post-deal announcement. It was nothing against Instagram (I love the app), it was the purchase price that made me all weak in the knees. While everyone is still wondering how the valuation of a twelve-person employee business, that hasn’t been around for three years and has no revenue could go for that kind of whopping amount, many conspiracy theorists think that it’s more of a Facebook play to prove to the market that if Instagram is worth a billion dollars, than Facebook must be worth (at least) one hundred billion dollars. Between us friends, just writing out sentences like that makes me feel like I’m typing a script for the next Austin Powers movie, instead of what I’m really trying to do: write a legitimate business blog post. Some may call it a bubble, others may claim that it’s a gross over-evaluation… either way, we’re now evaluating startups using the “b” word and that changes everything. Again.
If it happened to Instagram, the next logical business questions are…
Believe it or not, there is a laundry list of great, new companies who had very interesting valuations prior to the Instagram acquisition, but now they’re looking prettier than ever. Companies like Rovio (makers of the highly addictive Angry Birds video game), Foursquare (the location-based mobile social network), Spotify (the socially-driven music streaming service) and even Airbnb (instead of staying at a hotel, you can pay to crash at someone’s pad) could be next. While I like each and every one them (for different reasons)…
Here are four other hot startups that are more than capable of cracking an Instagram-esque sale price:
While many of these companies have raised enough money to put their valuations in the billion dollar-plus range, it’s going to be an interesting few years as the general economy claws its way back to a sense of normalcy (hopefully), while these new, brash and unique digital business models unfold before our eyes. Who could have ever imagined a business landscape where a company of less than twenty-people, an Internet connection and a handful of MacBook Pros could have these types of engaged customers and these types of wild valuations?
Which new startups do you think have the billion dollar magic touch?
The above post is my twice-monthly column for the Montreal Gazette and Vancouver Sun newspapers called, New Business – Six Pixels of Separation. I cross-post it here with all the links and tags for your reading pleasure, but you can check out the original versions online here:
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