With any emerging medium, the real fun begins when companies that are less than two years old and have little-to-no revenue exit at 10-figure valuations.
So, rather than debate whether or not Instagram sold out its users by being absorbed by Facebook, let's look ahead and ponder which app(s) will be the next Instagram.
I'm not talking about different photo-sharing apps, of which there are many great alternatives to consider. The reality is, once Instagram becomes fully absorbed by Facebook, even those promising to abandon the service to some degree won't be able to live without it. Facebook paid a king's ransom for Instagram because it realized how exposed it was without it -- or worse -- if the 12-person startup was gobbled up by one of its peers.
Just as web portals from an earlier boom paid heavily for younger upstarts encroaching on their space (Excite@Home -- BlueMountain.com, AOL -- Mapquest, Yahoo! -- Geocities and Broadcast.com), we are about to see a new generation of app-driven companies get sucked up for unprecedented amounts of money relative to their revenue and time in existence.
While Zynga swung and missed on Angry Birds developer Rovio for a reported $2.25 billion late last year, the social gaming pioneer did successfully gobble up Draw Something developer OMGPOP for a cool $200 million.
Scrolling through the App Store best-sellers right now, and there doesn't appear to be an independently-developed app with the same trajectory as Instagram or Draw Something, which itself has more than 50 million downloads across multiple platforms (compared to Instagram's 30 million+).
But that's the beauty and the magic of the app space right now. The barriers to entry are still small and the distribution platform so immense, that a company none of us have even heard of today (or even exists) could be acquired for billions by year-end.
What app do you think has a shot at becoming the next Instagram? Let us know, and we will publish the best answers.
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