I don’t begrudge Instagram’s founders for selling their company. There’s nothing inherently wrong with acquiring businesses or selling one. What I think this shows, though, is what Silicon Valley’s venture capital-fueled motto—”build now, get big, and figure out how to make money later”—does to companies. It ends up meaning that getting acquired is the only viable means of continuing the business, or ending it. It means that the business isn’t long for this world.
This is sad, but true.
I get what FaceBook gains by buying Instagram: Our photos, including our location. Probably pretty valuable. I also get what Instagram’s founders get: A cool billion.
What the idealistic part of me doesn’t get: Why are people building businesses that have no chance of ever turning a profit on their own?
I recently asked this question on GigaOm:
How does Instagram make money btw? It seems everyone and their brother praises them, yet no one talks about their business model…
It seems to me that this includes most businesses out of Silicon Valley. Food for thought.