Billion Dollar Acquisition Dreams vs Reality

- April 11, 2012 2 MIN READ

The big news of the week for the rest of the week in the startup world will be the acquisition of Instagram by Social Media Powerhouse Facebook for a nice and tidy 1 billion dollars! – Yes not too shabby for a business that just started up less than 24 months ago. Today both Kevin Systrom and Mike Krieger wake up as very very rich gentlemen and apparently so do their 9 staff that are still currently employed, with reports suggesting these employees will have around 100 million dollars shared between them all. Imagine if you were the graphic designer that turned down that equity of shares in exchange for extra work arrangement at the very beginning!!

Everyone at the moment is writing about the acquisition, and they should be – building an app is not an easy task [I should know, I have just finished doing this with a group of people] and attaining the critical mass is SUPER BLOODY HARD – and takes no where near the short amount of time you envision at the beginning – because of this the founders of Instagram have my congratulations and my admiration.

Stories like the one that happened today are extremely inspirational and motivational – God, it even got a the fire burning a little brighter in my belly this morning; after all as young entrepreneurs the guys are both around our age, on all accounts they were regular people just like you and me and therefore it makes it easy to imagine yourself being the next big thing – the next dot com billionaire … am I right?

Of course I am right, however sometimes inspirational stories can cause us to take dangerous actions when starting up. And let me be clear, I am not talking about risks – you need to take those, that is part of the startup package. What I am talking about is dangerous actions where you build a business and never have a monetization strategy.

Facebook purchased Instagram because it held strategic value for them, each photograph taken on the app has information embedded that is valuable for Facebook as marketing machine, not to mention it has a huge fan base and is the market leader at the moment. Instagram may have received it’s huge pay day, but there will be hundreds of “Instagrams” that will never see this day and will eventually run out of capital and fade into a forgotten land…

The best way to build value in the startup world is to be making money, the business market is tough enough for newbie’s as it is, it is at least three times as tough for tech startups and those in the app space.

So as you furiously map out a business plan for that next big idea today, please please make sure you include a way to make money and have a profitable business model – that ‘pay day’ dream becomes more of a reality if you do…


How do you make money from your tech startup?


[pictured: Instagram Cofounders]