You would have to have been sleeping under a rock to not know that Facebook has just finalised an acquisition of the 12-man band, Instagram, for a cool price of $1 billion, give or take a few dollars, in shares and cash.
Firstly, congratulations Instagram! 12 people, 1 billion dollars, 18 months of sleepless nights. I am in! I am up for it! How can I join your club? I am prepared to wash dishes, empty your bins and learn to cook the most delicious lunches you can ever imagine for a decent share of the proceeds. Photosharing never looked so appealing.
Billion dollar deals are few and far between. They tend to go with over hyped market analysis and valuations of the hottest trend of the moment. Remember the dot com boom? Did anyone really survive? Did the big deals ever really get a decent ROI for investors? Maybe for those smart enough to get in and out of the deal very fast, but what about the mere morals. The Mum's and Dad's who put their superannuation into investments that newspapers told them where 'hot'? What about these people? Do you really think that they are laughing all the way to the bank or are they in fact just making these young millionaires richer by the second and the more they publicise the fact, the more the Mum's and Dad's who often don't have a clue about such things, invest more and more cash that they don't have or were saving for retirement.
Do I think Instagram is worth $1 billion? Hell No! Seriously, that is more than $33 per email address. Are they serious that this is going to get them a decent ROI? Are we all falling prey to the hype and ridiculousness of the social media era?
Sure, social media will be here forever - or at least until something else replaces it, but are these valuations giving false hope to small business owners hoping to crack the jackpot?
I have not used Instagram and probably never will. Being a narcissist and promoting the fact isn't really my cup of tea. I don't need to showcase what I ate for breakfast, that I met a celebrity for 2 seconds in the street and begged them for a photo, or that I am supposedly having a great time even if it was me who had to set up the tripod to take my own photo just so others thought that my life was fantastic and something that everyone around me should be jealous of.
And... where are the boundaries. Yes, my nieces and nephews know what Instagram is and have been sharing photos for ages. Some have children as little as 3 or 4 years of age, parading in their cute little bikini's. Well, I think this is ridiculous. Great spot for Pedophiles to hang out and get their jolly's.
There is not enough policing of social media and everything has a place. These valuations on companies that have made no profit are not realistic and does have little or no reflection on what companies are really worth. What it says is that an eccentric billionaire, had a good idea that Instagram would be a great add-on (which it probably is) and wanted to showcase his power by buying it at whatever cost. Not bad really, since it isn't really his money to buy it with. It's Mum's and Dad's at home who have given their money to super funds and fund managers, that love nothing more than to do a deal. After all, isn't that how they make their fees.
Mellissah Smith is a marketing expert with more than 20 years experience. Having founded and built two successful marketing companies internationally, she is well recognized as a industry thought leader and innovator. Mellissah started her career working with technology and professional services firms, primarily in marketing, public relations and investor relations, positioning a number of successful companies to list on the various Stock Exchanges around the world. She is a writer, technology developer and entrepreneur who shares her thoughts and experiences through blogs and written articles published in various media outlets. Brag sheet: #2 marketer to follow on Twitter (2003), Top 150 Marketers to Follow (2015), Top 10 innovative marketers (2014), 60K+ followers on Twitter with 97% authentic.
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