the biggest loser (in the instagram/facebook deal)

Somebody’s gonna hurt someone
before the night is through
Somebody’s gonna come undone.
There’s nothin’ we can do.
The Eagles, Heartache Tonight

Clearly the guys at Instagram are big winner’s in yesterday’s deal. ONE. BILLION. DOLLARS. In cash and pre-IPO Facebook stock. All for a company that has no revenue and just a really engaged sticky user base, two platforms (iOS and Android) and a small but growing ecosystem of third party apps on their platform.

Facebook is a big winner too. They snapped up one of the top 5 most popular iOS apps, and before long it will probably hold a similar place in Android soon. It’s a small, smart team of developers ready to make Facebook’s mobile apps the absolute center of smartphone photo sharing. Yes one billion dollars is a lot of money but Facebook has it, is about to IPO and pull in even more money. Zuck can afford it.

So who is the biggest loser in this deal? Google and in particular Google+.

Google, who has a billion dollars lying around under a cushion at the Googleplex, could have swooped in and bought Instagram before it was even an idea in Facebook’s mind. Over 5 million downloads in the first week, after  finally getting a version of Instagram for Android is just one example of how much this app means to Google. Now I’m sure Instagram will still maintain their development on Android and might even built a version for Windows Phone, though they clearly don’t need Microsoft’s money now.

Yes they will keep building for Android but will they build for Google+ now that Instagram is part of Facebook? I doubt it.

Instagram for Android shipped missing two key critical features for Google: saving Instagram photos to the camera roll and native sharing to Google+. Either of those would have instantly caused an explosion of sharing from Android users to Google’s social network. If Instagram for Android would share to the camera roll when the Google+ app’s “Instant Upload” feature would have automatically added all those photos to the user’s Google+ account for sharing. Better yet would have been the “share to Google+” feature to put the network on par with Facebook, Twitter and Tumblr for media sharing.

Why did Google miss the boat? I can’t say. It’s a strange misstep because one of the brain’s behind Google+ is Vic Gundotra, a super smart guy that I worked with at Microsoft in mid-90’s. Back then Vic and I were technical evangelists in Microsoft’s Developer Relations Group and no strangers to “checkbook evangelism” to get apps built for Windows. Google could have walked in and thrown money at Instagram not for a piece of the company but simply to insure that Instagram kept Google+ front and center. What is being Facebook’s equal on photo sharing worth to Google? Tens or hundreds of millions easily. Google would have gotten what it needed and Instagram would have gotten free money to continue to build it’s brand and potentially even drive up the price for a later acquisition.

What does Google do now? Go buy Hipstamatic. Seriously. Hipstamatic is currently iOS only, but it’s the only app that can share photos directly into the Instagram network. They have a great in app purchase model, arguably a better camera app than Instagram, and could be an easy rival to the Facebook/Instagram combination. Hipstamatic will be cheaper than Instagram and give you almost the same value. You’ll bring another great app to Android, probably keep it from ever going to Windows Phone and make Google+ even more useful.

Larry and Vic, are you listening?

Published by Steve Banfield

Kentucky born, Seattle based. Entrepreneur. Team Builder. Photographer.

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