Why did Facebook pay $1 billion to buy Instagram? My theory!

What surprised me about the Instagram acquisition by Facebook was not the transaction itself, but the price.

One billion US dollars?

Not $811 million, not $769 million but a clean $1 billion.

And this is for a company with a few million users, zero revenue etc. So there was/is no real 'basis' for this number, right?

Now, I'm thinking, Facebook declared a clean $1.0000 billion profit in its last financial year as also stated in its IPO filing document to the SEC:

See this image taken from the SEC filing:

This is a better illustration of the same numbers from TechCrunch:

Image courtesy: TechCrunch

So, was there a meeting of minds between Facebook and Instagram when it came to the magical number of $1 billion?

- I mean, you go to a party, meet some creepy, long haired bloke who tells you in a South Indian accent, "Yeah, FB bought my company for $349 milion", then all you will remember the next day after your hangover is hungover, is "a few hundred million dollars" and a south Indian accent.

But you ain't gonna forget a billion (Say Bi - li - un ) dollars.

- If I were the Instagram guy negotiating and read the Facebook SEC filing and figured that ZUCKY BABA gets turned on by $1 billion - then I would use the same number on him to make him realize that we share the same fetish?!

He will like me, won't he, if we have the same $1 billion fetish?

Forget 'liking' me (pun intended), I'm saying - he will buy me!

- Lesson and Take out:

Strange are the stories of the Internet world. Even the Gods don't know sometimes!

So, just put your head down, and make the next Instagram happen!

Alok blogs at http://therodinhoods.com/