One billion is a lot for a business with 13 people and no revenue. Here’s why it’s a steal for Facebook. Instagram is winning in mobile photos, which Facebook needs, and Facebook offers the better part of a billion people’s worth of sharing to pour fuel on the Instagram fire. Facebook was built on photo sharing. It now has over 130 billion photos, and is adding 10 billion a month. At one point, photos were responsible for half of Facebook traffic. Facebook makes money on ads targeted using your data, but until recently had not put ads next to photos. They now do, and it’s critical for their revenue growth that they get it right, and that their inventory of photos to put ads against continues to grow. Even more, mobile photos taken on Instagram are becoming one of the key ways that people record the information of where they’ve gone and what they’re doing. Facebook “check-ins”, where you post status updates or photos with your location, could use the help. My start-up – Jetpac – helps you work out where to travel by discovering your friends’ best travel photos from Facebook. Facebook’s main growth strategy is mobile. Facebook’s iPhone and iPad apps haven’t made creating photos as fun and easy as on Instagram, with its filters to pimp out your photos. Kevin Systrom and Mike Krieger of Instagram, and their talented team, can help Facebook improve their mobile apps. I sat next to Mike and Kevin in the Dogpatch Labs in Pier 38 in San Francisco, and watched as they spent two hours getting the round corners of their filter icons right. They make things look pixel-perfect, and bring an Apple design sense to Facebook. For Facebook to grow efficiently, they need the best people working on their most important stuff – mobile and photos. Instagram filters could make Facebook photos more fun for everyone. In return, Facebook offers a massive audience for the Instagram product, and the tagging technology which helped build Facebook photos (where you tag your friends in a photo and they get a message about it) could help discovery on Instagram, where the tagging isn’t as easy. They also give Instagram the resources they need to quickly scale, which is helpful since they have around 30 million users, but recently got 1 million more just on the first day of their Android app. So, the Instagram-Facebook fit is a good one. Kevin has 400 million reasons to make sure the soon-to-be-public Facebook stock increases its value. Facebook should make $5 billion or more in revenue in 2012, and having mobile photos and their other mobile apps working to reaccelerate growth could drive enough ad revenue to be worth $1 billion. Even better, Facebook has some good news going into its IPO, so instead of talking about their valuation, they can be showing off cool photos with filters. That’s got to be worth at least another $1 billion to Mark Zuckerberg and Sheryl Sandberg.
CULLED FROM:THE TELEGRAPH BY JULIAN GREEN