Instagram’s Buyout: No Bubble to See Here | Wired
Instagram’s billion-dollar sale to Facebook raised eyebrows Monday, renewing fears of a new tech bubble. But compared to other major acquisitions since the dot-com bust, turns out it’s a pretty sane deal.
To put the acquisition in perspective I pulled together data from a selection of 30 notable internet acquisitions over the last 10 years, from Broadcast.com to OMGPop to see if Facebook/Instagram for $1 billion was as crazy as everyone thinks. (I left out companies without public purchase prices or user stats.)
Some would point to this as a sign of a bubble, but I think it’s more likely it just reflects the incredible scalability of modern app architectures. Using EC2 and solid monitoring, Instagram can quickly scale up to support a million new users overnight with very little additional engineering effort.