NO-ONE the case of Instagram, the acquisition

 NO-ONE IS IMMUNE TO DISRUPTION

No company is
immune to change, not even Facebook. And no one could know that better than
Facebook themselves. Facebook has frequently bought out companies that could be
regarded as its competitors, or were considered to become so. This company has
found that tactical purchases are a quick and effectual way of obtaining new, innovative
technology.

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When Facebook
realized that they were struggling to take-over a status in the mobile market,
the Instagram’s acquisition was a part of the solution. The well-established
“mobile first” mindset that Facebook and many other companies now show perhaps
makes it difficult to imagine how Facebook, with its web-based platform, when struggled
with mobile. In contrast, Instagram that began as and still is a mobile app, was
light years ahead concerning user experiences, and attracted a huge number of Facebook’s
users with its new method of sharing photos.

Over the years,
Facebook has over and over verified that they are pioneers and have a unique
capacity for constant self-reinvention. Strategic acquisitions have repeatedly
been part of their armoury in this respect, in recent years, remarkably,
through acquisitions in VR and AI.

Giving an acquisition independence and using your own
currency

Initially, Facebook
didn’t know how to monetize from its leadership in users, but they succeeded in
finding a way to tackle it. They have given acquisitions independence and
have not incorporated with others.

So just as Facebook had to find its turnover model, Zuckerberg
and his team permit the leadership of Instagram, operating in their own White Space, to develop their
user base and learn to monetize what is an extraordinarily huge group of happy
folks.  When developing in new markets, it is independence rather
than integration that
makes the most sense organizationally.

In
addition, Facebook is strong enough to print its own currency, using its
private money for acquisitions.  Facebook has ability to make acquisitions
with shares, rather than real money as long as it has a very high market
valuation,

In the case of Instagram, the acquisition used a mix of cash, Facebook stock and restricted Facebook
stock for employees.  The latter two of these three items are not
real money.  They are simple pieces of paper giving claims to ownership of
Facebook, which itself is exponentially rise in earnings.  The price of those shares are all based on
expectations which now require the performance of Instagram to make happen.

By
doing the deal of acquisitions with Facebook shares, Facebook has the ability
to link the newly acquired managers to the same overall goals as Facebook, and
offering an extremely high price but without indeed having to raise any money –
or spend all that money.

 THERE IS
MORE THAN ONE TYPE OF ACQUISITION

It
is not true that acquisitions are always about the buyers “swallowing up” the
company they have acquired. Actually, it is just a significant resolution to be
made about whether to fully incorporate the company into the buyer’s company,
or to continue developing it under its own name and brand. This second option
is especially appropriate when acquiring a strong robust brand with a huge
number of customers or user base. Post-acquisition, Instagram has extended as
separate products, under their own names.

In terms of the Instagram purchase, Mark Zuckerberg, CEO of Facebook
said:

…we
need to be mindful about keeping and building on Instagram’s strengths and
features rather than just trying to integrate everything into Facebook. That’s
why we’re committed to building and growing Instagram independently. Millions
of people around the world love the Instagram app and the brand associated with
it, and our goal is to help spread this app and brand to even more people.