Yeah. Fish Stock.

If you think about it, Facebook is kind of a fish story, right? “I once caught a fish THIS BIG“. Yesterday, an even more unbelievable story unfolded in business change land, as Facebook spent . . . I can hardly even type this without retching a little bit . . . $1 BILLION (yes, one billion dollars) to buy an App. One App. One single, simple, been-copied-to-death-and-does-nothing-unique App.

Instagram, an App that has been downloaded approximately thirty million times for iPhones and a few million more in the week or so since it became available for Android SmartPhones, is that App. Can someone explain to me how an App with no revenue, 30-odd million users, and plenty of competition in its space is worth a billion dollars? That’s north of $30 per user.

In fact, do the math and you’ll see that it’s even worse. Facebook has 800 million users of its own and there’s tons of overlap between existing Facebook users and existing Instagram users, so it’s not like Facebook acquired anything close to thirty million new users. I’m going to guess they actually laid their hands on maybe six to eight million new users; the acquisition cost per user jumps to well over $100 each, and if I get really critical probably closer to $200 per new user. And remember, the Instagram App itself is meaningless.

Is this 1998 all over again? Are we headed for a tech stock bubble burst?

There are similarities, but remember that in the late nineties everybody with an idea was getting big money. In this case Instagram hit the jackpot while their many competitors got and will likely get nothing. I’m more interested in the ancillary issues surrounding Zuckerberg and Co spending a billion dollars on essentially nothing.

First, let’s remember that Mark Zuckerberg, for as smart as he is, has time and again shown his propensity to do business like a person without the seasoning to be running a company the size of Facebook. Yes, I have some nerve picking on Zuck, just as I had no right to pick on Warren Buffett for having a very old television in his office. But a deal valuing Instagram at a billion dollars simply makes no sense. Maybe I was right when I pointed out that young people just can’t be as smart as older people.

On the other hand, the world is changing. It’s All About The Apps.

Sure, I’ve actually discontinued the Answer Guy Central Apps, because we’ve decided we can deliver more value to you by using a platform-responsive web site design than by cramming an App down your throat. But Apps have a place. Sometimes, Apps make life easier.

A couple of weeks ago, the author David Dobbs released an App to promote his latest musings. Or maybe it was musings to support an App. Fish: A Tap Essay is available only for iPhones (really, Mr. Dobbs?), and judging by the comments at Wired is . . . well, not very good.

Unless the readers are missing the message.

Maybe the content of the App isn’t what matters. Maybe the App itself is the point.

Dobbs’ iPhone App allows you to read the content it contains by going forward, and only by going forward. Talk about a whole new meaning for “content management“!

The approach is limited, of course; while you don’t have to give readers hyperlinks all over a book, making anything readable only in one direction means it’s really only viewable in one sitting. It had better be short, clear, and focused on a message that you’re certain can be delivered without any question as to what that message was. At which point we have the ultimate example of what Marshall McLuhan told us a very long time ago: The Medium IS The Message.

Maybe that’s Facebook’s point in so drastically overpaying for Instagram. They don’t care about the billion dollars or that paying that much doesn’t add up in terms of acquiring either revenue or a huge user base. Stock Valuation doesn’t matter. All that matters is that you provide the most direct path from any one point to any other point, at the moment your user wants it.

Perception, it turns out, truly is reality.

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