Instagram is just the start
If you were surpised by the fact that Facebook was willing to pay $1bn in cash and stock for Instagram then be warned: this is the just the start.
Despite everything that’s going on in the wider economy, all the indicators point to a digital economy klondike. This gold rush will be initiated and funded by the East and West Coast US, regions that appear to be effectively recession-proof for the foreseeable future.
I’ve already talked about the much more aggressive and well-funded investment climate in the US in the past but there’s much more to come.
Many key players in that investment industry have been keeping their powder dry, nervously waiting for the dam to break. The Instagram deal could be the trigger for them to invest once more and end this period of watching and waiting.
Hedge funds, venture capital players and other investors have billions of dollars waiting to splash on ad tech and other digital businesses.
The upcoming Facebook IPO is also adding to the sense of boom, while WPP’s recent investment in conjunction with India’s Infosys to create BrandEdge, underlines the sense that things are about to kick off.
If $1bn for a company with a handful of employees and a rudimentary business model seems excessive, then you may be even more amazed in the coming months.