Let's get this straight: Kodak, which has been in the image business for 100 years, used to be the biggest employer in the city of Rochester, N.Y., and has been a household name for generations, is bankrupt. On the other hand, Instagram, which has been in the image business for 555 days, has no revenue, and employs a mere 13 people, is now worth $1 billion.
Let's chat for a few minutes about three things: 1) Facebook, which bought Instagram last Monday for all that cash; 2) TagTile, Facebook's latest acquisition (on Friday, purchase price unknown, but it probably wasn't $1 billion); and 3) innovation.
So What Did Facebook Buy?
For backgrounders, let's define Instagram and TagTile.
Facebook, despite its nearly 3,000 employees, apparently didn't have time or bandwidth to create this way-cool app itself, so it simply made a deal that we heard took a mere 48 hours to complete.
TagTile, which joined the Facebook team on April 13, is both a cloud application and piece of hardware called the TagTile Cube for businesses. Customers buying an item at a TagTile-affiliated store or restaurant tap their iOS or Android phones on the Cube as they are leaving. Then, should they choose to do so, they can share their enjoyment of the business to their friends with the tap of a button. It therefore follows, naturally, that if the customer is not satisfied, that not-so-good comments also may be networked out to the world.
So this is what Facebook is doing in the days leading up to what likely will become the largest initial public offering of stock in business history--an IPO worth some $5 billion. The brash social networking company has now resorted to buying good ideas.
Nobody is saying this is bad. In fact, this is the way most of the big players in IT now are moving. Technology advancement moves so fast, is so pervasive and so fickle, that companies that do not look to the outside for good ideas undoubtedly will be bypassed by competitors at some point.