The New Instagram: Finding the Next Big Social Media Acquisition

Joel Anderson |

News last week that Facebook (FB), despite being in a run-up to its IPO, was plopping down a cool $1 billion to buy up hip mobile phone app Instagram may have come as something of a shock to many. Instagram had 13 employees at the time and a whopping total revenue of zero dollars. However, the core idea for Instagram was making it the hottest new app out there. Adding millions of users a month, Instagram went from a company that had no real value on paper to getting sold for a ten digit number.

This may speak as much to the nature of the tech industry sector itself in this day and age. A small company with a big idea can attract millions of eyeballs almost overnight, making precisely what value means in this day and age harder and harder to quantify. Facebook itself could be viewed as an example of this. Less than a decade ago, the company didn't exist. Then, Zuckerberg essentially offered a service that was already widely available, but he made it more exclusive and hipper. Now the company's on the verge of a valuation that could exceed $100 billion because it has over 700 million users. Which, of course, means that the exclusivity that was Facebook's calling card while it overtook existing social networks in its early years is now completely gone. It's enough to make your head spin.

So, what might be the next Instagram? What tiny tech company with a big idea could be on the verge of getting sold for the kind of money that could just as easily be used to purchase a tropical island? Obviously, anyone who knows that answer with certainty is about to be very rich and probably isn't ready to share it too widely, but that doesn't mean the rest of us can't wildly speculate.

The Obvious Candidates

There are already some names for companies that are already being bandied about as the next major sale to go down. Pintrest, a photo-sharing website, reached 10 million unique views faster than any other website in history and now generates more referral traffic than Twitter. Micro-blogging and social networking site Tumblr has over 45 million blogs, and location-based social networking app FourSquare is quickly approaching 1 billion check-ins.

The next major deal in social media and tech will could very easily involve one of these names, but that doesn't mean one can't dig a little deeper.

Paper

Paper is an app for iPad that reached 1.5 million downloads in its first two weeks. Made by the company FiftyThree, Paper is essentially an Instagram for drawings, offering a chance to pump up sketches and then share them on social media. Like Instagram, much of its appeal is in the way it allows creative people to express themselves with ease, making techniques that once requires real expertise as easy as a few quick clicks.

Voxer

Voxer, a walkie-talkie app that allows smart phone users to communicate with each other, shot into prominence as one of the more popular apps available last November. The source of the demand for Voxer couldn't be more clear. Finally, a way for two people to talk to each other using their phones! Voxer, though, is getting oodles of downloads and just closed a deal to secure $30 million in seed money from a variety of different investors.

Meeteor

Meeteor is a social networking site geared towards professionals, allowing users to identify which friends of friends are in the position to help their career. This is, of course, pretty much the same thing as LinkedIn (LNKD). But, Facebook was MySpace was Friendster and and only one of those social networks has an Oscar-winning film based on it and a pending $100 billion IPO, so you never know. Particularly if Facebook decides to make a play at the professional field and contending with LinkedIn, Meeteor could be just the acquisition to get started. Now if only Mark Zuckerberg could find a connection to the people working over there...

SoundTracking

SoundTracking is trying to be Instagram but for music, allowing friends to take music and add effects before sharing the results on social media. The app is a year old and seeks to allow people to find "musical moments" to share with friends and even pair the results with pictures and or comments.

Klout

San Francisco, CA-based Klout uses analytics to determine how influential a person is across social networks and assigns a score of 1 to 100 to reflect that influence. Klout raised $30 million in October of last year when the company was rumored to have a valuation as high as $200 million. So, it's a company that measures a person's hipness online that has reached a valuation of hundreds of millions of dollars because of...its hipness online? Either way, Klout's relative influence could mean big things are in the company's future.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 113.12 0.94 0.83 22,190,548
FB Facebook Inc. 128.43 0.34 0.27 10,776,540
GOOG Alphabet Inc. 779.85 4.84 0.62 693,314
LNKD LinkedIn Corporation Class A 191.37 0.50 0.26 1,128,055
TCO.P.K Taubman Centers Inc. Preferred Series K 26.05 -0.33 -1.25 1,024

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