It wasn't worth $1bn on the general market, but it was worth 1% of Facebook's equity (which at the time was worth $100bn)
Photos are Facebook's biggest feature by far, and Instagram is the only company that has come close to challenging it, when you look at it in those terms, 1% isn't a lot at all
> And what kind of revenue does that feature bring in exactly? How exactly does Facebook profit from providing free photo hosting to a billion people?
The "goal" of facebook is for you to share and connected with your friends. Photos are just one of the things everyone wants to share. Without it, Facebook would have a giant hole for a competitor to attack.
Facebook profits by having the most active and connected users. It's not necessary to make money from each feature. That's extremely short sighted.
> It's not necessary to make money from each feature.
Which is correct. Google provides search functionality, but makes its money from advertising.
But what feature exactly is Facebook making money off of? They seem to still be scrambling to find a revenue source. I don't understand how this situation is at all acceptable from the investors' viewpoint. That is why I say that SV has jumped the shark.
Photos are Facebook's biggest feature by far, and Instagram is the only company that has come close to challenging it, when you look at it in those terms, 1% isn't a lot at all