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Facebook acquires Instagram. Intertainment’s Lucatch Weighs in…

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Is Facebook's $1-billion acquisition of Instagram, as some insist, a defensive business move, or does it signal something larger for social media valuations?
In a move that had both Silicon Valley and Wall Street buzzing, founder and CEO Mark Zuckerberg this morning announced that Facebook would acquire photo sharing app Instagram for approximately $1-billion in cash and stock.

According to the LA Times’ Jessica Guynn, Instagram had turned down a previous offer from Facebook and was rumoured to be closing in on a financing that would value the company at half a billion dollars.

While some assessed the deal as a defensive move on Facebook’s part others, such as DeadSpin Editor and Wired Contributor Erik Malinowski, marveled at an era in which “Facebook paid $1 billion for a free app that isn’t ad-supported and has no (apparent) business model in place. Wow.

Led by Vancouver’s HootSuite, Canada is teeming with social media companies, but not many are public. Intertainment Media, however, is one of the notable exceptions. The company recently announced that its Ortsbo translation software was used by more than 107 million unique users for the 30-day period of Jan. 25, 2012, to Feb. 23, 2012. Cantech Letter caught up with Intertainment Media CEO David Lucatch to talk about the Instagram news.

David, Facebook today announced it will buy photo sharing app Instagram for approximately $1bn in cash and stock. This shocked a lot of people today. What’s your take?

I think this really shows that Facebook is thinking about the future. Facebook’s growth will likely begin to slow as it reaches maturity in developed countries, so they will need to introduce new, related, yet stand alone services to support overall growth of the company as a whole.

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A ton of established techs have record levels of cash right now. Do you see this kind of thing happening more often?

There is a lot of interest and funding, especially in the US, for companies in the tech space, and we are starting to see that in Canada. This, together with their increasing operating efforts at the industry starts to begin to show revenue upside, is making a lot of cash available for purchases. This is a trend that I believe will continue to increase.

Instagram founders Mike Krieger and Kevin Systrom

Intertainment’s Ortsbo has already been integrated into Microsoft Outlook. Do you think Ortsbo would dovetail with large social media sites like Facebook, Linkedin, or Twitter?

We are starting to see that already as we begin to start to rollout our commercial programs. We partnered with Disney and Marvel with Twitter for an Avengers chat with some of the stars. We recently partnered with Fox and Yahoo! for a live event and we’ve just be named to partner with Marvel and YouTube for the live red carpet broadcast of the Avenger premiere. We are also seeing opportunities arise with many of the larger social media sites, but that’s a story for another day.

Do you believe the number of Ortsbo users puts it in the rarefied air of some of the these “super apps” such as Instagram?

I think that language is still an anomaly, especially in the US, but we are seeing huge traction in the commercial space where large American companies are really starting to think global and that means more than English or Spanish. Ortsbo is less than two years old and reaches over 100 million people worldwide each month. I think that makes us a “super app”, but we’ve still got a lot of runway to, in my humble opinion, become a lot bigger, which we believe, will make us much more valuable.

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About The Author /

Nick Waddell
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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