Instacube - When KickStarter Is Not Enough

KickStarter has turned out to be a fantastic place to launch a product. We often like to follow up to see what has happened with successful campaigns to follow them once they get the funding to the scheduled shipment of the product as listed on KickStarter. One that I have been looking at with interest this year is Instacube as it is one that caught my attention last year as a truly unique product. One that would fit on my desk or table to stream pictures for viewing. It is a very simple concept which proved to be of great interest to a large number of people.

A year ago, the Instacube exceeded the stated goal of $250,000 and received contributions of $621,049 demonstrating the interest they generated. By having Instragram feeds being shown in the Instacube, one could enjoy their own stream of great pictures. And with them exceeding their goal, they are to be including Facebook integration as well. The goal with the money raised was to ship the cube shaped product in March 2013. For those who contributed, that has long since past.

While starting a new product launch, one determines the funding to get it launched and when receiving 248% of the goal, you would think they had everything they needed to get the Instacube off the ground. But it is not. The company is looking for about $1 million in additional funding and the original designer has resigned from the company behind Instacube. The last update on KickStarter was July 3rd and the future for the Instacube does not look promising.

In that update, they are looking for more funding which does happen on other KickStarter projects. What is of concern is the explanation about a lot of money going to pay salaries for the people in the company. With a new product, there is either enough funding planned to cover that or people are working for equity in the company. Since so much has gone to pay salaries, was there a failure to plan the overhead for Instacube? Much of the future work described in the update talks about more money paying employees and contractors.

Additional money that we raise will be put directly towards completing the manufacturing engineering, software development, tooling and testing, and then towards buying components and materials for production and shipping the final goods to you.

There have been other issues, such as finding a manufacturer who then pulled out. Probably because of the financial aspects for Instacube and the need to raise more funding. The process of finding another manufacturer has started over, but until they receive more funding, it does not seem like that will get very far. It makes one wonder what the future holds for Instacube. Will they get the funding necessary to produce a product and deliver it?

The bigger question is why was the KickStarter campaign not enough? There have been failures on some campaigns to deliver which can be attribute to the inexperience of the individuals behind it. But in this case, DM2 has been around for years creating products, so this is not a new process to them. They had to know what it would take to bring a concept and deliver the Instacube close to the estimated date. We hope they can get the necessary funding and complete the manufacturing process to deliver the Instacube in the coming months.

The Instacube is a great product which needs to come to market.

Does Instagram Purchase Help Facebook's Bottom Line?

Instagram has not made any money when Facebook bought them, so how will it add to profits?

 
With the purchase of a large and growing following of Instagram, it makes one wonder what the strategy is for Facebook. Given that Facebook is very close to going public with their IPO, what are they considering to do with Instagram so that it can add to the bottom line of the company? Up until this point, Instagram has not made any money and the reported numbers continue to grow. While it may be difficult to believe some of the user numbers being reported by Facebook and Instagram, it is obvious they are big. Instagram reported their new Android app had 5 million downloads in the first 6 days making them ever more successful. And yet they have no revenue they can report on.

There seems to be a history of past purchases by companies who have invested large amounts of cash to acquire a photo sharing site. You can think of Google and the purchase of Picasa back in 2004. There is Yahoo and their purchase of Flickr back in 2005. Neither of these can be considered as purchases which added significantly to the bottom line. But, these are web based solutions and that is where the difference lies. Instagram is a mobile app which has deep roots in smart phone usage. The web based interface offers one very little information as to its real value.

And that may be the primary reason for Facebook to buy Instagram. Facebook already has a large following of people who post pictures on their Facebook page. But the mobile aspect of activities has been lacking and this may be exactly what they need. Instagram already has hooks into Facebook, so the purchase is not going to change anything immediately. But again, we have to go back to the question of whether Instagram is going to help the bottom line?

The best answer I can give is not exactly. It is not going to have a direct link between monetizing the product and adding revenue to Facebook. What this will do for them is deal with some of the Facebook limitations which other social media sites have been very good at. As an example, Pinterest has gained a lot of interest as a new social networking site through the use of pictures. These shared pictures has moved Pinterest up in prominence and is currently being ranked as the 3rd most popular social networking site in the US. Only Facebook and Twitter rank higher.

This may be one of the primary reasons for Facebook to buy the company to fill in some of the areas where they are lacking or less than successful with what they are currently doing. The whole idea of using pictures as a medium of communications has taken off and looks like it will do nothing but continue to grow. While Instagram is more of a photo sharing site, moving it to Facebook to use its features making it similar to what Pinterest is doing would not be that difficult.

There are a number of possible things Facebook can do with Intagram as the medium moves more from text based to images being posted. It would seem the old adage of "a picture is worth a thousand words" may really apply to the true value that Instagram brings to Facebook.

Will Instagram Remain Independent Or Within The Walled Garden?

With the $1 Billion purchase, will it remain free or be caged?

The really big news this week is the purchase of Instagram by Facebook for what could be considered a huge premium. That is because the revenue being posted by the company is non-existent and brings back memories of when Google purchased YouTube. But that was a long time ago and much has changed in this Web World that we all belong to. The numbers for Instagram have been what one would consider to be off the charts. With the launch of their Android app, they achieved 5 million downloads in 6 days, which is big numbers. All from company which has no profits to show.

Instagram is enjoying the biggest week in its existence. The company, already riding high on its iOS success, launched its Android app and captured 1 million downloads in its first day and unless you live under a rock, you will know that yesterday, Facebook came in and bought the company for a cool $1 billion.

Will Instragam Remain Independent As Microsoft Did With Skype?

This is the big question. Facebook does not have a history of purchasing companies and then leaving them alone. They do the exact opposite and integrate all the functionality and features inside their walled garden. This requires you to be a "guest" of Facebook and log on to gain access. This is the more likely situation which we can expect to see on the purchase. In the Blog post from Mark Zuckerberg, there are no guarantees being made with what the future may hold for the extremely popular service.

For years, we've focused on building the best experience for sharing photos with your friends and family. Now, we'll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.

Facebook has spent a lot of time and effort for sharing photos and with the Instagram team, they are going to be offering even better experiences by further integrating those features into Facebook. Instagram as it stands today may not go away, but Facebook is going to get the lion's share of the quality improvements. There is nothing in the blog which clearly states that Instagram has a long term future or not. If other sites start leveraging Instagram for their use, Facebook is going to be quick to stop that from happening. And with that, Instagram as we now it today may go away.

This large purchase of a company is a strange one as Facebook is on the verge of their IPO in the next few weeks and since there is no revenue for Instagram, Facebook will not get immediate benefits from the purchase. As a result, this has caused some to question whether there is a Tech Bubble here and the future implications are that is is one. The picture industry is still recovering with the bankruptcy of Kodak and they were a long established company. Instagram is a very young company which is still exceeding expenses over revenues and it does not look like that will be changing in the immediate future.

Given that YouTube has been a heavy use with computers and tablets, Instagram is a completely different model. Its best usage is with a smart phone and there in it is much different than YouTube and make the comparisons far different. Assuming that Instagram remains as highly popular as it currently is, the bigger question is what is Facebook going to do with it remains as an unknown. Given that the primary focus of Instagram is for mobile devices, it could be one area which Facebook wants to improve their processes on. Time will tell as to exactly what Facebook has in store for this most recent acquisition.

Given past history with Facebook and their walled garden mind set, it is more than likely Instagram for the future will be included inside of Facebook. What do you think?