The Race: Build the Instagram of Video
Newest App Phenomena Draw Big Money From Investors, Film Stars and Even Laurene Powell Jobs — Facebook Inc.'s $1 billion acquisition of photo-sharing start-up Instagram has shifted the spotlight to the newest phenomena in mobile apps: uploading personal videos from smartphones.
Context & Ripple Effects
Facebook's $1 billion purchase of Instagram — completed in April 2012, days after the app's photo ecosystem had already spawned a crop of filter-wielding imitators — has become the template every investor now prices against. Within two weeks of that close, Viddy rode Facebook Timeline integration to the top of the iPhone free-app chart and [[a:1195568|Socialcam closed an A-list angel round from Yuri Milner, Tim Draper and Laurene Powell Jobs]].
The Wall Street Journal piece lands amid unusually broad pickup — BuzzFeed, The Blog Herald and analyst Steve Cheney all carried it the same day — signaling that 'the Instagram of video' has moved from VC shorthand to mainstream business story. The money is arriving before any of these apps has proven retention or revenue; what is being bought, at this stage, is distribution on smartphones plus the possibility of being next year's Instagram.
First-order effects
- Viddy and Socialcam get instant validation and war chests: Viddy holds the #1 free iPhone slot via Timeline sharing, while Socialcam's angel roster gives it celebrity reach and credibility with follow-on investors.
- Every seed-stage social-video founder gains negotiating leverage, because acquirers have just paid $1 billion for a two-year-old photo app with no revenue.
Second-order effects
- Facebook's own feed and Timeline become the kingmaker channel: whichever video app it favors can be minted overnight, so rivals will optimize growth hacks for Facebook integration rather than standalone products.
- Incumbent photo and camera apps face pressure to bolt on video capture and filters quickly, compressing product cycles across the mobile creative-tool category.
Third-order effects
- If the pattern holds, each marquee mobile exit will trigger a copycat funding cycle in its wake — a recurring 'category-template' dynamic where capital chases the last deal rather than differentiated technology.
- A crowded field of thinly differentiated, heavily funded clones raises the odds of consolidation, with most of the wave absorbed by platform owners or media companies once user growth stalls.
The trend: Mobile app investing is entering a template-chasing phase, where a single outsized exit like Instagram re-prices entire categories of lookalike startups before their economics are proven.