Insta-Rich: $1 Billion for Instagram (Wall Street Journal)

The two founders of Instagram, a tech startup with about a dozen employees and no revenue, announced Monday they sold their photo-sharing company to Facebook for $1 billion in cash and stock. The deal is the largest ever for Facebook and improves its mobile offerings while removing a rival of users’ attention. Facebook users spend an average of 7.5 hours a month on the site, according to ComScore. Much of that engagement comes from photos, which Facebook relies on to get its 845 million users to view ads and interact with brands on the site. Advertising accounts for 85% of Facebook’s revenue, or $3.1 billion in 2011, $1.8 billion in 2010. Trying to apply that revenue model to Instagram, which allows users to take pictures with their smartphone and apply effects to it before sharing with friends, might not capture adequate attention on smaller phone screens.