Here's How Buying Instagram For $1 Billion Helps Facebook's IPO

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Photo: milkmit/Dylan Love

Facebook is going to go public in about a month.Today, it made its first major acquisition, buying photo-sharing app Instagram for $1 billion.

The timing is not a coincidence.

In the future, there are going to be startups that do what Facebook does, but better.

To be a company that is going to last for the long haul, Facebook was going to have to be able to acquire these companies, sometimes for a lot of money.

Today, Facebook proved to its future Wall Street investors that it had the ability and the stomach to pull off huge 10-figure deals. It proved that it was not Yahoo, and that small startups would go for these deals. 

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