I wonder if we should consider buying Instagram, even if it costs ~$500m.

Right now they seem to have two things that we don't: a really good camera and a photo-centric sharing network.

For the camera piece, their camera just takes photos that look much nicer than the native camera because of their filters, tilt-shift effects and even their new lux feature. I worry that it will take us too long to catch up, if we even will. And regardless, their brand is established as the awesome mainstream camera, so even if we catch up on features they're still the awesome iPhone camera app.

For the network piece, one concerning trend is that a huge number of people are using Instagram every day — including everyone ranging from non-technical high school friends to even FB employees — and they're only uploading some of their photos to FB. This creates a huge hole for us.

I think it's quite possible that our initial thesis was wrong and that theirs is right — that what people want is more to take the best photos than to put them on FB. If so, we'd be very behind in both functionality and brand on how one of the core use cases of Facebook will evolve in the mobile world, which is really scary and why we might want to consider paying a lot of money for this.