Facebook’s IPO did not go well. Yet, within weeks it was buying Instagram, which had no revenue, for billions of dollars. Months later it spent nearly $20Billion on WhatsApp, which also had no revenue. Facebook’s strategy to keep users on its platform so it could drive revenue growth depended on making big bets. Facebook had to create disruptions in the social media market to stay in the lead. Today Facebook is #1 use of internet, Instagram #2 and WhatsApp #3. Instagram has already returned multiples on its cost. In business today the bets have never been greater, the risks never higher. But there is no way to avoid investing resources into future innovations in order to grow. It is required for success. And everyone needs a strategy to make these investment bets so they can innovate, lower risk, maintain growth and facilitate greater value creation.
