The best way to think about the value of Instagram is not to think about $1 billion or $30/user, it’s this: 1%
The value of Instagram is tied up in Facebook being valued at an unprecedented $100 billion valuation. To use the case that Paul Graham makes for YC: do you believe that Instragram adds an incremental value of 1% to Facebook?
So before you as an entrepreneur start naively making the case that your startup is worth $30 a user like Instagram, or that a top-down view of the photo market is x so that means your video startup is worth y, consider the logic of the buyer.
There is no market more strategically valuable to Facebook than mobile, and there is almost no product more valuable than photos for them. But also, they have incredible buying power at $100b that virtually no one but Apple has. It was a very unique situation where a $100b company made a 1% bet.