Facebook acquires Instagram • Hacker News Board

Re: Facebook acquires Instagram

#121

Post by larrys » Mon, Apr 09, 2012, 5:46 PM UTC

homosaur wrote: post #86

inmygarage wrote: post #62

This is very reminiscent of Google/YouTube circa 2006. When Google bought YT it was a small team of people and a pretty nascent product that people really loved, and the usage numbers were out of control. They left the product mostly untouched and let it grow on its own. Though there was major criticism at the time, it is one of the best tech acquisitions of the past decade.

YouTube is a content paradise though. There's tons of value there and you can sell ads against it or even charge for premium services. Where's the money in Instagram? The content is practically worthless and their only real value is in their userbase. Even though I use the Instagram client, most of the time I see photos, they come through Twitter. So that also reinforces for me that any value is in the users and not…

"Where's the money in Instagram?"

Preventing Instagram from developing into something that has a negative effect on Facebook. It's a "keep your enemies closer" move.

Re: Facebook acquires Instagram

#122

Post by huggyface » Mon, Apr 09, 2012, 5:46 PM UTC

tptacek wrote: post #103

This seems ominous for Google, which spent $12.5bn for Motorola to stake a shaky claim in mobile and lord knows how much on G+; after this, what's left for them to do to stake a claim on social mobile? Buy Twitter? What else do people do socially with their phones? Totally possible for Google to sink tens of billions into mobile and still wind up on the bottom of the value chain, commoditized along one axis by Facebo…

Utterly outmarketed by Apple? What a curious take that is, though it is a natural statement when you're so desperate to try to drag Google into this.

Instagram is a tool that has a limited shelf-life, with a userbase that is almost certainly already on Facebook. Declaring this some sort of coup for Facebook seems weird, given that the overwhelming sentiment is that Facebook has more net worth than brains at this point.

Re: Facebook acquires Instagram

#123

Post by callmeed » Mon, Apr 09, 2012, 5:47 PM UTC

envex wrote: post #55

callmeed wrote: post #37

You know, I used to be pretty lax (careless, even) about geotagging all my Instagram photos. Now, should I continue to use Instagram at all, I'm definitely not going to share my location.

Just curious, but why the change of heart?

The last thing I want is people on FB seeing "Erik's Backyard Patio" when they are nearby.

Or, even worse, giving my backyard patio a bad review ;)

Re: Facebook acquires Instagram

#124

Post by andrewhillman » Mon, Apr 09, 2012, 5:47 PM UTC

I think this shows that FB felt threatened by Instagram because photos are in fact the thin edge of the wedge of social networks. People spend a lot of time on sites viewing photos and FB doesn't like when people are spending time on other networks.

Re: Facebook acquires Instagram

#125

Post by peterb » Mon, Apr 09, 2012, 5:47 PM UTC

freehunter wrote: post #107

homosaur wrote: post #86

Earlier quoted context omitted.

YouTube is a content paradise though. There's tons of value there and you can sell ads against it or even charge for premium services. Where's the money in Instagram? The content is practically worthless and their only real value is in their userbase. Even though I use the Instagram client, most of the time I see photos, they come through Twitter. So that also reinforces for me that any value is in the users and not…

Facebook currently has very limited editing for their pictures. By acquiring a well-known and talented company, Facebook can roll this into their current offerings. I would be very skeptical that this was a user-driven move. I can't imagine a large percentage of Instagram users who are not also Facebook users, even if people posted a lot of Instagrams to Twitter.

I don't think Facebook would spend $1B for image editing. Image editing has well known and documented solutions.

Re: Facebook acquires Instagram

#126

Post by bbenvegnu » Mon, Apr 09, 2012, 5:47 PM UTC

gbog wrote: post #76

I just downloaded Instagram for Android the other day and wondered how to save pictures on my phone with this tool... apparently you can't, so yes, Facebook and them play in the same court: you don't own your things anymore.

you can save. at least on iOS, tou can.

Re: Facebook acquires Instagram

#127

Post by Toddward » Mon, Apr 09, 2012, 5:47 PM UTC

marcamillion wrote: post #96

Toddward wrote: post #26

Earlier quoted context omitted.

Quite a jump from the $500 million valuation they were shooting for last week[1]. [1] http://techcrunch.com/2012/03/08/no-filter-required-instagra...

I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…

I haven't been able to find anything anywhere that says they actually closed that round - merely that they were looking to raise money at that valuation.

EDIT: Open mouth, insert foot: http://techcrunch.com/2012/04/09/right-before-acquisition-in...

Re: Facebook acquires Instagram

#128

Post by marcamillion » Mon, Apr 09, 2012, 5:47 PM UTC

Some quick back-of-the-envelope math for how much the co-founders walked away with.

Assuming the first round of $500K was @ $2.5M valuation, giving those investors 20%. So the founders are left with 80%.

Further assume the 2nd round of $7M @ $20M valuation, giving those investors 35%. So the founders are left with 45%.

Further assume the 3rd round of $40M @ $500M valuation, giving those investors 8%. So the founders are left with 37%.

Also assume that the employee stock options pool is worth 10% of equity. Founders left with 27%.

There are two founders, according to Crunchbase [1], so assuming a 50% split for each founder, each founder has 13.5%.

At $1B, each founder walks away with a cool $135M in cash + Facebook stock (which is likely to appreciate significantly in a few months) - which is likely another reason they chose to go with FB as opposed to Google.

Not bad for 2 years worth of work.

[1] - http://www.crunchbase.com/company/instagram

Re: Facebook acquires Instagram

#129

Post by there » Mon, Apr 09, 2012, 5:47 PM UTC

gbog wrote: post #76

I just downloaded Instagram for Android the other day and wondered how to save pictures on my phone with this tool... apparently you can't, so yes, Facebook and them play in the same court: you don't own your things anymore.

Every picture you take with Instagram is saved on the phone. Take a picture, optionally apply a filter, hit next, but don't hit Upload. Go to the Gallery app and you'll see an Instagram folder with your filtered photo, and a copy of the original photo in the Camera folder.

Re: Facebook acquires Instagram

#130

Post by marcamillion » Mon, Apr 09, 2012, 5:49 PM UTC

nirvana wrote: post #118

marcamillion wrote: post #96

Earlier quoted context omitted.

I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times…

The acquisition was in stock and cash. So the VCs that put up the $50M may have just gotten $100M in pre-IPO Facebook stock, which may well dramatically increase their return post IPO.

Ahhh....good point. That does change the formula a bit, but even still...what's the likely 1 year return on pre-IPO FB stock? 3X if so much? I doubt it.

Anyway, it's better than 2X, so I guess they can't be pissed.