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Facebook acquires Instagram

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Re: Facebook acquires Instagram

#151

Post by huggyface »

tptacek wrote: post #133
huggyface wrote: post #122

Earlier quoted context omitted.

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 poin…

Apple takes 75 cents out of every dollar of profit in mobile. The second graf isn't worth responding to. I'm not as emotional about tech companies as you seem to be.

I was replying directly to the undercurrent of your message which is rather hard to miss.

"This seems ominous for Google...a shaky claim in mobile....what's left for them...sink tens of billions into mobile and still wind up on the bottom of the value chain...utterly outmarketed"

That's the TLDR version of you pulling Google into a relatively small acquisition of a largely irrelevant tool that a subset of one relatively small platform is even engaged in. Most people reading this story quite rightly react "Instawho?", whereas you see it as a clanging bell of doom for Google. And I'm the emotional one?

Re: Facebook acquires Instagram

#153

Post by kwamenum86 »

ChuckMcM wrote: post #146
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…

100% return in 3 months (it won't close to the end of the quarter) is an annualized 400% return. If you're a VC you took $50M out of a fund put back $100M, now you can make 2 bets at $50M when before you only had one. I don't see any way that this isn't a great deal for the VCs. That being said, this wasn't part of the S-1 and Facebook really has to tell potential investors how this will affect the financials, so pre…

When VCs make money they generally don't reinvest it, which is why they always look for 10x in the long term rather than 2x in the (very) short term.

Re: Facebook acquires Instagram

#154

Post by FireBeyond »

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…

And people say we're not in another bubble.

People through comments saying things like "well, VCs needed to double their investment - this lets them do it in a few months"

Wish I lived in a world where I should have expectations of a several hundred percent ROI on investments.

Re: Facebook acquires Instagram

#155

Post by tptacek »

huggyface wrote: post #151
tptacek wrote: post #133

Earlier quoted context omitted.

Apple takes 75 cents out of every dollar of profit in mobile. The second graf isn't worth responding to. I'm not as emotional about tech companies as you seem to be.

I was replying directly to the undercurrent of your message which is rather hard to miss. "This seems ominous for Google...a shaky claim in mobile....what's left for them...sink tens of billions into mobile and still wind up on the bottom of the value chain...utterly outmarketed" That's the TLDR version of you pulling Google into a relatively small acquisition of a largely irrelevant tool that a subset of one relativ…

I don't see anyone reacting "Instawho?", let alone doing so "quite rightly". Instagram is extremely popular. Stories about how Instagram's backend works have been at the top of the front page on HN for weeks.

I think you think this is some kind of Jets/Eagles thing here, and I'm wearing the green jersey. No. I don't have a side, and I don't think the competitive battle happening here is rational; I just acknowledge that it is happening.

Re: Facebook acquires Instagram

#157

Post by A-K »

It's nice to see that Zuckerberg's letter actually addresses some key concerns about Instagram's future--a courtesy I haven't seen offered by many recent "acqhirers". However, to echo several other comments, it'll be interesting to see to what degree the stated intentions are actually upheld.

Re: Facebook acquires Instagram

#158

Post by marcamillion »

ChuckMcM wrote: post #146
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…

100% return in 3 months (it won't close to the end of the quarter) is an annualized 400% return. If you're a VC you took $50M out of a fund put back $100M, now you can make 2 bets at $50M when before you only had one. I don't see any way that this isn't a great deal for the VCs. That being said, this wasn't part of the S-1 and Facebook really has to tell potential investors how this will affect the financials, so pre…

Well...if I am not mistaken, the way VC investing works is once an investment return is made - they have to distribute it back to the LPs immediately. They can't just "re-invest it" into other companies.

Unless those economics have changed, but I don't think they have.

It is in that light why I say, it seems a bit precarious. Essentially what would have happened is, these VCs would have contacted their limited partners and said, we have an investment we want to make - send us the money now (this is after the limited partners already committed to giving them that money). The LPs then wire the VC fund the money. The VCs then wire that money to Instagram.

3 months later, Instagram wires the money (assuming it was all cash, which we know it wasn't) back to those investors, which then have to wire the money back to their LPs. So technically, it doesn't REALLY help their portfolio as much as if they got a 10X return in a few years because the money was put to work for a shorter period of time.

Although, if you are 'annualizing' the return properly and assuming a 33% return each month, then the yearly return is actually 29X (compounded), but we digress.

Re: Facebook acquires Instagram

#159

Post by orblivion »

2pasc wrote: post #63
wavephorm wrote: post #48

That's an awful lot of money for a business that had no revenue and had no business model of any kind. http://windonaleaf.net/post/20464525754/instagram-perform-ad...

I agree...but the point was not about the revenues, the point was about making sure that when you think about photos - to share or to browse(which is the most used app on Facebook), you think about Facebook. The risk of being displaced by Instagram on that crucial activity was too high for Facebook.

So Facebook is like giant a rail company in the late 1800s.

Re: Facebook acquires Instagram

#160

Post by [deleted] »

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…

[deleted]
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