Call me paranoid but for them to spend $1 billion on this silly thing tells me they think there are big profits to be made with facial recognition data.
Facebook acquires Instagram
171–180 of 394 posts
Re: Facebook acquires Instagram
#172Earlier quoted context omitted.
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.
Well... 1B is an amazing amount of money, but it is "just" 1% of Facebook post IPO value. What are the odds that Instagram growing more and more, the market freaks out, and Facebook stock loses 3-4% in a few weeks. Facebook buying Instagram is an insurance against this bumpy ride happening, and at a price much less that what it would be on the stock once Facebook becomes public.
Re: Facebook acquires Instagram
#173"Sell to Goole" era is ending. "Sell to Facebook" era is beginning.
google~~
Re: Facebook acquires Instagram
#174Earlier 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…
Like everyone else already said, VCs can't reinvest so they dont really want 2x returns.
Anyways, there's a excellent blog post that explains this very clearly. It is written for founders to understand the VC's perspective when investing. Does anyone know what I"m talking about?
Re: Facebook acquires Instagram
#175Some 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…
I'm not sure that your numbers account for share dilution. Let's assume the employee stock pool is 10% before any funding is raised so the founders start with 90% and the employees 10%. Assuming your numbers above are correct, the founders are left with 72% after the first round of investment (500k at 2.5m = 20%) and the employees are left with 8% (think 72 + 8 + 20 = 100). The second round of investment takes 35% of…
You may be correct.
I was just doing some rough calculations to show an approximate 'low-figure' of their take.
It is very possible and likely that they took away much more (because all of the variables could have changed).
For instance, that first $500K round could have been convertible debt which would have converted in the $20M round. If that's the case, then those investors ended up with 2.5% instead of 20%. That drastically changes the math and gives the founders more equity and a better outcome.
Re: Facebook acquires Instagram
#176Re: Facebook acquires Instagram
#177This 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…
This seems ominous for Google, which spent $12.5bn for Motorola to stake a shaky claim in mobile I was under the impression that Google paid that price (and, indeed, bought Motorola at all) for patents. Google is doing just fine out of Android. iOS may be better marketed, but there are a hell of a lot more Android phones out there.
> Google is doing just fine out of Android.
By what metric?
> iOS may be better marketed, but there are a hell of a lot more Android phones out there.
Yes. And Google has made more money out of those fewer iOS phones than it has from the many Android phones.
Re: Facebook acquires Instagram
#178So, I found something very interesting in Mark Zuckerberg's post about acquiring Instagram: > we're committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people. Facebook has always integrated whatever it purchased (that I know of) very tightly into the core…
They sort of did it with Beluga- it became "Facebook Messenger" but was never integrated into the main app. At the time I was confused as to why they'd do that, but if you think of it as a replacement for the stock "Messages" app, and Instagram for "Camera" then it all starts to come together.
Re: Facebook acquires Instagram
#179Facebook should buy extragr.am as well the best web UI for instagram
Ok downvoters, not asking for a billion dollar valuation, just saying it was a good match with instagram
Re: Facebook acquires Instagram
#180I had been wondering how a product like Instagram would ever make money. Now we'll never find out. I guess traction really does trump all other business metrics.
path seems to be experimenting with in-app purchases for additional photo filters.