Facebook acquires Instagram • Hacker News Board

Re: Facebook acquires Instagram

#191

Post by fleitz » Mon, Apr 09, 2012, 6:39 PM UTC

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…

At the standard 2 and 20 it's a really great deal. Assuming this was a one time sort of fund from the LPs as other posters have suggested. The VCs are looking at putting $12 million in their bank accounts in 2 months.

Re: Facebook acquires Instagram

#192

Post by psb217 » Mon, Apr 09, 2012, 6:41 PM UTC

kposehn wrote: post #169

So, 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…

Zuckerberg's statement that Facebook will keep Instagram alive and kicking seems likely to prove honest but disingenuous.

Instagram, in providing a photo sharing experience (at least) on par with Facebook's, spanning multiple "social platforms", facilitates user migration across these platforms. In the current context, any user migration between social platforms would (almost) inevitably dilute Facebook's share of user-time.

Thus, it seems reasonable for Facebook to acquire this possible avenue of departure and generally maintain its current state (i.e. Zuckerberg's statement is honest) while guiding future evolution of Instagram's product to subtly guide the flow of users along "Instagram Avenue" towards Facebook, rather than in its current unbiased direction (i.e. Zuckerberg's statement is disingenuous).

Though useful from a business perspective, this sort of defensive acquisition is discouraging to me. I would prefer to see the evolution of "social" in general towards an open protocol for maintaining the actual useruser graph structure and piping of information along it, with a loose confederation of services such as Instagram providing the content hosting/delivery. This would decentralize control of people's social graphs, with control being restricted to subsets of the shared content and its flow over the graph, rather than the actual graph structure itself. I.e. market-driven services such as Instagram would compete to control portions of the infrastructure implementing this new construction, which one might call the "world wide (social) web".

TLDR: Facebook's purchase of Instagram permits them to simultaneously reduce the instantaneous rate of user migration across social platforms while preventing the emergence of a competitive open social platform/protocol, the evolution of which would be greatly facilitated by the prior existence of third-party social content infrastructure such as Instagram, which reduce the size of the "chicken and egg" problem confronting any attempt at an open platform.

Re: Facebook acquires Instagram

#193

Post by marcamillion » Mon, Apr 09, 2012, 6:42 PM UTC

FireBeyond wrote: post #154

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…

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.

You are just seeing the good cases here. A 10X return on any one investment pays for all the bad investments. If I remember correctly, the return that Sequoia got on their YouTube investment paid for the entire portfolio many times over.

But more importantly than that, I think it was one of a very few that were good in that fund. I believe that particular fund was particularly bad because it contained remnants of the dot com bust - so only 1 - 3 of their investments in that fund were profitable, and only 1 was enough to pay for the entire fund.

I am not remembering EXACTLY so my numbers may be a bit off...but you can just imagine how annoying it must have been to be a partner in a fund and be telling your LPs that you have essentially lost all their money - and thinking about this for the entire 10 year life of that fund.

Just for at the last minute, almost literally, all of that changes.

People don't think about it, but it's not easy to be a VC.

Re: Facebook acquires Instagram

#194

Post by Steko » Mon, Apr 09, 2012, 6:43 PM UTC

jonursenbach wrote: post #39

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...

Wonder if there was a bidding war between FB and Google that caused it to double off of that.

Obligatory Google+ momentum check:

http://www.google.com/insights/search/#q=Google%2B%2CInstagr...

"Mr. Silbermann, Larry Page is on line 1"

Re: Facebook acquires Instagram

#195

Post by ary » Mon, Apr 09, 2012, 6:46 PM UTC

ben1040 wrote: post #152

ary wrote: post #93

Unfortunately you still have to write in to cancel your Instagram account.

I just canceled mine five minutes ago with this form: https://instagram.com/accounts/remove/request/

Out of curiosity where did you find that link? I must have missed it when I checked the site.

Re: Facebook acquires Instagram

#196

Post by TomGullen » Mon, Apr 09, 2012, 6:48 PM UTC

marcamillion wrote: post #128

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…

Why do you think the FB stock is likely to appreciate significantly in a few months? If you really believe this, I assume you've just invested a significant chunk of your net worth into FB stocks?

Re: Facebook acquires Instagram

#197

Post by drpancake » Mon, Apr 09, 2012, 6:50 PM UTC

27 million iOS users + 50 million projected Android users means that this cost them roughly $13/user.

Re: Facebook acquires Instagram

#198

Post by admiralpumpkin » Mon, Apr 09, 2012, 6:51 PM UTC

untog wrote: post #135

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…

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.

This is untrue, but often assumed.

Total iOS devices: 315M (as of 2012-03-07) Total Andriod devices: 300M (as of 2012-02-29)

http://techcrunch.com/2012/03/07/tim-cook-talks-ios-device-s... http://www.guardian.co.uk/technology/appsblog/2012/feb/29/an...

Android is selling faster, but it has yet to have a larger installed base. It will likely happen soon, but iOS had a large lead in terms of start time and the iPad is killing in the tablet market.

Obviously there are many factors which will adjust the true installed base (broken devices, devices no longer update-able, etc.).

Re: Facebook acquires Instagram

#199

Post by _delirium » Mon, Apr 09, 2012, 6:53 PM UTC

marcamillion wrote: post #148

redthrowaway wrote: post #67

Earlier quoted context omitted.

I think something like that had to have happened for the valuation to get so high. Apple may have been in the hunt as well, given their propensity for acquiring popular iOS apps and rolling the functionality into vanilla iOS.

The valuation wasn't all that high. It was just twice that of the last round. In order for the investors that just came in to get any sufficient return on their investment, they had to at least double their money. Ignore, for a second, that it was just 1 month (or 1 night as Techcrunch suggests) - it doesn't matter. The purchase price is usually determined based on the latest round of financing.

The $500m-valuation round happened so close to the buyout, though, that it's quite possible the investors in that round knew of pending offers, which then increased the valuation. So if that round's valuation itself then increased the buyout's valuation, that's a neat bit of circularity.

Re: Facebook acquires Instagram

#200

Post by ben1040 » Mon, Apr 09, 2012, 6:55 PM UTC

ary wrote: post #195

ben1040 wrote: post #152

Earlier quoted context omitted.

I just canceled mine five minutes ago with this form: https://instagram.com/accounts/remove/request/

Out of curiosity where did you find that link? I must have missed it when I checked the site.

The first few hits on a google search for "instagram cancel" indicated you had to write in, but then I found this.

http://help.instagram.com/customer/portal/articles/95760