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Facebook acquires Instagram

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Re: Facebook acquires Instagram

#271

Post by garry »

tptacek wrote: post #265
3pt14159 wrote: post #206

Earlier quoted context omitted.

You are not accounting for liquidation preference correctly. When someone gets a 1x liquidation preference first they get their money back, then they get an equal portion to what is left . So in the case of the 3rd round, first they got their $40M back, but they retained 8% of the pool. Same with the 7M etc. Call it $50M off the billion right off the bat, leaving 950 million. Doesn't really dent the number (reduction…

Aren't you describing participating preferred stock? That's not a universal deal term, and Instagram didn't seem to have much trouble raising.

Yes, what they are describing is participating preferred, not liquidation preference.

Re: Facebook acquires Instagram

#272

Post by [deleted] »

mattmanser wrote: post #209
marcamillion wrote: post #193

Earlier quoted context omitted.

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…

You need some serious perspective, they just got 2x return in a few months. They can, I don't know, re-invest the money perhaps? And you're cherry picking out one of many Sequoia funds (and still a successful one at that) to point at to call VC life hard? A dot-com period fund as well? How many other hit funds have they had? Sequoia estimates that 19% of the NASDAQ’s value is made up of firms they have funded.

[deleted]

Re: Facebook acquires Instagram

#274

Post by dacilselig »

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…

I remember people saying the same thing about Youtube and that Google will not be able to profit off of it's purchase.

Re: Facebook acquires Instagram

#275

Post by zbuc »

unreal37 wrote: post #248
dirtyaura wrote: post #232

Earlier quoted context omitted.

Google bought YouTube for $1.65B when YouTube didn't have business model. It was critiqued a lot because of this, but it established Google as a dominant player in video space and it's ripest fruits might be seen in coming years when media consumption moves more and more to mobile. I grant that $1B sounds a lot for Instagram and it is harder to see similar commercial value in photos than in videos. My personal take i…

Trust me, Youtube is very profitable. Major multi-national brands have to pay $100,000's in Google Adword purchases to have their own branded channel. And if you want to change the look of your channel? Pony up another $100K.

It is very profitable now, however it wasn't when the purchase was made -- therefore it was a wise decision.

Re: Facebook acquires Instagram

#276

Post by marcamillion »

tptacek wrote: post #38
benologist wrote: post #33

Earlier quoted context omitted.

They probably did to protect themselves... instagram was growing like crazy, last thing FB needs is another giant network to share people with.

That's my thought too. Instagram has a plausible claim on all mobile photo sharing, and there's a strain of thought that suggests that 80% of the value of Facebook is photo sharing. Instagram might be a bit too much of a free radical for Facebook to let float around the market.

Or even worse...end up in Google, Apple, MSFT, Amazon, or anyone else's hands.

This was purely defense just like YouTube, and Diapers.com & Zappos for Amazon.

Brilliant move all-around.

In a few years, this price will seem like a steal...much like the $1B that Yahoo proposed for FB a few years ago seems laughable now.

Re: Facebook acquires Instagram

#277

Post by EGreg »

Oh man. I could have made a billion dollars by making stuff like this. Instead I am building a long term value company like Apple. Steve Jobs may have been proud. :)

Re: Facebook acquires Instagram

#280

Post by pmarsh »

I am not an Instagram user, but after checking it out on my Android though it seems like if FB was playing keep away it was more likely to be trying to keep it out of Twitter's hands.
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