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Facebook acquires Instagram

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Re: Facebook acquires Instagram

#311

Post by JoeCortopassi »

I think the point that everyone is missing here, is how heavily integrated Instagram is in non-Facebook social networks (i.e. twitter and Flickr). Yes, part of the valuation was due to Instagram being an up and coming social network. But the main value of this acquisition comes from the fact that, with this single purchase, Facebook is able to leverage multiple social network's userbases into their own.

From captain Zuck's post on Facebook "We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience." (https://www.facebook.com/zuck/posts/10100318398827991)

Re: Facebook acquires Instagram

#312

Post by enfoster »

untog wrote: post #81
jc4p wrote: post #23

Earlier quoted context omitted.

Most of Instagram's "technology for handing photos" uses S3, as described in previous Instagram tech blog posts. Instagram however has a massive big data structure which would lead to any big company getting high value out of them. Why use the tools they open sourced last week to improve your reliability if you can just acquire the entire team?

I'm pretty sure that Facebook has "handling a lot of photos" sorted: http://gizmodo.com/5841667/facebook-photo-library-dwarfs-eve...

the thing is that they don't have it sorted. Trying to do any sort of photo management(move, delete, edit) in Facebook is a pain and I always receive database errors thrown back at me.

Re: Facebook acquires Instagram

#313

Post by Domenic_S »

dkrich wrote: post #292
Domenic_S wrote: post #260

Earlier quoted context omitted.

> if they can average 50% gains over the course of a year That's the point, this isn't what happened. Given the choice between 2x return in 2 months or 10x return in 120 months, there's no contest at all. That initial investment that returned 2x is now out of play for the life of the fund. If the fund's life is 10 years, the return is 1.1x, not 2x.

Okay, you go ahead and bet on the companies that will pay you a 10x return in ten years and I'll take the 2x return in two months. Will Instagram even exist in 10 years? Who knows? I wouldn't bet on it. BTW, you're absolutely right. The 2x return extrapolates to a return of trillions of dollars over ten years, so there really is no contest at all. It doesn't matter if you run a hedge fund, a VC fund, or a trust fund.…

> It doesn't matter if you run a hedge fund, a VC fund, or a trust fund. A 2x return is a 2x return, and anybody would take it any day. Anybody who wouldn't has no business working in finance. Just because you assign a ten-year time frame to your portfolio does not diminish the return on that investment, so the return on your $50mm is 2x, not 1.1x.

This is your key misunderstanding. When the fund starts, you lock up the money for a specific amount of time (say, 10 years), and once the money's been in, it can't go in a second time. So if you're near the beginning or middle of the fund, and the fund was In other words, it does diminish the return on that investment, because that $50MM is now out of play. Every dollar gets one shot of multiplying, and when it's done it's done, as far as the fund is concerned.

If the fund is near the end of its life and for some odd reason they still have $50MM sitting in it, then yeah, it'd be a great move.

Re: Facebook acquires Instagram

#314

Post by gbog »

there wrote: post #129
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.

You are right, I was wrong: didn't see this folder.

Re: Facebook acquires Instagram

#315

Post by sbarre »

tanish2khn wrote: post #188
freehunter wrote: post #107

Earlier quoted context omitted.

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.

one, instagram has brilliant team which also include creative people and not only tech. two, very high yet active user base. three, which is purely on business value - the cumulative time spent in the mobile app of 30 million active instagram users, when you add up, will give more revenue in facebook ad in the following years. i would say, facebook played safe here in trying to regain the usage time.

In other words: get ready for ads in your Instagram feed? ;-)

Re: Facebook acquires Instagram

#316

Post by erikpukinskis »

knowsnothing613 wrote: post #208
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…

yeah, but they paid $1 BILLION dollar for a company with NO business model. This buy was just another way for connected Silicon players to cash out on the facebook IPO, since the IPO window for web 2.0 is closed.

They have a business model: filters that cost money.

Re: Facebook acquires Instagram

#317

Post by sbarre »

georgespencer wrote: post #307
achompas wrote: post #181

Earlier quoted context omitted.

Instagram is a photo service in a sea of other photo services. You're mischaracterizing Instagram. It's not "a photo service," it's the photo service. 30M iOS users plus 1M new Android users in 12 hours. [0] Instagram is the main mobile photo app. With this purchase, Facebook strengthens their mobile position the way Google strengthened their content position with YT. The acquisitions are very similar. (edited for a…

It isn't the photo service: Facebook. Flickr. Picasa. Imageshack. Twitpic. Imgur... To name a few. Instagram doesn't have more users than Facebook. Hell, it doesn't even have more users than Flickr (51m) or Photobucket (50m). Instagram is a small part of the web photo ecosystem. It's a very peculiar play by Facebook, and not at all comparable to Google & YouTube other than the fact that Google acquired YouTube, and F…

I think he's talking about the mobile space specifically..

And to go further: I have a Flickr account, I have some Picasa galleries.. I rarely visit those sites except to upload a batch and then go elsewhere.

I use Instagram 5-10 times daily when in transit, on lunch, while watching TV, etc...

Re: Facebook acquires Instagram

#318

Post by mikekij »

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…

Angel / Series A investors are shooting for 10X. VCs hope that investments in more mature companies with users, revenue, etc. get 2-3X. I don't think any of the VCs that invested last week are bummed on 2X in 5 days.

Re: Facebook acquires Instagram

#319

Post by TomGullen »

marcamillion wrote: post #201
TomGullen wrote: post #196

Earlier quoted context omitted.

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?

Well.....FB is the poster-child of tech exuberance right now. Everybody uses Facebook. Many of those users will likely want to buy the stock - not for any sophisticated investment thesis. But because they want to own what they use. That will likely push up demand for the stock in the short-term, thereby the price. Aside from that, we have never seen a service have 800M users and still growing at the rate that FB is g…

Sorry if I came off crass, my point is that people throw 'stock tips' like this around without care and it's generally bad advice and you have to understand some people reading it may act on it.

Someone could read what you wrote and buy stock when your actual reasoning is simply because you think the public are going to get excited and buy the Facebook stock because they use it, along with the big assumptions that a) this wont already be reflected in the price and that b) these people who are buying the stock will have a meaningful impact on a $100b cap company with a 'significant' increase in price.

These are not the best assumptions and reasons to state that it's highly likely that FB stock will significantly increase. Every time I hear someone say something like this I have to ask how much of their own wealth they've stuck out on the line because more often than not it's nothing.

Re: Facebook acquires Instagram

#320

Post by kooshball »

omfut wrote: post #203
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…

According to wired, Kevin Systrom owned 40%, while mike owned 10%. http://www.wired.com/epicenter/2012/04/facebook-buys-instagr...

Those figures are from 2011 though. I assume they would have gotten diluted from the final round last week.
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