MaverickM11
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Instagram Worth $1B? How?

Tue Apr 10, 2012 3:08 am

First of all, congrats to everyone at instagram. From WSJ:

"On Monday, the two twenty-somethings said they sold their photo-sharing service—which has about a dozen employees and no revenue—to Facebook Inc. for $1 billion in cash and stock."

But how does anyone, either on the Facebook side or Instagram side come up with a valuation of $1B for a firm of a dozen people, with no revenue, that helps people swap pictures?
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BMI727
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 3:20 am

Quoting MaverickM11 (Thread starter):
But how does anyone, either on the Facebook side or Instagram side come up with a valuation of $1B for a firm of a dozen people, with no revenue, that helps people swap pictures?

You guess. That's how the first tech bubble happened and why some people think we are seeing a second one now. Building a popular website, app, or web service is one thing. Building a popular website, app, or web service that makes money is something else.

Quoting MaverickM11 (Thread starter):
First of all, congrats to everyone at instagram.

  
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Tugger
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 5:11 am

Quoting BMI727 (Reply 1):
You guess.

Or you red up on what is out there on the issue:

Quote:
Does Facebook really need better targeting for its ad platform? Possibly not -- it's already quite good. But what Facebook likely could not abide was this level of information going to a competitor. By wrapping up Instagram's users, Facebook ends up (it hopes) owning the lion's share of social information about mobile photos.

The billion-dollar transaction shows that Instagram had the power in this negotiation, and more than one suitor. The company only last week raised $50 million at a $500 million valuation. The 2x premium that Facebook paid over this indicates that Facebook may have locked in a bidding war for the startup. Other companies that could have used Instagram's focus and user base include Google, Apple, Microsoft, and Yahoo, although that last company would have had a hard time justifying a big buy in light of its current restructuring.
http://news.cnet.com/8301-19882_3-57...-down-$1-billion-to-buy-instagram/

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moo
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 7:54 am

It's the captured subscriber base that has the value.
 
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 11:20 am

Quoting moo (Reply 3):
It's the captured subscriber base that has the value.

Yep, we're not the customers, we're the product.
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moo
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 11:36 am

Quoting Revelation (Reply 4):
Yep, we're not the customers, we're the product.

The rule always is "if you aren't paying for it, you *are* the product".

Simple enough really.
 
Flighty
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 12:16 pm

Facebook has the most valuable 10% of the globe signed up to it. Their eyeballs are looking at it. The income of those people must be over 10 trillion dollars a year.

It wouldn't be surprising that there is real money in the facebook industry. Facebook could employ a million people and I would not be surprised. So, it's a mega-industry in the making.
 
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 4:27 pm

Quoting Flighty (Reply 6):
Facebook has the most valuable 10% of the globe signed up to it. Their eyeballs are looking at it. The income of those people must be over 10 trillion dollars a year.

And Facebook knows they took the place of MySpace who took the place of Yahoo who took the place of AOL ad infinitum.

Their thinking must be that they don't want to be the next internet has-been.

They feel vulnerable in the area of mobile apps, especially ones that let you post pictures, so they overreacted and spent $1B for Instagram.

There's now 10 very happy and very lucky Instagram employees out there, and probably a billion app writers hoping Zuck gets a hard-on for their app.
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moo
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 4:36 pm

Quoting Revelation (Reply 7):
And Facebook knows they took the place of MySpace who took the place of Yahoo who took the place of AOL ad infinitum.

The difference is in how entwined users were in each of those services prior to Facebook, and how entwined they are in Facebook. MySpace didn't really offer the engagement that Facebook does, 99% of people used it as a personal website rather than anything group orientated, which is why it was so easy for people to switch to Facebook.

Moving away from Facebook means you now move away from your interconnected group of friends, and have to rebuild that setup on a new service - basically, Facebook has critical mass these days because its so hard to move away.
 
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 4:48 pm

Quoting moo (Reply 8):
Moving away from Facebook means you now move away from your interconnected group of friends, and have to rebuild that setup on a new service - basically, Facebook has critical mass these days because its so hard to move away.

Agreed, but the real point is that FB has no idea what's next. FB may be hard to move away from, but if something comes along worth it, people will indeed move, and they know it.
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Flighty
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 7:20 pm

Quoting Revelation (Reply 9):
Agreed, but the real point is that FB has no idea what's next. FB may be hard to move away from, but if something comes along worth it, people will indeed move, and they know it.

Hard to imagine, but I still agree with you. New things will come. Facebook has almost taken a permanent position alongside email, postal mail and cell phone. *almost.* It's almost something a human needs to have. But we're only 5 years in so really who knows.
 
Alias1024
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RE: Instagram Worth $1B? How?

Tue Apr 10, 2012 8:16 pm

Quoting Revelation (Reply 7):
And Facebook knows they took the place of MySpace who took the place of Yahoo who took the place of AOL ad infinitum.

Their thinking must be that they don't want to be the next internet has-been.

They feel vulnerable in the area of mobile apps, especially ones that let you post pictures, so they overreacted and spent $1B for Instagram.

This

Facebook is easily the biggest photo sharing site on the internet. What would happen to it if Google had bought Instagram and it's intellectual property? Suddenly Instagram might be a feature of Google+ and would be used to drive users away from facebook toward Google+. The purchase of Instagram is about facebook protecting its userbase from poaching by other social networking sites.
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CXfirst
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RE: Instagram Worth $1B? How?

Fri Apr 13, 2012 1:10 am



I bet it was so Zuckerberg could do this.

-CXfirst
 
QFA380
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RE: Instagram Worth $1B? How?

Sat Apr 14, 2012 8:19 am

A billion dollars seems like an extreme amount, congrats to the guys at instagram though, making a billionaire with an incredible empire tremble in his shoes isn't very easy. Zuckerburg really didn't have much choice with this and the instagram people would have pretty much written their own cheque.

Quoting moo (Reply 8):

The difference is in how entwined users were in each of those services prior to Facebook,

It has become sort of like eBay, where it is really the only dominant player, people don't bother with other auction sites because they know eBay will have the most options, they have spent years building a bank of feedback and the website hasn't changed dramatically that alters the user experience too much, just like Facebook, people have 5 years of their lives recorded in dramatic detail. People don't just throw away their history for the new flavour of the month.

However anecdotally I have seen Facebook decline somewhat, while I and most of the people I know still use it, collectively we spend less time using it, this is as we graduate and start making money, just the time Facebook would like us to spend more time on it. There is always less and less people posting statuses, uploading photos or chatting online than there used to be, despite having more facebook friends.
 
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RE: Instagram Worth $1B? How?

Sat Apr 14, 2012 5:58 pm

Quoting Alias1024 (Reply 11):
Facebook is easily the biggest photo sharing site on the internet. What would happen to it if Google had bought Instagram and it's intellectual property? Suddenly Instagram might be a feature of Google+ and would be used to drive users away from facebook toward Google+.

I'm really wondering about Google's strategies. From what we've all been reading lately, Google has become internally obsessed with competing with Facebook, but it really is not getting much traction. All of its "properties" such as Google itself, YouTube, Picasa, etc are not seamlessly integrated. Perhaps Google+ does that, but like most of us, I don't use Google+!

Quoting Alias1024 (Reply 11):
The purchase of Instagram is about facebook protecting its userbase from poaching by other social networking sites.

Yes, and it's interesting how most people are saying they hope Instagram doesn't change, but FB will be leaving lots on the table if they don't leverage its technology and do even tighter integration with FB.

Quoting QFA380 (Reply 13):
It has become sort of like eBay, where it is really the only dominant player, people don't bother with other auction sites because they know eBay will have the most options, they have spent years building a bank of feedback and the website hasn't changed dramatically that alters the user experience too much, just like Facebook, people have 5 years of their lives recorded in dramatic detail. People don't just throw away their history for the new flavour of the month.

That highlights a problem - users don't want the product to change, but if the product doesn't change, it stagnates. In particular, by going public you become beholden to investors, and those folks aren't happy with you just being the best auction site, or search engine, or social network, they want more, more more, and that means changing the product.

Quoting QFA380 (Reply 13):
However anecdotally I have seen Facebook decline somewhat, while I and most of the people I know still use it, collectively we spend less time using it, this is as we graduate and start making money, just the time Facebook would like us to spend more time on it. There is always less and less people posting statuses, uploading photos or chatting online than there used to be, despite having more facebook friends.

Yeah, I think FB is done, because after holding out for years I just joined!

The reason I joined is to keep in touch with relatives, which is fine, but also isn't super exciting either.

It probably is a good time for FB to IPO, so the principals can cash in, and so it can officially transition from growth/hype phase into mature/stagnant phase.
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Goldenshield
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RE: Instagram Worth $1B? How?

Sun Apr 15, 2012 10:37 am

Quoting Revelation (Reply 14):
I'm really wondering about Google's strategies. From what we've all been reading lately, Google has become internally obsessed with competing with Facebook, but it really is not getting much traction. All of its "properties" such as Google itself, YouTube, Picasa, etc are not seamlessly integrated. Perhaps Google+ does that, but like most of us, I don't use Google+!

Google+ is not really out to compete with Facebook as a whole. While they both look similar on the outside, there's a clear deliniation between the two services: Facbook is a social service, and it's all about friends. Google+ is an interest-based service, and it's all about sharing information between like-minded people. Thus, with Facebook, it's who you know; with G+, it's WHAT you know.
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RE: Instagram Worth $1B? How?

Sun Apr 15, 2012 2:42 pm

Quoting Goldenshield (Reply 15):
Facbook is a social service, and it's all about friends. Google+ is an interest-based service, and it's all about sharing information between like-minded people. Thus, with Facebook, it's who you know; with G+, it's WHAT you know.

Then it's a losing strategy - a lot of people don't know much, and many who do want to give it a rest when they are sitting on the sofa with their laptop or tablet.

Thanks for the explanation though. Maybe I'll give it a try.
Inspiration, move me brightly! Light the song with sense and color.
Hold away despair, more than this I will not ask.
Faced with mysteries dark and vast, statements just seem vain at last.
Some rise, some fall, some climb, to get to Terrapin!
 
Goldenshield
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RE: Instagram Worth $1B? How?

Sun Apr 15, 2012 2:55 pm

Quoting Revelation (Reply 16):
Then it's a losing strategy - a lot of people don't know much, and many who do want to give it a rest when they are sitting on the sofa with their laptop or tablet.

With how the circles work, one can post to specific groups depending on the need, if they don't want the post declared as public, and going to everyone in their circles. I follow webcomics, and thus, I follow a WebComics circle, and an artists circle. I also follow some musicians and pop icons. There's over 500 people and pages that I follow, of which 10% maybe post on a regular basis. Of course, it's not who I know here, but what they post that interests me. The best part is that they don't have to circle me back for me too see their feed.

G+ isn't only for intellectuals---and there are plenty of those on there. It's also for interests, and hobbies, and those that like them.  
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TIA
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RE: Instagram Worth $1B? How?

Sun Apr 15, 2012 5:38 pm

I don't get why people keep putting all these inflated values on these new internet startups. That includes Facebook's current valuation. Look what happened to the last internet darling that went for an IPO. Groupon is trading at half its initial price, at a time when the market is up.
 
Pyrex
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RE: Instagram Worth $1B? How?

Sun Apr 15, 2012 6:48 pm

WTF is an instagram?
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Maverick623
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RE: Instagram Worth $1B? How?

Sat Apr 21, 2012 6:08 am

How?

Because that's what Facebook was willing to pay for it.

I'll tell ya this though: anyone dumb enough to put any money into Facey-space is never going to see that money again. This is Tech Bubble 2.5.
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