Apple used to be king of the world until they almost went belly up. Yahoo was the big the thing now they are sinking. Rimm 5 years ago was woth 70 bil they might be gone in a couple years. AOL was worth a 100billion. If you don't think Google could become an also ran then you can keep saying pee-pee over and over. Tech is a fickle beast you always got to be coming up with something or buying the next great thing. Probably 80% of apple market cap are derived by products made in the last 5 years.
Why, may I ask? That company wasn't adapting to digital fast enough. Instagram WAS digital from the get-go, albeit just "an app". Also, you're comparing Mercedes Benz to Saturn, in my opinion.
Tech is not only fickle but people don't really understand it. I seriously do not understand all these people evaluating these companies so high. Look at these list of companies. I fear this is just the start of this mass social media/tech bubble again. Instagram - 1 bn Angies list- 828 M Yelp- 1.47 bn Groupon -8.63 bn Twitter - last year eval around 7-10 bn Facebook - 100 bn Pandora - 1.4 bn Linkedin- 10.16 bn Zynga- 8.10 bn
Did Facebook pay with stock for the most part? They are probably over valuing themselves and used that to make a purchase.
Let's say the founder and investors get 80%. The other 11 engineers split the difference. $200MM/11 = $18MM each. Not bad for two years of work in a Company that has not made any money.
Instagram is r****ded. I downloaded the app, used it briefly (i.e. a day), than stopped. I want my pictures, generally, to look like real life. To each their own. i understand they have 50 million downloads and probably a large portion of active users, and that if/when they wanted to turn on the advertising spicket there'd be a lot of cash potential there, but $1 billion? Really? For a company with no revenues? For a company where a meaningful % of the users are likely to move onto a completely different/new app instead of be "happy" about the facebook acquisition? It was an overpay. As clear as day when you look at the valuation from Sequioa last week, and how quickly this deal got done. Zuck threw out a huge number, they said yes, documents done, deal signed. Pinterest appears to be the real new player, and a company with legitimate value. It apparently already does better than Facebook/Twitter when it comes to click-through rate... which makes sense, it's a social network built around people "wanting stuff". I have not signed up for it and don't plan to - I don't really "want" much, but it at least appears to have a credible business model.
They didn't buy it for the product - they bought it for the userbase. First mover has a huge advantage in this industry. The product itself is easy to re-create, but the 30 million userbase is not. It would be expensive and difficult to get all those people to switch from Instagram to FB's own version of it, so instead they just bought it out to bring all those people under their umbrella. In addition, Instagram is used to post pictures to competitors like Twitter and G+. So Facebook now has direct access into that distribution channel - that data they'll collect is huge for them in better understanding their competition and maybe driving more people towards using FB over the others.
Anyone with a basic knowledge of photoshop could replicate those effects in under thirty seconds. Not to mention there is no limit on what you can do with photoshop. Amateurs with instagram (I only use it to upload camera picture which aren't worth it to blow up and edit)!
It's Ziggy's favorite word to post on CluthFans. It is kinda r****ded and way overused, but whateve's.
What I don't get is what they spent their VC money with so few employees. No way UI and PR cost 10 million.
