Four Immediate reasons why this is crazy.
1. Instagram completed a Series B Round from Sequoia for $50 million...at a valuation of $500 million.
2. According to Techcrunch, the $50 million (60 million according to Business Week) from investors was WIRED LAST THURSDAY, only to see it doubled the next business day (not counting Good Friday)
3. Why would Instagram employees dilute their equity if Facebook was in the process of acquiring them. Or did they not know. Or was it really spur of the moment...
4. Lastly, Instagram valued themselves at $500 million using Sequoia, which you bet your ass included some premium to account for the android app, rapid growth, and die hard customer loyalty. And ONE WEEK LATER FACEBOOK BUYS THEM FOR $1 BILLION!?!?!?!
Now there has been a lot of interesting things said from the community, with most of the negative commentary obviously getting more attention than the people who had positive (and somewhat logical) things to say.
--- My favorite Quote of the day came on twitter, which people saying how absurd it was that Instagram was acquired for $1 billion after 551 days while New York Times, which was 116 years old, was worth $967 million.
My Opinion - New York Times is in a dying industry, Instagram is in the fastest growing industry in the world. Also, remember Facebook & Google? Yea they've been here for a decade and are worth $100 Billion and $205 billion respectively.
---Second thing I heard was the gazillion people who use instagram making empty threats about deleting their accounts and such:
My Opinion - You are not going to delete your Instagram account. They will still be running as an independent app just like Youtube/Google or Zappos/Amazon. Just because the "Yankees" (as someone coined Facebook) acquired one of your favorite sites does not mean you are going to hate it. Unless of course you are Johnny Damon/Roger Clemens (I'm a Red Sox fan so it's okay). If you truly love the site, Thank the founders for making such a cool site, and congratulate them on becoming the newest multi-millionaires.
---Another thing I heard was about Facebook getting a deal since they were really paying a couple of bucks per user (~30 million users at $1 billion = $33.33)
My Opinion - Not Entirely True. In my very, very rough estimates (as in my friends on Facebook), I would say about 15-20% have Instagram accounts. So really, how many NEW users are they getting. What they are really getting is a very, very successful mobile photo sharing app/website which is what they more or less failed at doing. They are also getting die hard users, something I think Facebook lacks. Also, in the scheme of things, whats 30 million users to the 800+ million Facebook has currently
---There was a link I posted earlier about how Facebook is in the process of suing Yahoo using 10 patents, most involving the photo sharing programming/process. This acquisition can help, since Instagram is waging a sort-of war with Flickr when one thinks of specialized photo-sharing websites, and Flickr is owned by Yahoo.
---What Mark Zuckerberg (CEO of Facebook) Said about the acquisition:
"For years, we’ve focused on building the best experience for sharing photos with your friends and family. Now we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.
We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram’s strengths and features rather than just trying to integrate everything into Facebook.
That’s why 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."
From Zuckerberg's comments, and Facebook's side, this looks like an okay deal to me. They know they can be doing a better job with sharing photos, and for years Zuckerberg has said his main goal is to help people share their lives (photos). This will help them crack into the mobile photo sharing market.
From Instagram's point of view, they still get to be independent and they keep their name. They get support and reassurance from one of the biggest and best companies in Silicon Valley (and World?). They now have 800+ million facebook users that can help grow Instagram to crazy new heights.
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Taking a step back, one must hand it to the people of Instagram. 13 employees. 15 months. $77 million per employee. $1 Billion dollars. They did it while doing what they loved, and really, what more can you ask for?
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