Facebook acquires Instagram

https://www.facebook.com/zuck/posts/10100318398827991

by hunterowens • 14 years ago

837 369 14 years ago

jc4p2• 14 years ago

It's a little too late for April Fool's isn't it?

It seems strange that they're deciding to keep the Instagram social network up as its own independent social network, that leads me to think that their acquisition was really for their big data talent and not just to squash a smaller social network. I wish Mike Krieger's tech talk was more than two days away now, so we could hear about how they're going to merge with Facebook's big data issues too.

iamhenry• 14 years ago

I can't believe this either...

briancray• 14 years ago

Can anyone hear the flush sound?

gavanwoolery• 14 years ago

Upvotes for you, sir!

brlewis3• 14 years ago

I think it's cool and bold that he's sharing specific features of Instagram that they plan to preserve. It's bold because it increases the PR cost of changing those plans.

op_amp• 14 years ago

"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"

gcl2• 14 years ago

Haven't you heard, that's the cool thing for startup founders to say while trying their best to get acquired behind closed doors.

It used to be a better world when they just tried their best to get acquired without making public claims to the contrary.

jtchang• 14 years ago

Congrats to Instagram! Can't say I am not bit disappointed though with all the startups getting gobbled up by much larger companies. What's next? Pinterest?

freehunter3• 14 years ago

Not saying I'd like to see it happen, but Pintrest would fit in well with Google+, moreso than Facebook. Google+ really does the sharing+comments thing well.

It's hard to know where to root. Independent start-ups give great competition to the big players, but I know a lot of people go into an MVP with the goal of making a large exit. It's a great way to get funding for your next startup.

smiler• 14 years ago

Why are you surprised? Most startups are built to either go IPO or exit through a buy out. Considering many startups (including Instagram) do not even come up with a profitable business model, it excludes IPO and therefore only leaves an exit as a way for investors to recoup their investment.

skeletonjelly4• 14 years ago

Wasn't Pinterest announced the third biggest social network last week? I'm sure it will be a matter of time.

jsm386• 14 years ago

According to WSJ price is $1B

source: http://allthingsd.com/20120409/breaking-facebook-to-acquire-...

Edit: Direct Source: http://newsroom.fb.com/Announcements/Facebook-to-Acquire-Ins...

The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this quarter.

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Toddward2• 14 years ago

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...

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jonursenbach• 14 years ago

Wonder if there was a bidding war between FB and Google that caused it to double off of that.

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marcamillion15• 14 years ago

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) of that fund I am not sure how beneficial that is.

Although, I guess they can't be too pissed because it must feel good to be able to at least return something to their LPs in such a short time frame.

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mkramlich4• 14 years ago

It's because they doubled their revenue since last week.

Oh, that's right. Revenue doesn't matter. "This time, it's different!"

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simondlr• 14 years ago

I have no words. That is incredible.

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jimmyvanhalen2• 14 years ago

congratulations guys!

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rhizome• 14 years ago

What are the odds that that figure is actually in real dollars?

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damoncali7• 14 years ago

Zero - it's being reported as a partial stock deal, which (speculation coming...) probably has some sort of performance based component (the word "earn-out" hardly seems appropriate here.)

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johnrob2• 14 years ago

I had been wondering how a product like Instagram would ever make money. Now we'll never find out. I guess traction really does trump all other business metrics.

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mariorz• 14 years ago

path seems to be experimenting with in-app purchases for additional photo filters.

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itg• 14 years ago

It's beginning to remind me of the late 90's where the only thing that mattered was number of "eyeballs" on your site, sound business plans/profits be damned.

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rbranson• 14 years ago

The difference being that the burn rate of these companies is minuscule compared to what was going on the late 90s. They built a 30 million user social network with 5 engineers. This changes the dynamic tremendously.

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jakelear• 14 years ago

This is a smart move by Facebook. I'm almost surprised to see them acknowledge in the initial announcement that they'll retain the ability for Instagram to interact with other social networks, although I'll be interested to see how thoroughly those features are supported as Facebook takes the reigns.

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teoruiz• 14 years ago

It doesn't say but any wild guess on how much did Facebook pay?

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goronbjorn2• 14 years ago

$1b according to WSJ

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dreamdu5t• 14 years ago

Why did Facebook buy Instagram if they aren't going to require FB integration and allow you to post to other networks? Is it purely about traffic now?

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statictype2• 14 years ago

How many photo-related startups has Facebook acquired now?

And what do they gain from Instagram?

A user base? Most of them are probably already on Facebook?

Technology for handling photos? Doesn't Facebook already do this as well as anyone else?

Design and UI talent for mobile apps? Don't they already have Mike Matas?

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jc4p2• 14 years ago

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?

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statictype2• 14 years ago

I'm not entirely convinced that Facebook can benefit from Instagram's infrastructure more than the Instagram can benefit from Facebook's.

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untog5• 14 years ago

I'm pretty sure that Facebook has "handling a lot of photos" sorted:

http://gizmodo.com/5841667/facebook-photo-library-dwarfs-eve...

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davidcuddeback2• 14 years ago

They can kill off a photo service that rivals their own. (I can't judge which one's better, because I use neither.)

Edit: I know Zuck says they will continue to build Instragram. I'm skeptical.

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marcamillion15• 14 years ago

Now that they own it, there is no good reason to kill it. The only possible reaction to killing Instagram is ill-will with potential and current FB users, and bad press.

Not only would he be going against his word - while the internal metrics of the company are going strong - but he would be killing an asset and destroying shareholder value.

Even Zuck isn't crazy enough to pay $1B for a growing company and just kill it. That would be totally irrational.

I suspect this may very well be the best tech acquisition since Google bought YouTube.

Good luck for both of them - even though I am wary of FB's growing clout and I don't use Instagram, it's nice to see a good service find a good home that can support it over the long term.

I am SOOOO happy that Google bought YouTube. Can you imagine a world without YouTube?

I sure can't. Not a good world anyway.

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randomdata• 14 years ago

Perhaps they just see Instagram as a threat? If everyone is sharing their photos on Instagram, they are not doing so on Facebook.

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flurie• 14 years ago

I wonder what sort of people putting photos on Instagram weren't also sending them to Facebook. Wouldn't it likely be people who don't/won't use Facebook anyway?

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cheap2• 14 years ago

This is why I loved Instagram and Twitter, it wasn't Facebook... where people I don't even know anymore are all my best friends.

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donw2• 14 years ago

I've got two guesses:

First, it integrates an incredibly popular mobile destination into the Facebook ecosystem.

A lot of people have been using Instagram as a replacement for their built-in smartphone camera software. You don't even need to go on Facebook to post those photos, thanks to the Instagram Facebook app.

That's ad revenue and location data that Facebook would love to have more direct access to.

Second, Facebook hasn't really been focused on mobile until recently. Mobile features have been second to web features for a long time now.

I think that Facebook has woken up to how far behind they are in the mobile space, and wants to catch up quickly. Photos are probably the most important sector of the mobile space, especially now that phone cameras are generally as good as mid-market point-and-shoot cameras.

Hence acquihiring Mike Matas (Push Pop Press), and now Instagram.

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zaidf• 14 years ago

A better question would be: what were the chances that Google could acquire instagram and use them to make a charge at facebook?

The question, of course, sounds a bit laughable. But the answer is a non-zero number big enough for facebook to pull the trigger and defend their territory(social networking & photos).

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drivebyacct2• 14 years ago

>Design and UI talent for mobile apps? Don't they already have Mike Matas?

I don't know who Mike Matas is, but given the quality of the Facebook for Android application and the amount of time Facebook's been spending on it... well... $1 billion is still a lot to buy a team to make your Android app not suck.

Though, on that note, the Instagram team wouldn't be the one to buy. Another startup that (took ages to) port their UI to Android and kept the crufty old iOS appearance.

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hrktb• 14 years ago

Flickr is still big in numbers but has more or less gone south for a lot of users, and Instagram may have filled this gap.

there's a lot of people that wouldn't fit the bill for facebook friending but are perfect in a looser setting. In this perspective, even if userbase has overlap, I'd guess that the social graph on Instagram is radically different than the one on facebook for a lot of users.

Now depending on how much Instagram gets integrated into fb, that might become less and less the case and give an opening to another photo sharing service...

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cmer2• 14 years ago

According to Crunchbase and Techcrunch, they raised $40M just a month ago at a $500M valuation. Something doesn't add up here. A billion dollar deal like this had to take more than a couple of weeks to close...

http://techcrunch.com/2012/03/08/no-filter-required-instagra...

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draggnar• 14 years ago

Is it against some regulation to do negotiations concurrently?

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dkasper• 14 years ago

No. Some deals will include "no-shop" and other similar clauses to prevent this sort of thing, but it's definitely not a requirement.

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cmer2• 14 years ago

No but why raise so much money at such a lousy valuation if you're 30 days away from a billion dollar exit?

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cperciva• 14 years ago

"poised to pick up another round of funding" doesn't mean that the funding round has actually closed. Sounds to me like they were keeping their options open, using the threat of raising another VC round to get Facebook to hurry up with an offer.

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guan• 14 years ago

According to TechCrunch, the round did close and the money was wired to Instagram last Thursday.

http://techcrunch.com/2012/04/09/right-before-acquisition-in...

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brackin• 14 years ago

It was announced then, could have been raised in 2011 or earlier this year.

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kylec• 14 years ago

Some of you might find this useful:

https://instagram.com/accounts/remove/request/

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amirhhz• 14 years ago

When I read the headline I thought two things: a) Wow, the Instagram guys deserve it, congrats to them. b) I need to delete my account.

The second point is because I have been actively trying to avoid giving fb more data than absolutely necessary. No ill will towards Instagram.

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yawn2• 14 years ago

Same reaction here. Pretty sad to delete it, actually. The other day I was using Instagram as an example of a social app with a friend list that WASN'T Facebook. sigh

Edit: spelling.

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cheap2• 14 years ago

This was EXACTLY my feelings. I sat down after lunch, read the headline, opened up my browser, changed my user profile information and deactivated my account. Good luck Instagram, but I can't stand Zuckerborg.

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emehrkay• 14 years ago

Yes. I JUST deleted (deactivated/request removal) my FaceBook account over the weekend.

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pbhjpbhj3• 14 years ago

>I need to delete my account //

Surely it's already too late. They bought your data.

Why do we allow companies to sell personal data on as part of the company? Should this be legislated against?

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farmdawgnation• 14 years ago

It makes me wonder how many people are going to have that reaction. I'm an Android owner and I still haven't checked out Instagram, and now I'm not sure I want to.

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reinhardt• 14 years ago

It's funny, just a few hours ago I was going through my apps looking for rarely used ones to delete. I was on the fence about Instagram; I'm not using it much but I left it there "just in case". Well, seems this acquisition solved the dilemma.

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aminozuur• 14 years ago

You can still post to Instagram without sharing the photo on Facebook. So this "paranoia" - if I may call it that - is only because Facebook now has acces to all of Instagrams information? And Facebook will abuse this position why, exactly?

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xorbyte• 14 years ago

The current trend with buyouts seems to be eventual integration. Google recently did this with their privacy policy, and it was received with mixed feelings. I see no reason to expect Facebook's acquisition of Instagram not to change how the latter operates: it must become profitable to FB somehow (beyond talent), and data is the most straightforward way. The two blog posts announcing the acquisition aren't legally binding with respect to the future of the products, and nobody should be surprised if a 180º shift happens in a few months. Facebook is in the business of monetizing user data after all.

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faraway• 14 years ago

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goronbjorn2• 14 years ago

Instagram is such a great experience for a number of reasons, but one of them is the separate network it provides from Facebook. Maybe I'm in the minority, but my Facebook network is substantially different from my Instagram network. /:

I hope Facebook is careful with this one…

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rcchen• 14 years ago

Anyone else think that the proximity of the announcement of Instagram for Android last week to today's acquisition was not a coincidence?

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jordhy• 14 years ago

I'm not very clear on the main driving factor of this acquisition: is it a talent grab, a technology acquisition or did they acquire Instagram mainly for the customer base.

FB really wanted Instagram. They've been in talks since August 2011: http://thenextweb.com/insider/2011/08/24/facebook-couldnt-ac...

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untog5• 14 years ago

Zuck's post gives a few clues.

"We will try to learn from Instagram's experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure."

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sp332• 14 years ago

Oh, so not tech talent, but talent in developing a loyal and active userbase. That could be worth $1B to FB.

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tptacek13• 14 years ago

I feel like I can safely declare that there is no such thing as a one billion dollar talent acquisition.

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davidw• 14 years ago

Maybe in Zimbabwe, but otherwise, it doesn't seem likely, does it.

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j_baker4• 14 years ago

Well, it certainly wouldn't happen if your company employs anyone other than Turing, Einstein, Dijkstra, and Knuth. That said, that doesn't mean that the talent isn't inflating the price at least a little bit.

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damoncali7• 14 years ago

Perhaps they found Instagram threatening. I'm betting they kill it now that they own it.

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benologist• 14 years ago

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

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tptacek13• 14 years ago

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.

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porterhaney• 14 years ago

That would mean the likes of pinterest would be next.

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vibrunazo• 14 years ago

I would say customer base is the strongest point, and that indirectly means technology. Instagram is huge. Now many people's default photo app will automatically upload to facebook, as a google+ instant upload competitor.

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j_baker4• 14 years ago

I have to say: it's nice to see an acquisition where the product is valued enough to not be summarily taken out back and shot. I'm curious how it fits into Facebook's product strategy though. It doesn't seem to be their style to keep a brand around that doesn't help their main brand somehow.

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fredsters_s2• 14 years ago

wait - you think this is actually true?

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skrish3• 14 years ago

Is your question about the acquisition itself or that service will be continued?

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skrish3• 14 years ago

+1. It really is nice and the news coming from acquirer than the acquired makes it sound better. That just makes it that much more difficult for them to say "it is no longer a service that interacts with other social networks" without a public backlash among user community. Good to see the commitment coming from Zuckerberg.

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brlewis3• 14 years ago

FriendFeed wasn't taken out back and shot either -- it's still running, albeit with some broken features. It doesn't hurt Facebook to leave a service running.

With Instagram, I think it's a case of user acquisition trumping product strategy. If lots of people are joining Instagram, Facebook wants to own it regardless of how it fits with their main brand.

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j_baker4• 14 years ago

That Instagram would turn out like FriendFeed would be my major fear. I mean, who uses it any more?

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skrish3• 14 years ago

Congratulations to the Instagram team.

With all the news of talent acquisition and subsequent shutdown news, my first reaction was "oh god! yet another shutdown!".

Thankfully there are some very good statements in the announcement. "...we're committed to building and growing Instagram independently. "

Hope this is true especially for the sake of all the startups that are betting on Instagram and building associated products on top.

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zinssmeister• 14 years ago

Instagram has an awesome team and kept stealing eye-balls from facebook. It makes a lot of sense for facebook to get this team AND the product.

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methoddk• 14 years ago

As long as they keep instagram intact as the service it is now, then awesome.

If Facebook kills my favorite platform, that would make for a really sad day.

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callmeed2• 14 years ago

You know, I used to be pretty lax (careless, even) about geotagging all my Instagram photos.

Now, should I continue to use Instagram at all, I'm definitely not going to share my location.

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envex• 14 years ago

Just curious, but why the change of heart?

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theorique• 14 years ago

Facebook will add all the locations to their giant, evil database.

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callmeed2• 14 years ago

The last thing I want is people on FB seeing "Erik's Backyard Patio" when they are nearby.

Or, even worse, giving my backyard patio a bad review ;)

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mrgreenfur• 14 years ago

Does anyone else think this valuation is insane? It's like $300/registered user. The company doesn't have a business model. No way the handful of employees are worth $1B. My mind is blown.

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amcnellis• 14 years ago

Really boggles the mind. Would love to see the company's financials.

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ptomato• 14 years ago

More like $30/user, I should note. They have 30 million on iOS and some number > 1 million on android.

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wavephorm• 14 years ago

That's an awful lot of money for a business that had no revenue and had no business model of any kind.

http://windonaleaf.net/post/20464525754/instagram-perform-ad...

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2pasc2• 14 years ago

I agree...but the point was not about the revenues, the point was about making sure that when you think about photos - to share or to browse(which is the most used app on Facebook), you think about Facebook. The risk of being displaced by Instagram on that crucial activity was too high for Facebook.

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orblivion• 14 years ago

So Facebook is like giant a rail company in the late 1800s.

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mhartl• 14 years ago

It's a strategic acquisition. Such acquisitions are common, especially in the Valley. This is one reason why startups should primarily work to "make something people want" (the official Y Combinator motto) rather than focusing on making money. True, sometimes a startup achieves spectacular growth without ever finding a way to turn it into money, but examples are surprisingly rare. Can you think of any offhand? Maybe Twitter, but I'd bet they'll find a way to be hugely profitable someday.

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jvm• 14 years ago

Not to mention no product since it duplicates the 'share on twitter' functionality of the camera app.

In 2 years, nobody will remember what instagram was.

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untog5• 14 years ago

Anyone got some bad news about their startup that they need to release? Get that press release out, stat.

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mikecane• 14 years ago

Now before you all wonder about that valuation and technology, consider that Zuckerberg is actually buying the users and their data.

Anyone recall this back in the day? Yahoo! buying BCST.com http://money.cnn.com/1999/04/01/deals/yahoo/

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joshbaptiste• 14 years ago

Congrats to Instagram, Django-powered projects making it big.

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ojr• 14 years ago

PHP projects buying them

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inmygarage• 14 years ago

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.

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redthrowaway2• 14 years ago

It was also only really possible given the resources Google had to throw at YT. It was years before YT was profitable, and even then it was only with the introduction of intrusive ads that that was possible. A company without Google's deep pockets would likely have had a hard time giving YT the chance to grow organically, without trying to butt in and make it profitable.

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homosaur2• 14 years ago

Maybe YouTube could have done it on their own too, but a big reason why Google was able to keep YT afloat was its widespread peering agreements. So even though it bled cash for years, it didn't bleed near as much cash as it could have because they paid very little for their actual bandwidth.

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homosaur2• 14 years ago

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 the actual content, which is mostly crap.

I'm more convinced that we're in a 2nd bubble now more than ever.

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freehunter3• 14 years ago

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.

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xutopia• 14 years ago

Social sites like Facebook are mostly about photo sharing. This acquisition is all about controlling the main reason people use a social site like FB (or one that competes for it).

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larrys2• 14 years ago

"Where's the money in Instagram?"

Preventing Instagram from developing into something that has a negative effect on Facebook. It's a "keep your enemies closer" move.

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acgourley• 14 years ago

I doubt you, or anyone else, was saying that then youtube was purchased. It merely looked popular.

It turns out what Google was buying was a chance to maintain their lead in how people were going to use their computers.

Facebook is now buying a chance to maintain their lead with how people are going to use their phones.

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dacilselig• 14 years ago

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

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sendos2• 14 years ago

> I'm more convinced that we're in a 2nd bubble now more than ever.

I agree. So far I've mostly dismissed talk of "the next bubble", but this pretty much solidifies it.

Of course no one knows when the bubble will burst, so I guess investors are making as much money as they can before it inevitably does burst. It's a classic case of the "greater fool theory" http://en.wikipedia.org/wiki/Greater_fool_theory

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Kavan• 14 years ago

When Goog bought YouTube it was a mess of content. There was litigation everywhere and no advertisers wanted their products associated with it.

But Google saw the potential in the usage stats. The YouTube search bar was the second most used search bar after theirs.

Similarly Facebook see the social engagement stats of Instagram being similar to their own.

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georgespencer6• 14 years ago

> This is very reminiscent of Google/YouTube circa 2006.

In that it was a startup acquired by a big company? Yep.

> 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.

Like most startup acquisitions, the team size is relatively small and there is significant traction in the market with headroom to mature their footprint.

> 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.

This is not going to be one of the best tech acquisitions of the next decade. YouTube helped to propel Google into content. It also helped to commoditise web video in a massive way: reminiscent of the way which Google commoditised search (YouTube is probably just short of being a byword for online video at this point).

Instagram is a photo service in a sea of other photo services. Photography has been around on the web in meaningful ways for a long time. Flickr lost out to Facebook in the community stakes, and Instagram is doing great in whatever-the-fuck market it's in (the share-to-my-twitter-followers market?), but this is not Google acquiring YouTube.

Bookmark this comment. See you in 2022.

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achompas4• 14 years ago

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 stronger point)

[0]http://www.forbes.com/sites/anthonykosner/2012/04/07/instagr...

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nextparadigms2• 14 years ago

Google also missed buying Flickr back then. I think Instagram would've been a smart buy for them, too, at least from a social network point of view. I don't want Facebook to gobble up all rising social networks. Maybe Google was looking to buy Pinterest instead?

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cageface• 14 years ago

This feels a lot more like the 1999 "eyeballs" landgrab. There's no unique technology behind Instagram.

Being popular != being valuable.

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scalhoun2005• 14 years ago

Totally agree, unless the purchase is cheaper than gaining popularity, but that seems far fetched in this particular case.

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Duff• 14 years ago

I say follow the money. Things that don't make any sense on the surface often have simple motivations. Someone (perhaps someone affiliated with the Instagram funding round that closed days ago) needed an infusion of cash. Facebook has more cash than they know what to do with.

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puranjay• 14 years ago

Have you completely forgotten about Android? Do those millions count for nothing?

To compare it with YouTube is a massive overstatement. YouTube still has ~65% market share. InstaGram didn't even have an app for Android until a week back. How is that even remotely close to YT's domination of the video space?

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dave1619• 14 years ago

Congrats to the Instagram team. An amazing group of people that really worked lean and delivered what people really needed.

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dongsheng• 14 years ago

Facebook acting really fast nowadays, especially when comes to require good developers.

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senthilnayagam2• 14 years ago

Facebook should buy extragr.am as well the best web UI for instagram

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senthilnayagam2• 14 years ago

Ok downvoters, not asking for a billion dollar valuation, just saying it was a good match with instagram

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veyron• 14 years ago

The price tag certainly is consistent with a 100B price tag on Facebook. I'm going to assume this merely keeps the bubble going until the IPO. In finance land there are rumors of difficulty finding people to buy into the IPO and this should theoretically instill confidence

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gbog2• 14 years ago

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.

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bbenvegnu• 14 years ago

you can save. at least on iOS, tou can.

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there• 14 years ago

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.

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gbog2• 14 years ago

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

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blhack• 14 years ago

This definitely isn't the case on iOS. I use instagram all the time, but only for the filters. Pictures I take with it get put on dropbox.

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juliano_q• 14 years ago

After only one week using Instagram for Android it was already my favorite network. Congrats for the Instagram team, but I cant deny that I just lost much of my sympathy for the network, since I can´t stand the way that Facebook handles privacy anymore.

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tzz• 14 years ago

One good thing about being bought by bigger player is that it creates a void for other smaller innovative startups. Instagram is easier to compete against now than when it was independent.

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ary2• 14 years ago

Unfortunately you still have to write in to cancel your Instagram account.

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ben10402• 14 years ago

I just canceled mine five minutes ago with this form:

https://instagram.com/accounts/remove/request/

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ary2• 14 years ago

Out of curiosity where did you find that link? I must have missed it when I checked the site.

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JosephHatfield• 14 years ago

So did I. Thanks for posting that link. It's a sad day for me.

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wensing• 14 years ago

The main reason they were acquired? Not the tech, not the audience (does FB need either?). I guess for the brand + engagement? Someone said as a defense against the big G acquiring them later - sounds plausible?

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nilsbunger2• 14 years ago

Zuck's announcement seems really thoughtful and authentic. He hit on a bunch of things people would be worried about -- whether things would automatically post, whether you can maintain a separate follower list from your FB list. He showed respect and humility towards Instagram's follower model, and interest in bringing it into other products. I'm impressed.

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tptacek13• 14 years ago

This seems ominous for Google, which spent $12.5bn for Motorola to stake a shaky claim in mobile and lord knows how much on G+; after this, what's left for them to do to stake a claim on social mobile? Buy Twitter? What else do people do socially with their phones?

Totally possible for Google to sink tens of billions into mobile and still wind up on the bottom of the value chain, commoditized along one axis by Facebook and utterly outmarketed by Apple (with its extraordinary profit margins and increasing domination of supply chains) on another.

Or maybe GOOG/Twitter is in the air, and Facebook is reacting defensively?

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huggyface2• 14 years ago

Utterly outmarketed by Apple? What a curious take that is, though it is a natural statement when you're so desperate to try to drag Google into this.

Instagram is a tool that has a limited shelf-life, with a userbase that is almost certainly already on Facebook. Declaring this some sort of coup for Facebook seems weird, given that the overwhelming sentiment is that Facebook has more net worth than brains at this point.

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tptacek13• 14 years ago

Apple takes 75 cents out of every dollar of profit in mobile.

The second graf isn't worth responding to. I'm not as emotional about tech companies as you seem to be.

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untog5• 14 years ago

This seems ominous for Google, which spent $12.5bn for Motorola to stake a shaky claim in mobile

I was under the impression that Google paid that price (and, indeed, bought Motorola at all) for patents.

Google is doing just fine out of Android. iOS may be better marketed, but there are a hell of a lot more Android phones out there.

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tptacek13• 14 years ago

The game is scored in profit. Revenue and market share matters only as a means to the end of securing profits. Android has a huge market share (and, dearly bought), but even 1st & Goal doesn't matter unless you actually score.

I don't keep super close track, so maybe Apple's commanding profit share lead is eroding sharply. Last I checked, "commanding" was indeed the word for it.

Again, all I'm saying is that you can spend a lot of money for a huge footprint in the market and still find yourself at the bottom of the value chain: you can be the guys facilitating a lot of commerce for other people without taking a significant cut.

If you don't believe Google cares about that, why are they wasting their time with G+? Facebook isn't going to be a search engine. Nobody believes that. The worry is that Facebook is going to commoditize search by moving the profits it generates somewhere else.

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georgespencer6• 14 years ago

> Google is doing just fine out of Android.

By what metric?

> iOS may be better marketed, but there are a hell of a lot more Android phones out there.

Yes. And Google has made more money out of those fewer iOS phones than it has from the many Android phones.

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admiralpumpkin• 14 years ago

This is untrue, but often assumed.

Total iOS devices: 315M (as of 2012-03-07) Total Andriod devices: 300M (as of 2012-02-29)

http://techcrunch.com/2012/03/07/tim-cook-talks-ios-device-s... http://www.guardian.co.uk/technology/appsblog/2012/feb/29/an...

Android is selling faster, but it has yet to have a larger installed base. It will likely happen soon, but iOS had a large lead in terms of start time and the iPad is killing in the tablet market.

Obviously there are many factors which will adjust the true installed base (broken devices, devices no longer update-able, etc.).

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yarapavan• 14 years ago

$1 billion for a 13-person team? Is this the highest per-employee price tag?

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Raphael• 14 years ago

Has to be.

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rokhayakebe2• 14 years ago

I thought that was the real story here.

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loceng• 14 years ago

It's for the users, to prevent a competitor from 'owning' them - Facebook could block the API, otherwise all of their competitors can still gain access to them. If Facebook does start to screw around with the API then they're destroying value to the consumer.

It's really too bad Instagram sold so soon. I hope they took mostly money.

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brlewis3• 14 years ago

The API already only gives access to 612x612 images with limited metadata. All Facebook has to do is keep them from improving the API.

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RexRollman3• 14 years ago

I wonder if Facebook will force their sense of decorum onto Instagram. For example, there are people using Instagram to create interesting nude photography, which is something that is not allowed on Facebook (unless I am mistaken).

In any case, I bet you can expect them to force everyone to use Facebook for logging in. Yahoo eventually forced us Flickr users to get Yahoo accounts in order to log in.

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freehunter3• 14 years ago

According to their press release, Instagram will continue to work independently and use alternative networks. Until they prove otherwise with their actions, all anyone can do is speculate.

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andrewhillman2• 14 years ago

I think this shows that FB felt threatened by Instagram because photos are in fact the thin edge of the wedge of social networks. People spend a lot of time on sites viewing photos and FB doesn't like when people are spending time on other networks.

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marcamillion15• 14 years ago

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 are left with 37%.

Also assume that the employee stock options pool is worth 10% of equity. Founders left with 27%.

There are two founders, according to Crunchbase [1], so assuming a 50% split for each founder, each founder has 13.5%.

At $1B, each founder walks away with a cool $135M in cash + Facebook stock (which is likely to appreciate significantly in a few months) - which is likely another reason they chose to go with FB as opposed to Google.

Not bad for 2 years worth of work.

[1] http://www.crunchbase.com/company/instagram

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Finbarr• 14 years ago

I'm not sure that your numbers account for share dilution. Let's assume the employee stock pool is 10% before any funding is raised so the founders start with 90% and the employees 10%. Assuming your numbers above are correct, the founders are left with 72% after the first round of investment (500k at 2.5m = 20%) and the employees are left with 8% (think 72 + 8 + 20 = 100). The second round of investment takes 35% of the company, leaving the founders with 46.8%, employees with 5.2%, first investors with 13% and the new investors with 35% (46.8 + 5.2 + 13 + 35 = 100). The third round of investment takes 8% of the company leaving the founders with 43.056%, the employees with 4.784%, the first investors with 11.96%, the second investors with 32.2 and the new investors with 8% (43.056 + 4.784 + 11.96 + 32.2 = 100).

If my math is correct, the founders may have ended up with more like $430,560,000 between them ($215,280,000 each assuming 50/50).

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marcamillion15• 14 years ago

You may be correct.

I was just doing some rough calculations to show an approximate 'low-figure' of their take.

It is very possible and likely that they took away much more (because all of the variables could have changed).

For instance, that first $500K round could have been convertible debt which would have converted in the $20M round. If that's the case, then those investors ended up with 2.5% instead of 20%. That drastically changes the math and gives the founders more equity and a better outcome.

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TomGullen3• 14 years ago

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?

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marcamillion15• 14 years ago

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 growing and have the stickiness that it has. So there is no telling how big it can get - which is why the valuation is so high.

There is no doubt that over the long term, FB will figure out a way to print money. It's just a matter of time.

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omfut• 14 years ago

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

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kooshball3• 14 years ago

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

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3pt14159• 14 years ago

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 of 5% for the founders, so they each walk away with $128M, but that is still 7 million less). Also, this assumes no advisors got shares or board members got shares and that really early hires got no shares outside of the ESOP, which is unlikely). I would guess they probably each walked away with $100M after everything was said and done.

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tptacek13• 14 years ago

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

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avree2• 14 years ago

According to VentureBeat, the CEO made off with $400M. http://venturebeat.com/2012/04/09/instagram-ceo-just-made-40...

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yawn2• 14 years ago

2 things I'm very curious about:

1. What role did the Android app play? 2. When did these two start communicating?

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rumblestrut• 14 years ago

Dear Facebook: My student loans are for sale at cost. Please contact me for details.

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A-K• 14 years ago

It's nice to see that Zuckerberg's letter actually addresses some key concerns about Instagram's future--a courtesy I haven't seen offered by many recent "acqhirers". However, to echo several other comments, it'll be interesting to see to what degree the stated intentions are actually upheld.

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huoju• 14 years ago

"Sell to Goole" era is ending. "Sell to Facebook" era is beginning.

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XiQiao• 14 years ago

google~~

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johnrob2• 14 years ago

This price makes plenty of sense if you think of as "instagram was bought for x% of facebook". I don't know facebook's current valuation, but I could be convinced that instagram is worth something between 2-10% of it (500M users vs 30M users, all sharing pictures daily). The reason for the billion dollar number has nothing to do with instagram, and everything to do with facebook.

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kposehn3• 14 years ago

So, I found something very interesting in Mark Zuckerberg's post about acquiring Instagram:

> 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.

Facebook has always integrated whatever it purchased (that I know of) very tightly into the core product, or just done an acqui-hire. Instead, they've taken what is arguably the best way to share photos and decided to keep it as a product that exists on its own.

This is a major strategy change for Facebook and speaks to something I have suspected for some time - they now understand that in order to continue spurring growth, they cannot just acquire and roll in every product. As the ecosystem starts to hit a long-term maturity cycle, other products that fulfill particular functions better will be key to maintaining dominance over the market as a whole.

Let's face it: G+ cannot topple Facebook (though it probably wasn't intended to anyway), Twitter is fairly specialized and Pinterest has come up with a new way to share that fits neatly with the other two. Instagram makes immense logic as a purchase for Facebook as they'll control one of the most important ways people share photos outside their product, neatly roping everyone that uses it right into the FB circle without feeling forced to do so.

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untog5• 14 years ago

They sort of did it with Beluga- it became "Facebook Messenger" but was never integrated into the main app. At the time I was confused as to why they'd do that, but if you think of it as a replacement for the stock "Messages" app, and Instagram for "Camera" then it all starts to come together.

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kposehn3• 14 years ago

Good point - though they did eliminate the brand with Beluga, and they probably won't with Instagram. That could change though.

Besides messaging and photos, I'm thinking that few things are left as halo products around Facebook. There's no reason for a "games" app - to me, at least - but there might be logic in acquiring something like Turntable.fm for music.

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skeletonjelly4• 14 years ago

Almost sounds like you're describing a new FacebookOS!

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psb217• 14 years ago

Zuckerberg's statement that Facebook will keep Instagram alive and kicking seems likely to prove honest but disingenuous.

Instagram, in providing a photo sharing experience (at least) on par with Facebook's, spanning multiple "social platforms", facilitates user migration across these platforms. In the current context, any user migration between social platforms would (almost) inevitably dilute Facebook's share of user-time.

Thus, it seems reasonable for Facebook to acquire this possible avenue of departure and generally maintain its current state (i.e. Zuckerberg's statement is honest) while guiding future evolution of Instagram's product to subtly guide the flow of users along "Instagram Avenue" towards Facebook, rather than in its current unbiased direction (i.e. Zuckerberg's statement is disingenuous).

Though useful from a business perspective, this sort of defensive acquisition is discouraging to me. I would prefer to see the evolution of "social" in general towards an open protocol for maintaining the actual user<->user graph structure and piping of information along it, with a loose confederation of services such as Instagram providing the content hosting/delivery. This would decentralize control of people's social graphs, with control being restricted to subsets of the shared content and its flow over the graph, rather than the actual graph structure itself. I.e. market-driven services such as Instagram would compete to control portions of the infrastructure implementing this new construction, which one might call the "world wide (social) web".

TLDR: Facebook's purchase of Instagram permits them to simultaneously reduce the instantaneous rate of user migration across social platforms while preventing the emergence of a competitive open social platform/protocol, the evolution of which would be greatly facilitated by the prior existence of third-party social content infrastructure such as Instagram, which reduce the size of the "chicken and egg" problem confronting any attempt at an open platform.

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narrow• 14 years ago

Very bold + smart move on Facebook's part. Google should've taken similar step when it approached Path. Am a Google fan, but what's unfortunate is that social would be totally different by the time it successfully builds G+ to look like Facebook. This is should be the time to invite folks at Path/Pinterest to the negotiation table, if anything Wallstreet won't think it's stupid...Facebook just did it.

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Baba_Chaghaloo• 14 years ago

Call me paranoid but for them to spend $1 billion on this silly thing tells me they think there are big profits to be made with facial recognition data.

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awongh• 14 years ago

Will this mean that they'll finally get a real website? I'd love to be able to browse my friends' photos. It seemed to me that the complete lack of functionality on the single photo page (not even a link to your home page?!) seemed like a big middle finger to non-mobile users. Anytime I clicked through from facebook and twitter, the fact that I couldn't get anywhere from there was enough of a turn-off to make me avoid getting the iOS app.

Or maybe it'll be folded into the horrible UI mess that is FB and go away....

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thisismyname• 14 years ago

Interesting that everyone is focused on Instagram as a company and how they just got $1 billion.

I find it interesting that Mark and Facebook were able to buy a company for $1 billion. Its like the joke chris rock said about being wealthy.

"Shaq is rich, the white man that signs his check is wealthy"

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bimil• 14 years ago

Congrats to Instagram. I think the real value that's been overlooked for Instagram is the Instagram community. Instagram has a very strong community around the world (www.instagramers.com has more than 250 chapter groups) and that may be one of the factors Facebook was looking at.

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drpancake• 14 years ago

27 million iOS users + 50 million projected Android users means that this cost them roughly $13/user.

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joeblau2• 14 years ago

Can someone explain how this isn't insider trading?

Day before deal: - Instagram closed a $50 million Series B round from Sequoia, Josh Kushner’s Thrive Capital, Greylock and Benchmark at a $500 million valuation.

Day of deal: - Company gets purchased for 1 billion. - All investors instantly double investment.

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ochiba• 14 years ago

Christine Herron's comment on this post seems to explain: http://techcrunch.com/2012/04/09/right-before-acquisition-in...

"It's common to use an impending investment valuation to drive a higher acquisition valuation. Strategic/acquisition values are typically much higher than investment values. eg, as of today, Instagram is worth more to Facebook than it is to Sequoia, because Facebook gets strategic value in addition to market value. Also note that an investor with a signed term sheet would be fully aware that acquisition discussions were taking place, as well as what valuation range they were in. I would be surprised if Sequoia did not go into this with eyes wide open. They win either way - an instant 2X multiple on investment (and a crazy high IRR), or a highly desirable company that they believe has growth potential. Call me jealous."

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damoncali7• 14 years ago

Instagram is not public.

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mdda• 14 years ago

It's not insider trading, since the stock is not traded on a public market : There's no presumption that all the facts are out in the open. As long as there's no misrepresentation, it's all 'just business'.

How about : "Let me invest right now, so that I won't vote against the FB offer you've got on the table".

Or "If you let me invest now, I can make a recommendation to the FB board that they acquire you".

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joeblau2• 14 years ago

Thank you :)

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rokhayakebe2• 14 years ago

I am willing to bet the $50M raised is all the cash the founders pocketed, FB gave stocks to investors and the team.

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nQuo• 14 years ago

While a bit harsh considering Instagram's success, I completely agree with this quote from Steve Jobs on startups:

http://instagr.am/p/JNVJIwBElP/

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regularjack• 14 years ago

So Steve Jobs hated entrepeneurs who who were just looking for someone to buy they startup. Following that line of reasoning, he most have loved it when Dropbox refused to sell to Apple.

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mkr-hn• 14 years ago

What's really interesting to me is that they have a flood of geolocated pictures of places now. And they have a partnership with Microsoft. Photosynth integration on Instagram with all your photos would be amazing.

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babuskov• 14 years ago

Looks like Gary Vaynerchuk's was right:

http://www.youtube.com/watch?v=FKiIjhyptVA&feature=youtu...

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baby• 14 years ago

by the way, 1 billion = 1 milliard

I was very confused since only the USA, Canada and the UK use 1 billion = 1 milliard instead of 1 billion = 1k billiard

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andrewhillman2• 14 years ago

Those investors who passed on the recent round must be kicking themselves. This one has gotta sting. Ouch!

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ChuckMcM3• 14 years ago

This is an interesting take:

http://www.latimes.com/business/technology/la-fi-tn-why-face...

Which basically has Facebook buying them because of the social traction. Suggesting that perhaps they did not want this to be part of Google+ which has a lot of pictures but not the same as Instagram does with the social connection.

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louhong• 14 years ago

According to Wired.com the CEO is taking about $400 of the Billion.

Source: http://www.wired.com/epicenter/2012/04/facebook-buys-instagr...

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pbhjpbhj3• 14 years ago

"$400 Million", FTFY.

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michaelkscott• 14 years ago

How many people work at instagram?

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Kopion• 14 years ago

http://www.linkedin.com/search/fpsearch?companyId=2289109...

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iscrewyou• 14 years ago

You know what I'm afraid of? Facebook doing to Instagram what they did to Beluga. At work, we used Beluga to communicate about work related stuff. Facebook bought it, shut it down and turned it into Facebook Messenger. Goes without saying but we didn't move our conversations/groups over to Facebook Messenger. I really hope Instagram doesn't get treated the same way. That's all.

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hjhjhj• 14 years ago

Best quiet period PR stunt ever.

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Shank• 14 years ago

Reminds me of when Google launched the official Google Blog during quiet period, then proceeded to post recipes for chicken on there.

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philjackson• 14 years ago

No, Zuck. I meant the app...

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tlogan• 14 years ago

Somebody was saying that Facebook has issue with mobile - I guess they solved the problem now.

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rshl• 14 years ago

I think there's a great lesson here: It takes only 2 years and 13 people to overtake one of Facebook core features. And that's talking about a company that suppose to have the best programmers and designers in the world. That's something you should remember next time someone's tells you that Facebook/Google/Microsoft will do it better.

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EGreg• 14 years ago

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. :)

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HSO• 14 years ago

This is the Netscape IPO of the app economy.

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pmarsh• 14 years ago

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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joelmaat• 14 years ago

This situation reminds me of when Facebook was worried about Twitter: most of the worry ended up being unfounded. I guess I shouldn't be surprised that Facebook was eyeing Instagram, as Facebook's photo viewing UI is now fairly similar to Instagram's. But I wonder if the worry about Instagram merited the $1B exit. Either way, given how small the Instagram team is, they must feel mighty satisfied right now.

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eyeareque• 14 years ago

$1 billion divided by 30 million users = 33.30 dollars.

I had no idea my account was worth that much.

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jot• 14 years ago

Ask yourself not whether Instagram is worth $1 billion but whether Instagram is as valuable as 1% of Facebook. Sounds about right to me.

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acak• 14 years ago

Given that a majority of the Instagram users (~30M) are on iOS, what if Apple decides to give away iPhoto for free? Or better yet, make it the default photo app on iOS?

iPhoto is not half bad. http://itunes.apple.com/us/app/iphoto/id497786065?mt=8

Even if it's made the default photo sharing app in the next release for iOS 5+ users for whatever reason, and integrated deeper come iOS 6 this summer, they'd instantly have access to several times Instagram's userbase.

They could using this as a bargaining chip in their negotiations to integrate FB into iOS / iTunes. Because Facebook, a public company, cannot have a $1B acquisition become irrelevant in a couple of months.

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dpcheng2003• 14 years ago

HN is full of haterpraise today. http://www.davidpcheng.com/post/20808337202/instagram-and-th...

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beedogs• 14 years ago

$1 billion for something literally no one uses.

Web bubble 2.0 can't burst soon enough.

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tlrobinson• 14 years ago

I don't think you know the definition of "literally".

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minikomi• 14 years ago

A thought experiment : What if Facebook is making their own phone.. And the phone's camera basically is instagram?

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guynamedloren• 14 years ago

A billion dollars is an interesting sum. Any bets on whether the Instagram founders told Mark Zuckerburg,

"A million dollars isn't cool. You know what's cool? A billion dollars."

That'd be epic.

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coenhyde• 14 years ago

I believe this is a bit of a pony show. Facebook will have its IPO soon with an expected valuation of $100billion. A move by Facebook to buy Instagram for $1 billion works in Facebook's favor by positioning public opinion in the following ways:

1. If Facebook has $1 billion to spend then they must be making a lot of money.

2. If Instagram is worth $1billion then surely Facebook is worth $100 billion.

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tucson• 14 years ago

Does anyone have an estimate of Instagram current yearly profit (or loss)? (sorry for the basic question, I do not know much about their service)

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lindstorm• 14 years ago

Looks like this acquisition was in their business plan.

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gsharm• 14 years ago

Smart move by Facebook. If Google had bought Instagram instead and integrated with G+, things would have gotten interesting. Wouldn't be surprised if there was a bidding war that pushed the price this high. Reminds me of the recent Firefox deal.

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mkramlich4• 14 years ago

The best argument I've seen for justifying this is as a way for Facebook to neutralize one potential medium-term strategic threat. That said, they still probably overpaid. Who knows how much of an element of behind-the-scenes investor favors-calling-in-favors went on as well. The whole indirect "Let's get into Facebook, pre-IPO" angle, which also sounds plausible.

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imd23• 14 years ago

Great, now the biggest question is whether build for growing in users or be profitable from day one, or both.

AFAIK instagram didn't make any cent. Premium filters and and ads would be the first choice, but I heard they decided to focus and grow in people loving their product.

Another big thing to deal with is: to sell or not?

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Facebook acquires Instagram

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