
Once mocked, Facebook’s $1B acquisition of Instagram was a good move - BishopD
http://bgr.com/2016/12/29/facebook-instagram-acquisition-1-billion-genius/
======
mullingitover
Buying instagram was a brilliant move. It's a far more enjoyable social
network to use. Lately I've gotten into a scene that's basically a parallel
universe where facebook doesn't exist. Everyone uses instagram. It's far more
entertaining and creative, and far less saturated with anger and activism.
I've dialed back my facebook activity heavily in the past year, to the point
that I've deleted the facebook app. I have messenger and the facebook events
app, but the losing the news feed has been no loss at all.

I can see a future, not even very far away, where facebook is essentially the
AOL of our generation and having an account there is a punchline.

~~~
jackfrodo
That future is already here. I asked my 13 year old sister and her friend if
they were on Facebook, and they both laughed and did an old person imitation
of me! I couldn't believe it.

~~~
basch
facebook was for college age people. facebook is still for adults. when kids
grow up, and go to college, if they dont have facebook, they get it. just
because kids are allowed to join, doesnt mean its designed to appeal to them.
its purpose is to connect people. friends who see each other every day dont
need many of facebooks features.

this "kids dont think facebook is cool" narrative has been going on for years,
and it just doesnt matter. they come around eventually. the network effect is
too strong.

~~~
thesauri
At my university, Facebook is primarily used for events and groups. The groups
aren't used for discussion though, mostly just for informing about the events.
Banter is usually done in Telegram chat groups. Party photos make great
stickers..

~~~
microcolonel
I guess it's reached the point where everyone is assumed to have a smartphone.
As someone who loathes the charging, updating, and payment treadmill of the
things, I find this trend worrying. :- (

~~~
awjr
Buy a Moto G4 (or equivalent) out right, get a pay as you go SIM, and only
allow data transfer through wi-fi. Won't solve the daily charging, but does
get you out of the payment treadmill.

------
drum
I admire Mark Zuckerberg's confidence to pull the trigger on an acquisition
like this, especially doing it without consulting his board. My initial
thoughts was that he has a visceral feel for the rate of growth that makes a
social network successful, having gone through it himself. He could probably
tell just by their publicity of growing to a million users within 2-3 months
that they were going to be huge.

~~~
chiph
To be honest, if the board had objected, he might have said: "Fine. I'll just
write a personal check for it then."

~~~
beamatronic
Not to pick nits but there's a good chance he would have to liquidate some
stock in order to do that, which if done improperly, would have the effect of
depressing the FB stock price, thus affecting the board and all the other FB
investors.

~~~
akiselev
As one of the wealthiest people on Earth, wouldn't he just put up some stock
as collateral for a loan? I bet there'd be lots of big banks willing to take
the risk that $1.2-1.5 billion of FB stock would still be worth more than the
loan in case of default, especially given the loan payments in the meantime
and low risk that he'll be unable to repay.

Either way, acquisitions this big have complex financial structures in place
that would easily accommodate a payout over several years. The Roche
acquisition of Genentech took more than 20 years, although the latter was
already public at that time.

~~~
adventured
The Genentech deal wasn't a 20 year structured agreement that was pre-agreed
to culminate in a full buyout (Genentech tried to prevent the acquisition and
held off Roche for eight months). I don't see how it compares to the example
in question; it didn't actually take 20 years to complete, as there was no on-
going acquisition process occurring during that time.

------
iloveluce
Hacker news thread when Facebook acquired Instagram
[https://news.ycombinator.com/item?id=3817840](https://news.ycombinator.com/item?id=3817840)

~~~
bigfoig
made an account to post this b/c I don't normally post on hackernews

but does anyone else get a sense of schadenfreude when reading these comments

There are people doubting that Facebook could monetize or become a blue chip
stock

There's a comment of a guy being sure that Instagram would fail and literally
says "Bookmark this comment, see you in 2022" (Five years to go boys)

This is why I'm convinced that people should honestly share like 1% of what
they are really thinking in comments. Yeah, there might be a 1% chance that
Instagram would succeed, but do you really want to look like the idiot
doubting it could ever happen, with your comment immortalized on the world
wide web five years later when you're proven wrong?

~~~
macspoofing
In hindsight everything looks obvious. At the time the failure of MySpace was
still fresh, Facebook had not monitized its service and it wasn't obvious that
chat clients like WhatsApp and SnapChat would (or could) get these insane
multi-billion valuations.

~~~
argonaut
I think it _was_ obvious. I remember being in college during the acquisition
and thinking it was obviously a smart deal. And Instagram was pursued hotly,
so many tech insiders thought it was a good deal too.

People on Hacker News are only now just coming around to Snapchat, but I
thought Snapchat was obviously going to succeed 4 years ago when I was still
in college - 70% of the people I knew in college were using it.

You might object to this and claim that other apps (which are not guaranteed
successes now) like Yik Yak should have been similarly "obvious" to me at the
time - but that's just not true. I didn't know anyone who used other social
media apps (like Yik Yak, etc.) at the time as much as Snapchat (if they did,
they kept it to themselves).

But when it comes to social apps, there's just something about Hacker News
being particularly closed-minded. Even in the face of overwhelming usage, I
still see a solid plurality of cynical HN comments about any given social app.

~~~
b2600
I don't object to the veracity of your claims but I would note that "it's what
everyone around me is using" doesn't scale very well. For example, if you're
from the U.S. you might not know anyone who uses WhatsApp nevertheless it has
over a billion users and is the default messenger app in many countries.

~~~
argonaut
That's irrelevant. It's a positive filter, not a negative one (I didn't claim
the absence of everyone using it indicates lack of success).

------
pcurve
The real genius is, he left it alone and gave it autonomy. That in contrast to
Google, Microsoft, or Yahoo that can't seem to resist the allure of 'synergy'.

I bet most people don't even know Instagram is owned by facebook.

~~~
rch
Wasn't Tumblr mostly left alone? I've never used it, but looking now I don't
notice any overt Yahoo influence.

~~~
evanelias
The impact isn't necessarily overt in this type of situation. Not just talking
about Tumblr/Yahoo, but in general -- when evaluating an acquisition after-
the-fact, there's more than just overt branding to consider. Think about
amount of support from the parent company, rate of feature rollouts, ad
quality, company culture, turnover / morale, hiring bar, internal transfers,
etc.

Despite being an M&A buzzword, synergy is really important and doesn't mean
meddling or interference. With Instagram and Facebook, consider that FB
already had massive expertise in growing a successful social network, and
ditto regarding infrastructure, as well as monetization. FB also advertises
Instagram in-app for free. And Instagram is "cool" so there's major motivation
for talented people at FB to do an internal transfer to Instagram.

Similar situation with YouTube and Google. e.g., Google was undoubtedly able
to increase YouTube's growth rate by virtue of being the top search engine and
tightly integrating all YouTube content into Google search.

With Tumblr and Yahoo, it's just not the same situation. They aren't
headquartered on the same coast; their audiences don't overlap, which is
especially bad for monetization; their products don't naturally interact in
any way; the parent company has no experience with running a user-generated
content property of this size; and the parent company has been viewed as being
in decline for many years.

------
rudolf0
Dumb question, but what is it about Instagram that made it so huge?

Snapchat I actually get, since it's presenting a new kind of communication
model. Facebook I get. But Instagram is just like any old image gallery, with
a very rudimentary comment system and almost no features unrelated to image
uploading.

~~~
aroman
Instagram was the first app of its kind to make phone cameras social.

At the time, about the only thing you could do with pictures you took with
your phone was sync.

Instagram was released at a critical moment in history when phone cameras were
starting to get good and cellular Internet was starting to get fast enough to
reliably upload them.

You can't look at the landscape today and ask "Why is instagram popular?". You
have to look at it in its historical context.

Source: radio interview with the founders

~~~
ec109685
Facebook had image uploading via mobile at the same time instagram was
purchased. So it isn't just that.

Instagram smartest thing they did was leverage the Facebook social graph
(something much harder to do now) to integrate instagram photos as posts in
the feed, so that when a user clicked on them, you ended up at instagram
rather than staying inside Facebook.

~~~
oblio
> leverage the Facebook social graph (something much harder to do now)

Could you give a bit more details about this?

~~~
ec109685
Here's a good article on the subject:
[https://www.google.com/amp/s/techcrunch.com/2013/01/24/my-
pr...](https://www.google.com/amp/s/techcrunch.com/2013/01/24/my-precious-
social-graph/amp/)

One more: [https://techcrunch.com/2013/01/18/facebook-data-
voxer/](https://techcrunch.com/2013/01/18/facebook-data-voxer/)

------
tsunamifury
The purchase of instagram was a pre-IPO move to prop up Facebooks offering as
a mobile company before their core product had actually transitioned.
Investors major question was if FB could transition from desktop to mobile at
the time, and Mark needed something to back that up. Mark had been quite vocal
about Facebooks guesses around mobile, html5, apps and how he needed to
reorganize the product teams but couldn't get the story together in time. Thus
instagram.

The logic in both the article and most of the comments seems to utterly forget
the context of which FB was in at the time.

~~~
drum
I think you have a great point looking at the deal in hindsight, however
Instagram couldn't have looked that impressive to the typical institutional
investor at the time. Facebook already had 845 million monthly active users
with a large portion using mobile. Instagram was much smaller and if anything
people were skeptical if a social network could be profitable. The acquisition
could've made Zuckerberg look wreckless and backfired.

~~~
tsunamifury
I'm mostly quoting and summarizing Mark.

------
exodust
I hate the way Instagram allows people to sign up and use the service without
verifying the email address they used to sign up with. I'm assuming this is
the case after someone used my email to create a profile on Instagram.

I started receiving notification emails from Instagram a few weeks ago, which
I ignored at first thinking they were fake. On closer inspection they actually
were from Instagram, so I clicked "forgot password" on the Instagram website,
reset their password, logged in and deleted all their content and permanently
deleted their account. By the looks of it, the profile belonged to some kid -
a few family photos and so on.

It's quite slack of Instagram that this is possible. They should not be
allowing people to create profiles and use the service before first verifying
the email address used to sign up with. I guess basic verification is trumped
by the need for "active users" to motivate these "stroke of genius" articles.

------
symlinkk
I still don't understand why Instagram took off, and I'm a millennial. You
could already post pictures to Facebook when it came out. What advantage did
Instagram offer over Facebook? Filters? I just don't understand my peers and I
don't understand this industry sometimes.

~~~
tmcpro
Instagram was uncluttered. People posted original content. The content was
typically once a day and people would spend 5 minutes "getting the right
angle" and other 10 minutes picking the right filter. Today my Facebook feed
is clogged with people reposting links, videos, or photos that are more click
bait than news worthy. Instagram still allows me to see what my network is up
to without the political headlines

~~~
alecco
Politics, 9gag, and general clickbait are killing Facebook. It's hideous.
Stopped using it after unfollowing most of my "friends". Never looked back.

Also a random pretty girl pic gets 1000 likes while a good original post gets
100 if lucky. Why bother.

------
jplahn
A lot of people ask why Instagram took off and get a lot of different answers;
I think that's the beauty of it.

I wasn't much of an Instagram user for a long time until I started getting
into photography. I'm still a total photography noob, but now my feed of
pictures is a combination of friends and amazing photographers that serve as
inspiration. I deleted my Facebook account a couple months ago and haven't
looked back. Whereas I spent time on Facebook scrolling through vitriol, my
time on Instragram is a constant stream of friends lives and beautiful
pictures.

I've realized a shallow social network is all the social network I need.

~~~
mooreds
> I've realized a shallow social network is all the social network I need.

Wow. That is so true. Certainly for a certain class of acquaintance/friend,
all you really need is the lightest connection (but you still want a
connection).

------
vit05
Live video will be bigger on instagram than would be on facebook, snapchat or
periscope. It is way more easy, fast and better looking than any other app
that do live video IMO.

They only need to make a better discovery option than the "Follow someone".

~~~
bhandziuk
from the live IG videos I've seen it looks exactly like Periscope. As the
broadcaster is the experience better?

------
whack
I was in San Francisco when this deal was announced, and I still remember all
my supposedly "tech startup savvy" friends mocking Zuckerberg for buying a
company with no revenue for a billion dollars. And yes, this group even
included a Harvard MBA grad pursuing a career in entrepreneurship. It's no
coincidence that this was the same group of people who also mocked Facebook's
IPO valuation of ~$70B as proof that we were in a bubble. If there's one thing
I learned from that experience, it's that people have no idea how to appraise
high-growth high-potential ventures.

------
Ericson2314
I think the lesson is social media is a form of fashion, and Facebook may have
to continuously by new upstarts to stay trendy.

------
pasbesoin
People going to Instagram to escape their existing Facebook connections.
Starting a new graph on Instagram that is restricted to their current and more
private interests. What I've observed.

~~~
milesokeefe
People do it within Instagram even, known as "finstagrams":

>Finstagram (Finsta) is student's fake (or second) Instagram account.
Students, usually girls, get a second Instagram account along with their real
Instagrams (Rinstagrams), to post silly pictures or videos.

------
terda12
I'm doing art as a career after my comp sci degree and instagram is just
perfect for me. The fact that instagram is pics only works very well for
visual artists, and I can easily share my work in a relaxed sort of way.
There's also tons of other artists on instagram and the way it's set up I can
easily see their pieces of artwork much more easily than twitter/facebook.

Also Facebook is a dead zone now. It's literally pointless political junk and
rehashed memes shared by "friends". The only usage I have for it is to message
my old friends.

Snapchat is also starting to die out ever since Instagram implemented their
own "snapchat" feature. IMO Instagram just does it better than snapchat.
Snapchat is just too bloated for me. See with instagram I can follow someone
like Kanye West, see his life in cool pics and his "snaps" in a convenient
way.

------
pfarnsworth
Yep. Kudos to them, I remember thinking this was one of the dumbest
acquisitions I had heard of, until Whatsapp. But Instagram has been a huge
success.

The thing is that the Instagram and Whatsapp acquisitions are responsible for
fueling this idea that all you need to do is create growth, and Facebook
and/or Google will pay billions to acquire your company. Snapchat would never
have gotten funding if there wasn't this dream that this could happen. We'll
see if Snapchat is worth the $25B that is purported for their IPO, but I think
those two acquisitions were the catalyst for all of this.

~~~
ReverseCold
I can't imagine Snapchat not being worth $25b. They should be (in theory)
minting money with all the native ads they sell.

------
notfreeyet
I never mocked this deal. I always thought this was a small price to pay for
insurance that Instagram wouldn't subsume Facebook. It was only 1% of
Facebook.

But I still think $19 billion was about $17 billion too much for WhatsApp.
It's a messaging product that doesn't directly threaten Facebook the way
Instagram does. They could have created 10x $1 billion teams to compete and
easily done better than what they have with WhatsApp. It seems like a cowardly
use of $19 billion. Oculus cost them $2 billion and there are many other
breakthroughs that are equally underpriced.

~~~
frik
WhatsApp already replaced FB chat in various regions. And FB is already kind
of a ghost town, beside elder 50+ new-comers who got their first smartphone
just recently - in various regions. If you live in a filter bubble, where FB
is still very on-vouch, great, but it depends on your friends and geographic.
Many have the FB or messanger app still installed but rarely open it (because
you can't even remove it from eg Samsung phones, only a few know that it's
possible to deactivate it). That said, WhatsApp (the app) feels very
cumbersome to use, compared to competitors from other countries.

So Instagram and WhatsApp are what keeps Facebook ahead. FB itself (the social
network site) is probably past its peak (in various regions).

------
zappo2938
I think the brilliance of Instagram is how they solved the problem of image
ratio and rendering to different devices -- make everything a square. About
the time of the purchase Facebook engineers and designers had been making
talks about image layout. (I'll edit this if I find the bookmark to the link.)
I wonder if the purchase was an extension of finding a working solution to
working with images of different sizes, orientations, and aspect ratios.

------
jakebasile
I remember thinking this was a silly move, but my greatest regret is that I
did not reserve my preferred user name in time. This means I'll never really
be able to use the service.

~~~
planteen
> This means I'll never really be able to use the service

I think you mean "This means I'll never really want to use the service."

------
aznpwnzor
Instagram is what will take down Snapchat or at least defend Facebook against
Snapchat's offensive. Snapchat refuses, for good reason to its product, to
enact discoverability which Instagram (thanks to Facebook's expertise) handles
perfectly.

Instagram has also added to Facebook's main product through the autoplay
videos, a tech that FB engineers could not get to work until the Instagram
acquisition.

------
ianstallings
Let's be honest here. FB bought IG because they were the competition and what
was the end result? Those guys at IG got benched for years and haven't done
much since. So they _won_ , if money was the goal. But if the goal was winning
hearts and minds, and making an impact on the industry, they got sidelined.
They lost. IG will never reach it's full potential. So yes, a good purchase on
FB's part. But for IG? Debatable.

~~~
vecter
I'm so confused how you came even remotely close to your completely wrong
conclusion. IG has won in almost every way imaginable. Now that Snapchat is
the new threat, IG has been aggressively copying their features and it's
working.

~~~
ianstallings
Which they had years to already work on and leap ahead, but now they're
playing catch up.

I came to this conclusion by wondering, who sold IG? I can't remember. I can't
remember who created it to be honest. Because now they're a footnote.
Everything they've done they could've easily done without Facebook and become
a serious threat to FB and every other platform. But not now. Now they're on
the bench. This is what competitors do. They buy you up and make sure you
never work on anything that competes, and everything you do they take credit
for.

------
draw_down
I think about this whenever a startup is acquired and everyone here balks at
the price. Turns out $1B was a bargain for Instagram.

~~~
mikeyouse
Similar outrage was had after Snapchat turned down a few billion-dollar offers
and raised money at multi-billion dollar valuations;

[https://news.ycombinator.com/item?id=7150927](https://news.ycombinator.com/item?id=7150927)

[https://news.ycombinator.com/item?id=6671371](https://news.ycombinator.com/item?id=6671371)

[https://news.ycombinator.com/item?id=9065240](https://news.ycombinator.com/item?id=9065240)

Now they're planning to raise more cash in an IPO than many of the initial
'crazy' buyout offers at a valuation of something like $25 billion. And their
CEO is engaged to a Victoria's Secret model. It turns out that there's more to
building a business than complex engineering and one-of-a-kind services.

------
jonknee
It turned into one of the best tech acquisitions ever, even better than
YouTube because it actually makes a profit.

------
fullshark
The article's position that being mocked by Jon Stewart is meaningful is
silly.

------
RodgerTheGreat
Playing the lottery and winning doesn't retroactively make you a tactical
genius. Facebook saw a rising competitor, threw cash at the problem- a page
from the playbook of practically every major corporation in history- and in
the fullness of time came out ahead. This is a story about nothing.

~~~
gm-conspiracy
Agreed.

Look at what happened with Yahoo and Mark Cuban.

------
DoodleBuggy
Hmmm... the headline is succinct and probably is satisfactory to summarize the
entire article, but let's see if there is some deeper data or meaningful
insight!

* Clicked link to read article

* Immediately overwhelmed by fullscreen overlay ad

* Closed fullscreen overlay ad to attempt to read article

* Immediately assaulted by blasting volume autoplay video ad

* Rather than read article, scroll around and attempt to quickly locate blasting volume autoplay video ad to mute or stop

* Unable to quickly find and mute the blasting autoplay nuisance ad, instead decide to close the browser tab without reading even a word of the article

* Remembered to enable adblock in Canary

What a great web experience!

~~~
aioprisan
That's why my adblock is always on.

~~~
econnors
Typical progression for me:

Adblock auto-enabled => I like this site, I think I'll disable adblock to
support the creator => Autoplay video ad blasting || ad displays over content
|| full screen ad appears without a clear exit => Adblock auto-enabled

~~~
aioprisan
It used to be the same for me, now I just pay for the 5-10 quality sites that
I read often enough for me to miss them if they stop existing.

