
Facebook acquires Instagram - hunterowens
https://www.facebook.com/zuck/posts/10100318398827991
======
inmygarage
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.

~~~
homosaur
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.

~~~
larrys
"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.

~~~
jimmyvanhalen
and keeping Instagram away from Google. it's a good move.

~~~
wallawe
But back to the original proposition, is this indicative of a bubble when you
drop 1 Billion, or >1% of your estimated market cap on a preventive/defensive
measure?

~~~
niels_olson
you ever play chess? A pawn is 2.6% of your game's value.

~~~
corin_
I daresay that's true, but not exactly relevant. I've also played blackjack,
roulette, rock/paper/scissors, and I'm not sure if logic and tactics that work
in games are always valid business plans...

------
kposehn
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.

~~~
untog
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.

~~~
kposehn
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.

~~~
zmitri
I like this thread of reasoning. Also ties into the whole "Facebook" phone. If
they were to build one, it's possible it would be android based so maybe
that's why they were just waiting for the android app. I was thinking Spotify
for the music given all the ties to FB, but may be too big now.

------
jsm386
According to WSJ price is $1B

 _source:[http://allthingsd.com/20120409/breaking-facebook-to-
acquire-...](http://allthingsd.com/20120409/breaking-facebook-to-acquire-
instagram-for-1-billion/*)

Edit: Direct Source: [http://newsroom.fb.com/Announcements/Facebook-to-
Acquire-Ins...](http://newsroom.fb.com/Announcements/Facebook-to-Acquire-
Instagram-141.aspx)

_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. _

~~~
Toddward
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...](http://techcrunch.com/2012/03/08/no-filter-required-instagram-
reportedly-raising-40m-at-500m-valuation/)

~~~
marcamillion
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.

~~~
ChuckMcM
100% return in 3 months (it won't close to the end of the quarter) is an
annualized 400% return. If you're a VC you took $50M out of a fund put back
$100M, now you can make 2 bets at $50M when before you only had one. I don't
see any way that this isn't a great deal for the VCs.

That being said, this wasn't part of the S-1 and Facebook really has to tell
potential investors how this will affect the financials, so presumably there
is a revised prospectus or perhaps S-1 in the works.

~~~
kooshball
Like everyone else already said, VCs can't reinvest so they dont really want
2x returns.

Anyways, there's a excellent blog post that explains this very clearly. It is
written for founders to understand the VC's perspective when investing. Does
anyone know what I"m talking about?

~~~
gammarator
[http://www.danshapiro.com/blog/2010/08/vc-insanity-
economics...](http://www.danshapiro.com/blog/2010/08/vc-insanity-economics/)

~~~
mikeleeorg
Great article! Also related: Brad Feld's book "Venture Deals" goes into detail
on a lot of what Dan Shapiro mentions in this article.

------
kylec
Some of you might find this useful:

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

~~~
amirhhz
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.

~~~
yawn
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.

~~~
gdubs
Funny, I had a similar reaction. I was really late to the Instagram party but
the biggest thing I liked about it was that it was an alternative way to keep
a circle of friends. For whatever reason, I quickly re-connected with some
quality people that I had lost track of over the years, but was happy to find
on Instagram. Fittingly, a bunch of us had actually taken photo classes
together over a decade ago.

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

------
marcamillion
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>

~~~
Finbarr
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).

~~~
marcamillion
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.

------
tptacek
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?

~~~
untog
_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.

~~~
tptacek
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.

~~~
iand
The game is scored in total value of the ecosystem. Apple captures a higher %
of iOS ecosystem value because it's the only device manufacturer. Google
captures a lower % of a larger ecosystem, leaving value on the table for OEM
partners. The latter is a stronger long term strategy.

~~~
tptacek
No, the game is not scored in "total value of the ecosystem". The total value
of the ecosystem is only relevant if you control the whole ecosystem. Google
is making _far_ less profit on mobile than Apple is. If its strategy of
growing the ecosystem out and skimming less profit from it is a good one, we
should see it in their bottom line. We aren't, nor do we seem to be trending
that way.

Maybe someday soon Google's strategy of letting a thousand Android devices
bloom will pay off. But that is still a "maybe". Apple has tens of billions of
"definitely's" to counter that maybe.

Meanwhile: I think people are getting hung up on this whole Apple vs. Google
point, and getting away from my real point, which is that:

(i) Google's bids for a stake in mobile have been _hugely expensive_ and _not
particularly profitable_ ,

(ii) Apple's bids for a stake in mobile have been _hugely expensive_ and
_hugely profitable_ , and

(iii) Facebook's bids for a stake in mobile have been expensive but orders of
magnitude cheaper than Google's or Apples, and could end up hugely profitable
in the long term.

Facebook will end up looking pretty smart if that's what happens. They didn't
even have to buy a cell phone manufacturer or write their own OS!

------
statictype
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?

~~~
jc4p
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?

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

[http://gizmodo.com/5841667/facebook-photo-library-dwarfs-
eve...](http://gizmodo.com/5841667/facebook-photo-library-dwarfs-everything-
else-in-the-planet)

~~~
enfoster
the thing is that they don't have it sorted. Trying to do any sort of photo
management(move, delete, edit) in Facebook is a pain and I always receive
database errors thrown back at me.

------
johnrob
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.

~~~
itg
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.

~~~
rbranson
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.

------
mikecane
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/>

------
mrgreenfur
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.

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

------
coenhyde
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.

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

~~~
rokhayakebe
I thought that was the real story here.

------
cmer
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...](http://techcrunch.com/2012/03/08/no-filter-required-instagram-
reportedly-raising-40m-at-500m-valuation/)

~~~
draggnar
Is it against some regulation to do negotiations concurrently?

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

------
RexRollman
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.

~~~
freehunter
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.

------
rshl
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.

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

------
j_baker
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.

~~~
fredsters_s
wait - you think this is actually true?

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

~~~
fredsters_s
"the product is valued enough to not be summarily taken out back and shot"

------
jc4p
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
I can't believe this either...

------
jordhy
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...](http://thenextweb.com/insider/2011/08/24/facebook-couldnt-acquire-
instagram-so-its-making-its-own-filters/)

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

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

~~~
tptacek
So you're betting that they just straight-up lied in their press release.

~~~
damoncali
Correct - I don't believe them. I think they will merge the products to some
degree and then let what's left of Instagram rot.

------
veyron
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

------
goronbjorn
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…

------
skrish
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.

------
joeblau
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.

~~~
mdda
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".

~~~
joeblau
Thank you :)

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

~~~
ojr
PHP projects buying them

------
callmeed
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.

~~~
envex
Just curious, but why the change of heart?

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

~~~
jsz0
Instagram would have too when they needed to make some money.

------
acak
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.

------
EGreg
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. :)

------
jtchang
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?

~~~
freehunter
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.

------
mkramlich
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.

------
philjackson
No, Zuck. I meant the app...

------
juliano_q
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.

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

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

~~~
regularjack
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.

------
tzz
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.

------
awongh
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....

------
babuskov
Looks like Gary Vaynerchuk's was right:

[http://www.youtube.com/watch?v=FKiIjhyptVA&feature=youtu...](http://www.youtube.com/watch?v=FKiIjhyptVA&feature=youtu.be)

------
brlewis
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
_"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
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.

~~~
cpach
But that's the words of Zuckerberg, not the Instagram founders.

------
ChuckMcM
This is an interesting take:

[http://www.latimes.com/business/technology/la-fi-tn-why-
face...](http://www.latimes.com/business/technology/la-fi-tn-why-facebook-
bought-instagram20120409,0,7157117.story)

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.

------
joelmaat
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.

------
dreamdu5t
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?

------
johnrob
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.

------
iscrewyou
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.

------
nilsbunger
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.

------
loceng
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.

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

------
jakelear
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.

------
A-K
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.

------
imd23
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?

------
bimil
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.

------
thisismyname
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"

------
andrewhillman
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.

------
gsharm
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.

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

------
gbog
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.

~~~
there
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.

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

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

Source: [http://www.wired.com/epicenter/2012/04/facebook-buys-
instagr...](http://www.wired.com/epicenter/2012/04/facebook-buys-instagram/)

~~~
pbhjpbhj
"$400 Million", FTFY.

------
mkr-hn
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.

------
wensing
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?

------
dpcheng2003
HN is full of haterpraise today.
[http://www.davidpcheng.com/post/20808337202/instagram-and-
th...](http://www.davidpcheng.com/post/20808337202/instagram-and-the-art-of-
haterpraise)

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

~~~
ben1040
I just canceled mine five minutes ago with this form:

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

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

~~~
ben1040
The first few hits on a google search for "instagram cancel" indicated you had
to write in, but then I found this.

<http://help.instagram.com/customer/portal/articles/95760>

------
pmarsh
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.

------
guynamedloren
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.

------
tucson
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)

------
zinssmeister
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.

------
methoddk
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.

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

------
dave1619
Congrats to the Instagram team. An amazing group of people that really worked
lean and delivered what people really needed.

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

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

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

------
yawn
2 things I'm very curious about:

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

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

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

I had no idea my account was worth that much.

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

~~~
goronbjorn
$1b according to WSJ

------
lindstorm
Looks like this acquisition was in their business plan.

------
baby
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

------
HSO
This is the Netscape IPO of the app economy.

------
michaelkscott
How many people work at instagram?

~~~
Kopion
12

[http://www.linkedin.com/search/fpsearch?companyId=2289109...](http://www.linkedin.com/search/fpsearch?companyId=2289109&sortCriteria=R&keepFacets=&facet_CC=2289109)

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

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

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

------
wavephorm
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...](http://windonaleaf.net/post/20464525754/instagram-perform-ads)

~~~
2pasc
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.

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

~~~
2pasc
Well... 1B is an amazing amount of money, but it is "just" 1% of Facebook post
IPO value. What are the odds that Instagram growing more and more, the market
freaks out, and Facebook stock loses 3-4% in a few weeks. Facebook buying
Instagram is an insurance against this bumpy ride happening, and at a price
much less that what it would be on the stock once Facebook becomes public.

------
Baba_Chaghaloo
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.

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

~~~
XiQiao
google~~

------
hjhjhj
Best quiet period PR stunt ever.

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

------
beedogs
$1 billion for something literally no one uses.

Web bubble 2.0 can't burst soon enough.

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

------
briancray
Can anyone hear the flush sound?

~~~
gavanwoolery
Upvotes for you, sir!

