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> A glass of water can be worth more than the New York Times if Zuckerberg is lost in the desert

True. But only if you have the only water on sale in the desert.

What is instagram anyway? It tints photos and uploads them? That would cost Zuckerberg or Page maybe $10k to code and roll out a clone. I don't get it. Unless they're paying the owner of a rival tap to turn it off. But then someone else will just open a new tap, the barrier to entry is low. I still don't get it.

Instagram: - tints photos - uploads them - and has 30 million users

I largely buy the gigaom explanation (http://gigaom.com/2012/04/09/here-is-why-did-facebook-bought...). That's why the water-in-desert metaphor is, IMHO, very apt.

This explanation makes me daydream about a new social app that convinces FOO million Facebook users to join just on the promise that each user gets a stake in the payout when it gets bought. How impossible is it to get 30 million people on board for an average payout of $30 each? Maybe some game mechanics could help... get more of your friends to join "Let's-eat-FB's-lunch-agram" and you get a larger payout.

I'd pay to read your daydream if it were an ebook.. it sounds like fun.. like Bruce Sterling meets Adam Mansbach.

But only if you have the only water on sale in the desert.

Deserts tend to be deserted. "The only water seller" is redundant.

But the social-media photo sharing space is not exactly deserted.

You don't understand brand value.

No I do not think that is all, and some could argue that they have 30 million iOS users...but people need to realize, Facebook could have done this for 100,000$, 10,000 times less then what they paid for. And they have the world's largest and most captive audience, 845 million people, they would have just needed to convince less then 4% of them to have a similar amount of users.

Make no mistake, this is a crazy amount of money spent on a less then 2 year old, 13-man company. I think post-IPO, Mark might not have been able to get this as easily approved by the board of directors.

It's really not realistic to say that facebook could make it for $100k; even entry level developers at facebook make more than $100k salary yearly which means they each cost the company significantly more than that including benefits, office space, hardware, etc. Even if they took 2 developers, half a PM and half a UX person on this for only one quarter it would cost way more than that.

Of the 13 people, two are founders, two are engineers, two are developers, the rest are customer service reps.

Of the four engineer/developers, only one of them wasn't hired in the last few months. One of them was hired two weeks ago, one in January, another in December.

So only one developer is responsible for the app and all the servers, the others haven't hardly had time to get up to speed.

Not surprising, the iOS version is trivial since CoreImage' image processing library provides all the filters and image processing. Doing the port to Android was the hard part, although most likely they just licensed an image processing library from someone, or extracted it from GIMP's open code.

I think it is realistic to say the cost of developing the iOS version, which is what most of their 30 million customers are using, was well under $100,000.

First of all you are talking about Instagram and I am talking about facebook. If some random students made Instagram who were otherwise making minimum wage it's not like you can claim Facebook should be able to make it for <$1000. Also, it isn't just the app that we are talking about but the server and all associated infrastructure.

But secondly, I'm not sure how you went from 13 people to 3, lets assume we we accept that we are only talking about the 3 people. Even if those 3 people are making only $50k yearly salary, working on this for 6 months is already costing Instagram well over $100k once you take into account office space, benefits and hardware.

They could have done the tech for that much. The marketing would have cost a bit more. But do you know how much it costs to send tech and marketing a year and a half in to the past? That requires BIG bucks.

Yeah but they'd have to either integrate it with the Facebook app, which is over complicated and absolutely stinks on Android (still), or they'd have to release a separate app which would be competing with Instagram's brand.

The success of these new things like Instagram and Tumblr seem to be their mindless simplicity.

I ignored brand value for the sake of argument. But no, I really don't understand $1 billion of supposed "brand value"

What brand value? I never hear anyone talking about Instagram in real life, ok, maybe in some twitter feeds. But they'll go move on to the next big thing if the next big thing gave them more of what they wanted. Instagram is probably a bigger brand name to hackers, and developers than it is to regular users.

I'm not sure if this reflects poorly on me, but I actually forgot what Instagram specifically did, and had to do a quick search to refresh my memory upon reading the news.

Mentally, I lump Instagram, Pinterest and other en-vogue social-ly apps together. Speaking of the latter, I would imagine they're probably rubbing their hands with glee right about now.

I don't understand how the Instagram brand is worth $1,000,000,000.

You're thinking in the wrong terms. Is the Instagram brand worth less than 1% of Facebook? Also, I see hordes of high school and college females- especially the 'popular' ones with iphones- using instagram. When you have possibly the best target market, and a tiny valuation for what basically is facebook's other lifeblood (photos are second only to the social graph), Instagram was positively cheap.

I'm sorry, I think we're living on different planets.

Edit: I don't mean to rubbish what you're saying. I agree that it and the brand have value but to me that equates to something like $150 to maybe $250 million at a push. $1 billion is off the wall.

Edit 2: as is a $100 billion valuation for FB.

Facebook isn't worth $100 billion, considering that last year's revenue was only $3.7 billion.

Brand value is ephemeral. Look at Kodak.

I remember people talking about the brand value of Pets.com

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