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A couple of things I thought about while reading this, unrelated to the ethics...

1- If he's able to assign a precise value to the investment outcome, that implies that Facebook assigned an explicit value to their stock involved in the transaction. I don't know if that had to be the case or not, maybe it did. But what it makes me curious about is...what valuation did they use? The current second market valuation? Something else? The $100 billion bandied about isn't an official valuation is it?

2- What Facebook bought was an open social graph, as opposed to their current private one. Now that makes a lot of sense as something worth a lot of money, specifically to Facebook that otherwise has no way to make their private graph public, at least not in any way that doesn't piss off their users. Of course, now they have some verrrrrry tricky waters to navigate.

1. It was published the day after the Instagram acquisition that Facebook had assigned a valuation of $75 billion to their stock.

2. I doubt Facebook bought Instagram for the "social graph" . Facebook has always been laser focused on user engagement. One of the core features on Facebook that keeps users engaged is photo sharing with their friends. Instagram was an up and coming challenger in the sharing photos with your friends arena and that is the primary reason Facebook bought them.

Re: #1, this is a part of a reasonable answer to "How are they worth so much?" - the purchase of Instagram was made "roughly 30 percent in cash and 70 percent in stock[1]", meaning that the $1B was really ~$300M in cash and a bit under 1% of Facebook.

Maybe that still looks high, but it's certainly not as outrageous as a billion dollars. The bit that makes it look crazy is Facebook's valuation at nearly $100 per active user.

1: http://dealbook.nytimes.com/2012/04/18/with-instagram-deal-f...

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