> Say what you want about Zuckerberg but the guy was well ahead of his time and could see how things would evolve and what tick with people brains.
Did he really predict that, or did he just see an upcoming potential competitive threat and buy it?
I feel bad for the founders of Instagram. They could have been the next Zuckerberg(s) (as Instagram seems to be taking over as Facebook seems to be starting to fade), but instead they're subordinates in Zuckerberg's empire.
You "feel sorry" for two people in their mid-twenties who made anywhere from $100M to $400M selling their 15 month old company (while making the other 11 employees rich along the way.)
Ok. Beyond that, why do you assume the valuation would be exactly the same had they not sold to FB?
Exactly. To be honest Instagram's hypergrowth probably couldn't have been sustained if the company didn't end up getting access to some of Facebook's engineering talent and hiring pipeline.
Having 11 people try to manage a site of that scale is just asking them to keep doggypaddling to avoid drowning.
yea, nothing to feel sorry about. What could anyone do with a few millions (or billions more) if they are already rich by half a million.. unless you are trying to climb the Forbes leaderboard.
>if they are already rich by half a million.. unless you are trying to climb the Forbes leaderboard.
That would be half a _billion_ and, generally, I don't "feel bad" for people who don't attain their dream of climbing the Forbes leader board (assuming that is even a goal for these two.)
You should listen to the How I Built This podcast with Kevin Systrom and Mike Krieger. I think it's Kevin that said something like "I could keep doing what I'm doing the rest of my life. Work hard, build the company, but then what? At the end of it, I write a book about business? I want to enjoy my life". Definitely don't feel sorry for them, they met their goals.
Reading the discussion at the time there wasn't too much prediction required:
>A few days ago it was rumored to be valued at $500 million. A few months ago it was $300 million. Its last round — just a year ago — valued the company at $100 million.
The few days ago $500M round was just done because it was known Facebook was acquiring it. You can’t really count that. That was just VCs quickly doubling their money.
The other numbers are good, but then other companies also grow at similar rates. How come Instagram is the $100B valued company with 1B users and Whatsapp has over 1.5B users? And both are growing still. You’d think there would be another company coming at them.
For Whatsapp as a messenger the only service close to them is Messenger with around 1.4B users (you could say WeChat or Line/KakaoTalk as well though they are mostly popular in east Asia only). And Messenger is a sister product.
YouTube is a similar knock out success. Huge mindshare beyond its huge numbers, but it isn’t a profit machine like Instagram.
So it’s just Facebook that controls the 4 biggest social networks/messengers outside China. Along with some of them being the fastest growing services as well to this day.
All of this is to again say it wasn’t completely obvious Instagram would become this big. Other companies also grow and get valued highly quickly. And almost no other companies or services get as big as Instagram, which is still growing.
Finally, the zeitgeist at the time of the purchase was of shock at the price tag. Almost no one thought it was worth the billion dollar price.
> I feel bad for the founders of Instagram. They could have been the next Zuckerberg
Like Snapchat, you mean? The risk is that, failing to acquire Instagram, Facebook could have built a clone and turned their massive user base to it. Instagram could have been in a distant third place. We'll never know.
I am not sure if Facebook was already seen as the Pacman of social things. It could have been Google or MS (and had I been in the shoes of Instagram founders and reached for acquisition I would have had gone with Facebook: better long term perspectives).
Yeah. They should have gone for 5-10. I remember on one podcast, Kara Swisher was light-heartedly making fun if Kevin, saying "..He was crying..". Sort of like that. I believe it was a recode podcast
Facebook went public so they have a board of directors now, therefore I would assume Mark has to find ways to keep them happy as well. I would guess the general vision of Facebook is like most corporations, to make more money.
I think you're asking me to interpret my comment. Apologies if not.
The link I pasted simply had a list of Instagram's financing rounds.
April 5th, 2012, Series B $50m
April 9th, 2012 Purchased by FB, $1b
Several days before being acquired by Facebook, Instagram raised a $50m Series B on a $500m premoney evaluation, which gave investors 10% of the company.
Typically in order to grant 10% worth of preferred stock for a raise, the company has to increase the number of shares. If there were 100 shares prior to the raise, and a had 1, I would have 1/100 or 1%. If there are now 110 shares, and I still have 1, it's now 1/110 or < 1%
A few days later, the company was sold for $1b.
1/100 * 1b = $10,000,000
1/110 * 1b = $9,090,000
In my contrived example about dilution, with my 1/110%, I lost out ~$1m, and for seemingly no benefit to the company.
Bringing it back to my original comment, employees as a collective, would have lost out significant money, for seemingly no benefit, while Sequoia benefited tremendously.
I should caveat my post:
--This is pure speculation on a number of fronts. Any number of scenarios could be true (even if unlikely)
* IG could have had 10% shares already allocated in reserve for a Series B, and never had to issue more. Employees would still in effect lose out on money, but not because of dilution.
* With that $50m in cash, IG could have paid out hefty bonuses to employees. IIRC at the time of acquisition IG had ~19 people.
* IG could have issued anti-dilution to everyone, keeping relative % near the same.
* The SeriesB may have had to happen in order for Sequoia to agree to the sale.
I can see that as a possible scenario but without the real numbers of dilution, it might have not had such a significant impact. Nevertheless sequoia did made a bundle and that was paid either by founders or employees. There must be some sort of funny business in that deal.
Did he really predict that, or did he just see an upcoming potential competitive threat and buy it?
I feel bad for the founders of Instagram. They could have been the next Zuckerberg(s) (as Instagram seems to be taking over as Facebook seems to be starting to fade), but instead they're subordinates in Zuckerberg's empire.