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Instagram, it’s only paper

Image via CrunchBase

As most people have heard by now, Facebook bought Instagram (a photo sharing service) for $1bn last week.  Some people think it was a crazy move and confirms that another Internet bubble is forming while others think it was a wise strategic move.

Let’s look at the bubble side of things and the valuation.  Facebook didn’t actually hand Instagram a check for $1bn, most of the $1bn was in Facebook stock – which has its own ‘crazy’ valuation now approaching $100bn – and any cash probably came out of the funding round that

Instagram had just recently completed.  In other words, the real cost was simply the cost of closing the deal (lawyers).  From the perspective of FB and Instagram the deal seems like a winner.  If FB don’t float for the big bucks, Instagram’s valuation would have plummeted anyway and having Instagram does add value to the FB proposition.

This then give rise to the next question, is FB worth $1oobn?  Who knows.  Sure they have incredible reach but how much money can they really make and how well will they survive the next ‘big thing’.  For those of you have been online for awhile you’ll remember that Yahoo used to be the big kid on the block with Excite (who?) close on its heals.  Microsoft was the evil empire, Apple almost went bust, google was a small start up and Janet Street Porter said the Internet was a passing fad.  In other words, things can change very quickly on the Internet and there are no givens – for anyone!

Excite (Photo credit: Wikipedia)

Related articles

• Zuckerberg closed Instagram deal without Facebook board approval (arstechnica.com)
• Instagram wanted $2bn in Zuckerberg’s secret Facebook negotiations (slashgear.com)
• Explore Instagram Photos without the Apps (labnol.org)

Instagram, it’s only paper

Image via CrunchBase

As most people have heard by now, Facebook bought Instagram (a photo sharing service) for $1bn last week.  Some people think it was a crazy move and confirms that another Internet bubble is forming while others think it was a wise strategic move.

Let’s look at the bubble side of things and the valuation.  Facebook didn’t actually hand Instagram a check for $1bn, most of the $1bn was in Facebook stock – which has its own ‘crazy’ valuation now approaching $100bn – and any cash probably came out of the funding round that

Instagram had just recently completed.  In other words, the real cost was simply the cost of closing the deal (lawyers).  From the perspective of FB and Instagram the deal seems like a winner.  If FB don’t float for the big bucks, Instagram’s valuation would have plummeted anyway and having Instagram does add value to the FB proposition.

This then give rise to the next question, is FB worth $1oobn?  Who knows.  Sure they have incredible reach but how much money can they really make and how well will they survive the next ‘big thing’.  For those of you have been online for awhile you’ll remember that Yahoo used to be the big kid on the block with Excite (who?) close on its heals.  Microsoft was the evil empire, Apple almost went bust, google was a small start up and Janet Street Porter said the Internet was a passing fad.  In other words, things can change very quickly on the Internet and there are no givens – for anyone!

Excite (Photo credit: Wikipedia)

Related articles

• Zuckerberg closed Instagram deal without Facebook board approval (arstechnica.com)
• Instagram wanted $2bn in Zuckerberg’s secret Facebook negotiations (slashgear.com)
• Explore Instagram Photos without the Apps (labnol.org)

Instagram, it’s only paper

Image via CrunchBase

As most people have heard by now, Facebook bought Instagram (a photo sharing service) for $1bn last week.  Some people think it was a crazy move and confirms that another Internet bubble is forming while others think it was a wise strategic move.

Let’s look at the bubble side of things and the valuation.  Facebook didn’t actually hand Instagram a check for $1bn, most of the $1bn was in Facebook stock – which has its own ‘crazy’ valuation now approaching $100bn – and any cash probably came out of the funding round that

Instagram had just recently completed.  In other words, the real cost was simply the cost of closing the deal (lawyers).  From the perspective of FB and Instagram the deal seems like a winner.  If FB don’t float for the big bucks, Instagram’s valuation would have plummeted anyway and having Instagram does add value to the FB proposition.

This then give rise to the next question, is FB worth $1oobn?  Who knows.  Sure they have incredible reach but how much money can they really make and how well will they survive the next ‘big thing’.  For those of you have been online for awhile you’ll remember that Yahoo used to be the big kid on the block with Excite (who?) close on its heals.  Microsoft was the evil empire, Apple almost went bust, google was a small start up and Janet Street Porter said the Internet was a passing fad.  In other words, things can change very quickly on the Internet and there are no givens – for anyone!

Excite (Photo credit: Wikipedia)

Related articles

• Zuckerberg closed Instagram deal without Facebook board approval (arstechnica.com)
• Instagram wanted $2bn in Zuckerberg’s secret Facebook negotiations (slashgear.com)
• Explore Instagram Photos without the Apps (labnol.org)

Instagram, it’s only paper

Image via CrunchBase

As most people have heard by now, Facebook bought Instagram (a photo sharing service) for $1bn last week.  Some people think it was a crazy move and confirms that another Internet bubble is forming while others think it was a wise strategic move.

Let’s look at the bubble side of things and the valuation.  Facebok didn’t actually hand Instagram a check for $1bn, most of the $1bn was in Facebook stock – which has its own ‘crazy’ valuation now approaching $100bn – and any cash probably came out of the funding round that

Instagram had just recently completed.  In other words, the real cost was the cost of closing the deal.  From the perspective of FB and Instagram the deal seems like a winner.  If FB don’t float for the big bucks, Instagram’s valuation would have plummeted and having Instagram does add value to the FB proposition.

This then give rise to the next question, is FB worth $1oobn?  Who knows.  Sure they have incredible reach but how much money can they really make and how well will they survive the next ‘big thing’.  For those of you have been online for awhile you’ll remember that Yahoo used to be the big kid on the block with Excite (who?) close on its heals.  Microsoft was the evil empire, Apple almost went bust, google was a small start up and Janet Street Porter said the Internet was a passing fad.  In other words, things can change very quickly on the Internet and there are no givens – for anyone!

Excite (Photo credit: Wikipedia)

Related articles

• Zuckerberg closed Instagram deal without Facebook board approval (arstechnica.com)
• Instagram wanted $2bn in Zuckerberg’s secret Facebook negotiations (slashgear.com)
• Explore Instagram Photos without the Apps (labnol.org)