Zuckerberg blew $1bn on Instagram 'without telling Facebook board'
Facebook CEO Mark Zuckerberg left his board out of the loop as he personally hammered out a $1bn deal with Instagram for its colour-changing photo software in three days of negotiations in his house in Palo Alto, culminating in the deal on Sunday 8 April, a report in the Wall Street Journal claims. Citing a person familiar with …
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when will the bubble burst?
Safe ground to say before end 2013.
Any predictions when? How?
FB IPO could be a catalyst but probably a bit early.
For certain values of "about to"
One of the big lessons of the last couple bubbles is that a bubble will persist far longer than reasonable commentators expect. So figure 2015 at minimum.
I'm sorry...a BILLION bucks for what...? Seriously? This counts as indispensible, market-changing innovation does it?
FFS.
Also, this going-over-the-head of the board business will not end well either for Zucks or FB. They'll spend the next 3 months or whatever it is until IPO trying put a muzzle and a leash on him after this "stunt". Though "Stunts" are normally *a lot* cheaper than $1bn...
To be fair, 'cunning stunt' is almost exactly what I think of when I see Zuckerberg mentioned.
Almost.
Only time will tell
As all other posters I am also inclined to say "OMG 1 billion for what"....
but then again I did not create a successful Internet startup that is worth billions now so my comment is:
"only time will tell is the 1 billion was worth it."
PS: youtube!
Re: Only time will tell
how much money has youtube actually made though? last I saw it was costing google millions a year.
Re: Only time will tell
Your right Google are still propping up YouTube as it is running at a loss year on year.
They can't even get a decent ad revenue out of it compared to the amount of people using it.
Re: Only time will tell
There's a certain sad irony there. A lot of people voluntarily share favorite TV commercials via YouTube links; yet Google can't figure out how to monetize an actual desire to watch ads?
Are there any solid patents on the instagram software? It could perhaps make sense if there is a patent for post-processing photos though software on the phone.
If not couldn't zucker & co have just paid $10 million to develop a better competing product?
A chinese company would implement that solid patent and sell the product for valy, valy cheap.
> patent for post-processing photos
No
Sure they could re-write it
They might even be able to re-write it better. But they sure wouldn't have however many millions of users on day one like they did by buying it.
They bought the users, not the software
Re: Sure they could re-write it
"They bought the users, not the software"
He may have *thought* he was buying users, but those users haven't actually signed any legally binding contract with anyone so he really has nothing to show for his billion. It is unlikely that he'll be able to sell those users on to anyone else, so in straight accounting terms his "asset" is worth a damn sight less than he paid for it.
At best, you could argue that he is now free to develop his own version of the same product without a risk of being sued by Instagram. However, since Instagram were demonstrably not making anything remotely resembling a billion dollars out of the invention, even triple damages wouldn't have cost as much as he has paid.
Patents?
In a sensible world, they'd be duds... as they would be for unpatentable subject matter... yet in yankeedoodle land... sadly it appears they can just about patent anything...
Re: Sure they could re-write it
What? No due-diligence? Suppose the two discussed it privately, over wine, say, or golf, 9 months ago, and decided that if certain hair-trigger events occurred, they'd continue to agree to sidle up. Then, at the trigger event, IG's pres only needed to grab the IP-producing staff 1 hour before Z shows up, and sequesters them to a board room under some other pretext to keep them from twittering the developments... until AFTER the deal was formalized.
Still, you gotta wonder how much of the $billions would have been eaten up by attorneys and filings and such. Maybe Zuckerberg was smart on THAT "account", hahahaha....
The lawyers are probably rummaging around trying to figure out a plane mishap or a series of never-ending document vetting to make up for being cut out, hehehehe.
The elephant in the room which everyone appears to be avoiding commenting on .....?
If the valuation of Instagram was unorthodox, so were the negotiations. No bankers or lawyers were involved in the sitting-room deal which was thrashed out between Zuckerberg and Systrom.
Now that is progress and surely a sign that they are not needed in modern big business between principled principals.
Not a good day for parasites, that one.
Nice one, Mark. It would be a pleasure doing modern big business with you.
Re: The elephant in the room which everyone appears to be avoiding commenting on .....?
Good point. Without the bankers, accountants, lawyers and myriad other hangers-on he's probably actually got a bargain!
Re: The elephant in the room which everyone appears to be avoiding commenting on .....?
Funny, but it's not his money.
Tho parasites as ou call them actually do have a purpose...
did Systrom give Zukerberg a happy finish?
<hbo>om nom nom nom nom nom</hbo>
Those banks must be gutted..
alll the millions in fee's that they missed out on, probally a lot cheaper than going though the board, who would have phoned up goldman sachs to allow them to get their usual pound of flesh!
It's my pot of cash bitch!
And I waste it on any overvalued purchase I want! Bitches!
The interesting thing is that the sale was partly in shares. That means some of that 1bn figure is based on Facebook's own insane valuation, and that it's not really as ridiculous as it sounds.
1bn cash is not the same as 1bn worth of shares in Facebook, and I don't know how the split between cash and shares, but I'd bet that the bulk of the 1bn is shares in Facebook - and after FB goes public, that 1bn may not be worth nearly as much.
It's worth even less now that we know Zucks is both an idiot and totally contemptuous of his board.
Interesting, though...
If Zuk wanted it let him get it.
If he'd gone down the other route of "proper" negotiation, how much would a shed load of Lawyers have cost?
The legals might have got it down to, say $TooMuch, but their resulting bill would leave the whole transaction at $WayTooMuch,ButThankYouVeryMuch,NewAstonMartin,DoYouTakeCashToAvoidTax
A few less lawyers getting their piece of a pie that wasn't theirs to have in the first place can't be a bad thing, can it?
Just my thoughts...
Re: Interesting, though...
"a shed load of Lawyers"
That's the wrong collective noun. The correct one is "a gaol of lawyers", although "a wolfpack of lawyers" is usually considered not incorrect either.
Hmmm 25 comments and nobody has questioned the use of £'s in one of the paragraphs.
I can't believe I'm more pedantic than you shower of bastards, surely?
No...
you're just overly US-Centric. Stating the amount in British Pounds isn't incorrect, and as long as the current conversion rate is employed and the math accurate, it doesn't matter if you express it in pesos, euros or base 8. It's still the same number.
Some of us Murricans have noticed other countries and currencies exist :-)
This Zuckerberg chap.
He doesn't want a bridge by any chance......does he?
There you go
It just shows you the value FB places on YOU the product......
Glad I am not one of them.
Re: There you go
Now *that* is really a rather good point.
Glad I don't use either.
Fanboy chagrin?
"Instagram... saw a successful launch on Android, much to the chagrin of many an Apple fan."
I keep seeing statements like this, but where are all these heartbroken "Apple fans"?
I have an iphone, I've never actually downloaded Instagram, but it never occurred to me that it was Apple exclusive, or likely to stay that way if it was popular.. it's no secret that there are more Android handsets out there than iphones, so it seems a bit unlikely to me that anyone would be that upset or surprised by a social network expanding on to both platforms..
This supposed upset wouldn't be a little bit projected on the part of others, would it?
Re: Fanboy chagrin?
Ah, I see - a total of three people on twitter didn't like it. Yes, that sounds more likely.
Re: Fanboy chagrin?
Only three people said so, but all the echos around the blogosphere and the twittersphere made it hard to tell.
Re: Fanboy chagrin?
"Only three people said so,"
It used to be that there were only three people on the Internet*), and everything you**) see is just impersonation by those three. It's up to seven now, and because of the workload and the immensity of keeping track of who said what we're considering getting another two or maybe three on board, and also someone who can write us a computer program to do the administrative heavy lifting. Twitter was a gift from heaven though, we've got 99.9872% of the accounts set to auto-retweet, which cuts down tremendously on the amount of original (hah) content we have to inject there.
*) or was that just Usenet? I'm losing track a bit
**) you're not actually on the Internet, you just think so. You're impersonated by one of us.
"a total of three people on twitter didn't like it."
On of which turns out to be Twitter co-founder Jack Dorsey. There's also an Apple fanboi that quit: Phil Schiller.
asking price was too low!
They should have asked for 3bln, would have been 500 mln better off. In hindsight.
Re: asking price was too low!
Yes because clearly he would simply have paid 50% of whatever they initially asked for.
Re: asking price was too low!
fetching 1b off his pocket would make you think so, no?
ha ha ha
begining of the end for f.. kbook.
banks realy love moves like his.
look at htc stock price.
and they actualy generate profit from making things.
f.. kerberg produces bullshit and NO profits.
p. s anyone botheted to check jesus phone stock today?
down again.
People are saying it's been bought for it's 'user base' rather than the obvious fact that it doesn't make any money, but that leaves me with the question of what Facebook do with it?
If your on instagram and you aren't on facebook I'm going to say you've got a good reason to not be on facebook ie you don't like it as a site / company ethics / data mining. In which case facebook buying instagram is going to probably mean those people will close their accounts. All the other ones who aren't bothered will already have facebook accounts, so all they are doing is buying a service for a stupid price which has duplicate users to their service.
A mate of mine has been posting his stupid pictures taken with these filters directly onto facebook for months, so i really don't see what Zuck gains here apart from egg on his face when it all goes pop pop
There is logic
If they didn't pay for all the full legal bells and whistles (its only small anyway) then I bet they saved a few million on each side anyway so probably kept that as purchase price reward for a quicky deal.
(Work in a company with acquisitions going on all the time and legal fees can be eye watering even though they are only relatively small deals of £1-2m).
I like it, just because he didn't follow protocol everyone has a go, I bet if did it the other way and it cost a fortune the same people would also LOL.
Gay crush
if you ask me... I'd pay that much only if the founder was Cleopatra and the product was Egypt :/
No Lawyers!!
You're all missing the point of the article, "No bankers or lawyers were involved"!! The man's clearly insane, he NEEDS to be stopped before he destroys the very fabric of our lives.
Not a lawyer, but isn't this the sort of unilateral decision that gets CEOs sued by their shareholders for failure to perform due diligence?
My thoughts exactly
Ignoring the board and lack of due diligence just reinforces the impression that Zuckerberg is an arrogant little brat
CEO sued
even after the IPO, F***berg will be the largest/controlling shareholder( over 50%), so the board will do whatever he wants or it will be replaced. and if the majority of the shareholder wants something, he gets it.
Suckerberg should start counting from 1 to 1 000 000 000 000, with a slow pace. That way he will learn the value of a billion dollars.
Who's the dumb f*** now?
No board or banks involved, deal made in a living room... panicking much, Zuckerberg? Facebook should concentrate on making a mobile client that doesn't duck balls instead of trying to buy a popular mobile client which does one job, simply.
BTW the simplicity of apps like Instagram shouldn't be laughed at - that's the whole bloody point, who wants full Photoshop in their bloody pocket? See something memorable, snap, post-process with a little bit of nostalgic flair, post on web.
So sneering at it only shows the immediacy of sharing that the mobile web can bring has passed some people by...
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