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 …
I believe we are still in pre IPO so the 100 billion dollar valuation is noise.
But still the other 40-50% is owned by investors and Zuckerburg has a fiduciary responsibility especially in light of his desire to cash out. Why else is he taking the company public?
Anyone purchasing shares in FB after this stunt probably bought shares in groupon.
There's honestly no reason to buy them at all. You could build a competing feature for a few tens of thousands that would be available on MORE platform than Instagram exists on, and do a better job.
I'd say 4-6 months 3-4 people can create that product. There is nothing sophisticated or hard. No real time processing on the servers, image filtering is well studied too.
I still maintain it's money laundering.
If he didn't do this as a shift move to throw some money at a friend he's an absoute moron. If it were about buying out his friend's company then he'd just be acting like a prick towards the other board members.
Instagram surely can't even have any patents given they're doing something photoshop has done for ages. Buying a userbase is stupid given it could disappear over night since instragram is just a fad at best.
@lee; did you bother to do ANY research before ranting like a child who ate too many paint chips this week? Faceboook had $1.6 BILLION in revenue the first half of 2011.
http://techcrunch.com/2011/09/07/report-facebook-revenue-was-1-6-b-in-first-half-of-2011-net-income-500m/
I'd suggest before spouting off like a half-wit, you do at least a*LITTLE* research.
"Mr. Andreessen, whose venture-capital firm was the second to invest in Instagram, cutting a $250,000 check before the service launched, was surprised when Mr. Systrom walked into the room about an hour into his meeting with Mr. Zuckerberg, the people said."
I'm curious about the Facebook board's Mr Andreessen. He's apparently invested $250,000 into Instagram prior to the sale, so how much does he stand to gain now? I see that the sale is primarily Facebook stock, so wouldn't Mr Andreessen be winning quite a bit of his own stock? Stock that they're all hoping will be worth a metric fucktonne now?
Perhaps it's possible that Mr Andreessen knew a bit more about what was going on and the $1b price paid had the secondary goal of lining the Facebook board's own pockets.
I had never even heard of Instagram until I saw the Apple lot whining about it appearing on Android.
If I had been one of the "Userbase" I'd probably stop using it based on the sickening greed displayed by the CEO when placing that an inflated value on my head.
Someone mentioned money laundering - that sort of fits, along with creating a buzz and cooking the books in time for the FB IPO "Look we now include Instagram which alone is worth $1bn!!!".
When this bubble bursts, how's about we follow the current trend for "retro" for the next one? I've got a couple of nice Tulips I got from B&Q at the weekend that I'd be prepared to let go for a couple of million each --> Tulpenmanie
I have never used Instagram, though I seem to recall it has a product icon that looked remarkably like an old Polaroid camera (I haven't re-checked this factoid). In fact, this likeness was IIRC the reason I even bothered to look closer at what the app did. I subsequently moved on as Instagram provides no utility of any use to me. I DID, however, look at Instagram because of "the Polaroid" thingy.
a) I wonder how many others were attracted by the Polaroid camera icon?
b) Is there a business model somewhere in using (or is that abusing) the image of a massively well known product to gain "eyeballs" at zero cost?
c) If the answer to (a) is "a zillion" and the answer to (b) is "Yes", then I have a great list of "images" we can poach to launch a product.
Philip
I would like to know how they counted out £1bn of Facebook shares. The shares are unlisted and can't be freely traded, so how many shares are worth £1bn? I remember Facebook was widely regarded as being "worth £15bn" at one point on the basis that Microsoft had bought about 5% for £750m. The maths may be correct, but there is absolutely no way Systrom can actually go out and buy goods and services worth £1bn. Even if Microsoft decides they want to buy another slice, and Systrom would like to sell his, they won't ask him. They'll get the shares from some shadowy Melmotte figure.
There is of course the upcoming IPO. But as above, it won't be Systrom's shares on offer, it'll be the private equity firms' and investment banks' shares. He may even be restricted from selling his shares all at once in order to keep the share price up. If Facebook becomes the next Google - i.e. has a successful IPO, the shares don't tank, are traded in sufficient volume that he can sell his "£1bn" without breaking the market, and all this goes on for long enough for him to outlast any dealing restrictions, he'll be rich. If any of those things does not come to pass, he may as well have been paid in Monopoly money.
Still, I bet he's enjoying himself as long as he doesn't think about it too much.
and I hope he enjoyed it.
However, he in turn "hammered" the collective arses of the lawyers and other parasites that usually flock like vultures around these deals so I say good on him for that.
As for "Shareholders Suits" etc, ummm..no. FB is private still, sorry.
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