Facebook just paid 1 BILLION USD for Instagram- a company that was founded in Oct 2010, that is a simple photo sharing app (which isn’t even a new trick except for adding filters) and only just last week added an Android app.
Sorry…but WTF?
I haven’t read the articles about it. But I wouldn’t be surprised if Instagram have some technology patents that Apple want to exploit. Still makes you wonder, if for that price it wouldn’t be cheaper to throw bodies at the problem and do it in house.
You think it’s just now that there’s a problem?
I still don’t understand why everyone is so moist over Facebook or 90% of other online companies. What the fuck do they actually do and how the fuck do they actually make anyone money? The whole bloody thing is one massive speculation.
Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.
If you can create a product with millions of users, you can expect to do very well.
Definitely not. The VC money is not even comparable to what it was in the late 90s before the first .com crash. It is much more cautious/harder to get seed money now. There will still be acquisitions like this with big players seeing small ones they like and want to buy, but there isn’t the same amounts of money going into VC now or the reckless spending of money.
That’s what I read aswell. Still spending 1 billion USD like that points to a tremendous waste of money. Avoid buying their shares. All these companies are heading for a fall…Facebook, Zynga, Groupon. To my mind Google and Microsoft are still going to be a good bet long-term.
[quote=“Adam_CLO”]Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.
If you can create a product with millions of users, you can expect to do very well.[/quote]
I agree that the amount of users is impressive, and it’s definitely worth $$$. It is a good way to get rich quick if you have the right idea and implementation. But not 1 billion $$$. Because in the end you have to monetise a product. You’ve also got to see what the threshold barrier is. For a photo sharing app the threshold is exceedingly low. It is obviously just to ramp up their hits and userbase just prior to IPO. Some bean counter did a calculation on how much the share price would go up extra but they ignore that within a year instagram will probably be renamed onceagram.
There is a fundamental problem with Facebook’s valuation, which is that they will soon max out on growth. Uh oh. I guess there is some type of curve that the user base follows, many people don’t use Facebook very often after a while. This will become apparent when new user registration slows dramatically.
[quote=“Adam_CLO”]Draw Something is an app with 10 million users. They got bought out last week for $200 million.
Instagram has 30 million users - just on iOS devices. They released their app on Android last week and got 1 million new users on the first day so there is still a lot of growth potential for them. They are now worth $1 billion.
Facebook has 800 million users and is expected to be worth around $100 billion when they IPO soon.
If you can create a product with millions of users, you can expect to do very well.[/quote]
I have a Facebook account (though I don’t use it very much). I’m not quite sure how Mark What’s-His-Face? is going to make any money from me. Having 800 million users doesn’t mean diddly if most of them are freeloaders like me. Maybe I’m wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.
[quote=“GuyInTaiwan”]
I have a Facebook account (though I don’t use it very much). I’m not quite sure how Mark What’s-His-Face? is going to make any money from me. Having 800 million users doesn’t mean diddly if most of them are freeloaders like me. Maybe I’m wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.[/quote]
I would guess that they sell data. Data mining into 800 million must provide some very valuable information.
[quote=“tomthorne”][quote=“GuyInTaiwan”]
I have a Facebook account (though I don’t use it very much). I’m not quite sure how Mark What’s-His-Face? is going to make any money from me. Having 800 million users doesn’t mean diddly if most of them are freeloaders like me. Maybe I’m wrong on this and whilst I am an infamous tight-arse, everyone else is buying golden sheep (or whatever they do on Farmville) with their credit cards.[/quote]
I would guess that they sell data. Data mining into 800 million must provide some very valuable information.[/quote]
Companies and individuals pay to serve ads at the side of the screen. That’s how they (FB) make their money.
[quote=“cfimages”]
Companies and individuals pay to serve ads at the side of the screen. That’s how they (FB) make their money.[/quote]
Oh yeah, plus that 
Okay, but again, maybe this is where I am different to most people.
If they sell data, it’s presumably for marketing purposes. If they have an ad on a site, it’s presumably for marketing purposes. Yet if a person (including some family members, friends of friends, etc.) sends me an unsolicited email, it goes straight in the trash folder. I get dozens of unsolicited emails per day and they all go straight in the trash folder. I can’t remember the last time I clicked an ad on a website and actually bought something that I hadn’t already set out to buy.
I still don’t really get their business model. It seems like smoke and mirrors to me.
[quote=“GuyInTaiwan”]
I still don’t really get their business model. It seems like smoke and mirrors to me.[/quote]
But they make a big profit. $4 billion a year or something (I may be wrong about this figure, but it’s in my memory for some reason 
).
EDIT: That’s revenue. Profit is 1 billion.
it’s in part, the same business model as TV, radio or press. You watch the ad the product stays in your mind. next time you’re looking for that type of product you’ll remember that ad and that product. the added dimension is the click through which takes you to the promotion page of the website. TV companies are valued in much the same way ie It costs more more to advertise during the most popular programs.
I bought some Zillow for fun, and I think it is one of the new dot.coms and I don’t think it will crash into bits.
It’s about value in the end. I don’t see the valuations matching the value generated. They have value but not THAT much value. Most of the business models do not have a high enough threshhold so they can be overturned quickly. They are not diversified or rooted in the real world enough. Google is a great company because it has it’s hands in everything, geolocating, server farms, automobiles, search, mobile, hardware. That’s also why I like Amazon, a great mix of real world and online.
Yes, they have their hands in everything. But at the end of the day, they make 95% of their money out of one thing. Search.
They are looking to diversify into other areas like social media, mobile, hardware etc. They are just throwing money everywhere and seeing what sticks. So far they haven’t found it.
Microsoft has the same problem. It makes the vast majority of its money from two products - Windows and Office. Yet they are throwing money everywhere into mobile, search, browsers, video games etc. hoping to find another platform to make money from. But they haven’t found it either.
I agree with you but only up to a point. Microsoft is quite diversified as to it’s revenue base (business and consumer) although 75% still comes from Windows and Office.
tannerhelland.com/2962/where … oney-2010/
Google’s push into Mobile already brings the same amount of revenue as Facebook makes from all it’s ads, even though it is only 10% of their total revenue. My guess is they also have massively valuable IP rights in various sectors. Whether intentional or not free Android apps have proven to be a huge money spinner for them.
People must be doing some serious ad clicking then. Wow. I didn’t realise how compulsive people are. How much do they get per click?
Zuckerberg is on record calling Facebook users “dumb fucks”.