Slashdot Mirror

← Back to Stories (view on slashdot.org)

Zuckerberg Made Instagram Deal Alone

Posted by samzenpus on from the going-solo dept.

benfrog writes "According to the Wall Street Journal, Facebook's Board of Directors was all but out of the picture when Mark Zuckerberg struck the $1 billion deal to purchase Instagram, the yet-profitless photo-sharing service. From the article: 'It was a remarkably speedy three-day path to a deal for Facebook—a young company taking pains to portray itself as blue-chip ahead of its initial public offering of stock in a few weeks that could value it at up to $100 billion. Companies generally prefer to bring in ranks of lawyers and bankers to scrutinize a deal before proceeding, a process that can eat up days or weeks. Mr. Zuckerberg ditched all that. By the time Facebook's board was brought in, the deal was all but done. The board, according to one person familiar with the matter, 'Was told, not consulted.'"

82 of 307 comments (clear)

  1. and this is how... by mozumder · · Score: 5, Insightful

    bubbles begin: when non-financiers with access to lots of money decide to make financial decisions.

    1. Re:and this is how... by Anonymous Coward · · Score: 5, Insightful

      Ya, good thing it wasn't experienced financiers making financial decisions regarding mortgage derivatives that caused a huge housing bubble and subsequent destruction of the economy a few years ago.

    2. Re:and this is how... by TWX · · Score: 5, Interesting

      I don't see how your two posts are the same thing.

      Market bubbles happen when something takes on an unreasonable value and continues to grow, people see that it grows and jump on, causing further growth, until there aren't enough new entrants to sustain the expected and required growth. Sometimes the subject of the transaction is something of actual value (property, raw materials), other times it's something of only representative value (Flowers, dotcom companies). A few investors can help the bubble grow, but they certainly aren't the cause. If anyone can be blamed, it's those who sensationalize and provide positive news coverage to bubbles, causing more people to join who might not have done so otherwise.

      I saw signs of the housing bubble in 2002 when houses that I felt weren't worthy started crossing the $150,000 mark in this market. When we got married in 2007 we chose not to buy another house, thank goodness. We instead did so in 2010-2011 after the market crashed and got a short-sale for about half of what was owed on it. Our only real lament is not selling the old house when prices seemed ridiculous and renting for a couple of years. We could have tripled our square footage and had no loan if we had done so.

      As for the dotcom bubble, that happened because a lot of people who didn't understand technology thought that those who claimed to had something of value, and thousands of companies that had no real product got money poured at them by greedy people who expected to be the next Bill Gates. Fast forward to now, and Zuckerberg is already a rich man, and his company is strong at the moment, so his acquisition isn't really the same thing.

      --
      Do not look into laser with remaining eye.
    3. Re:and this is how... by jhoegl · · Score: 4, Insightful

      Although you are correct and the OPs post is pretty dumb, we are in another tech bubble.
      It started when the "cloud" stuff started happening.
      So... just be careful.

    4. Re:and this is how... by Guppy06 · · Score: 4, Insightful

      and his company is strong at the moment

      So far as we know. Hell, if the company's own board is in the dark about what's happening...

    5. Re:and this is how... by TWX · · Score: 4, Interesting

      Call it peace of mind.

      Not having a loan also means having the option of having more disposable income when raising children, or being able to have a work arrangement more compatible with personally raising kids. It also means that if one is absolutely fed up of one's job, one has the choice of leaving when one doesn't have to worry about where to live.

      Our current loan is financed at 3.75%. We're well aware of the benefits of having a very inexpensive loan. But, even if we had the cash to invest or to pay a chunk of the loan off with, we'd seek to "recast" the mortgage to have both the lion's share paid and to have ridiculously low monthly payments, instead of investing, because owning a home is a sure thing, while investing certainly is not. If anything, we could buy third property and rent that property out too, like we did our old home, and make even more money. But, we're not worried about that, and since we're not terribly greedy people, we're not looking for every possible avenue to make money.

      --
      Do not look into laser with remaining eye.
    6. Re:and this is how... by fredprado · · Score: 3, Insightful

      The problem most people overlook is that you can't make plans for the next 30 years based on the current scenario. A lot of thing scan happen in such a large time span.

    7. Re:and this is how... by TWX · · Score: 5, Insightful

      I don't think that the Cloud stuff is a bubble so much as it's a fad way of renaming existing technologies under one umbrella label.

      You also have something different in Cloud, in that businesses actually have a product if they're offering Cloud services, whereas dotcom companies generally did not.

      --
      Do not look into laser with remaining eye.
    8. Re:and this is how... by skuzzlebutt · · Score: 2

      ...cloud bubble? WTF is next, a cloud bubble rainbow?

      --
      My debut novel AMITY now available: http://jeremydbrooks.c
    9. Re:and this is how... by lexman098 · · Score: 2

      Maybe I can understand the peace of mind (fixed rate mortgage), but if the market truly crashes on a 30 year scale then you and I and your kids are all kind of fucked anyway (it won't happen).

      I'm not sure why investing instead of paying your low interest debt gives you more disposable income or work/housing freedom. If anything I would think it's the opposite.

      As far as the house being a "sure thing" (assuming you mean it's tangible and insured), that isn't worth as much when you still have to eat etc. You need an income, and in tough times investment principle is probably better to take from than a refinancing (good bye low, fixed interest rate).

      Lastly and most importantly, you don't have to be greedy to do what's financially efficient. You can call yourself greedy when you're screwing over your tenants to afford another property.

    10. Re:and this is how... by Nimey · · Score: 5, Insightful

      Horseshit. The quants may have made it possible, but it was the beancounters higher up who made the decisions.

      --
      Hail Eris, full of mischief...

      E pluribus sanguinem
    11. Re:and this is how... by StikyPad · · Score: 4, Insightful

      Ah yes, blame the nerds. That's how it goes, right? Hackers steal your money and government secrets, nerds will shoot up your school, and they smell all funny to boot. Except it's *criminals* who will do those things, not hackers and nerds. When someone gets arrested for robbing a bank, you don't say "A construction worker held up a bank." It's no different here, and labeling them just feeds a stereotype.

      And while derivatives may have been invented by quantitative analysts (quants), they're not inherently risky -- they're just a vehicle. It's the type and diversity of securities packaged in the derivatives that determines the risk. The bankers knew full well what was getting packaged and why. The quants just gave them the "how." I'm not saying the soldiers aren't responsible for the consequences of following orders, but there's plenty of blame to go around, and ultimately those in command should be (or have been) held most responsible, since they are. That is, allegedly, why they get paid the big bucks.

      --
      https://www.eff.org/https-everywhere
    12. Re:and this is how... by ObsessiveMathsFreak · · Score: 2

      Eh, no. Bubbles being when financiers get access to lots of money.

      The troubles of our present day have everything to do with the decisions of financiers and bankers, and almost nothing to do with anyone else. Zuckerberg might have a lot of money, but his ability to cause a bubble in anything pales in comparision to that of even a small bank or hedge fund.

      --
      May the Maths Be with you!
    13. Re:and this is how... by khendron · · Score: 4, Funny

      No no no! A cloud bubble DOUBLE rainbow!

      --
      Life is like a web application. Sometime you need cookies just to get by.
    14. Re:and this is how... by superdave80 · · Score: 3, Insightful

      ...receive an average return higher then 4% over a 30year period.

      ...that i've been building up since getting a job in 2006.

      2012-2006 = six years, not thirty years. And you started investing right before the peak of the last market bubble, so why are you surprised that you haven't made very much?

    15. Re:and this is how... by V-similitude · · Score: 5, Insightful

      We are not in another tech bubble. There are certainly isolated instances of overvaluation, but overall, there isn't a consistent pattern of it. Take Groupon for instance. It's almost certainly headed for failure, but people have pretty much already caught on to that and the stock has already receded from its IPO. In fact, it never really enjoyed a large and long stock burst that you'd expect in a bubble. Pandora is also well below its IPO. Facebook, while well overvalued at $100B in my opinion, seems to have a solid revenue and profit stream and isn't particularly indicative of a bubble (though buying Instagram at $1B certainly doesn't make me want to be an investor, long term).

      I think there was some realistic fear of a tech bubble back before any of these "sexy" IPOs actually took place and people seemed overly eager for them. But with a little bit of bubble-fear from the media, people seem to have stepped back and are respecting true valuations again . . . more or less.

      And yeah, Zuckerberg making a dumb (or more probably, cronyism-based) decision for his company is neither here nor there.

    16. Re:and this is how... by jhoegl · · Score: 2

      That is my point though. Hype makes bubbles bigger and they expand faster than they should.

    17. Re:and this is how... by Beeftopia · · Score: 5, Informative

      Bad loans were the core of the housing bubble. To understand the reason behind it all, you've gotta ask yourself one question: "Why would lenders make loans that are unlikely to be repaid?" Answering that question leads to the answer behind the bubble. It was a bubble in supposedly AAA-rated mortgage debt.

      Here's how it worked:
      1) Securitization of mortgages into MBS (mortgage-backed securities).
      2) Banks made money from selling the loans to securitizers and getting them off their books, not keeping them and collecting interest.
      3) Demand for these securities skyrocketed, as they were thought to be safe and reliable income streams.
      3) This led to the utter deterioration of loan quality, as banks basically just needed to get warm bodies to make loans to, create the loan and sell it. You started seeing things like NINJA loans (No Income No Job or Assets - NINJA) and option ARM loans made to risky borrowers. All included in securities rated AAA.
      4) Investment companies bought these loans, ratings agencies stamped a AAA rating on them and the securities were then sold off. Buyers hungry for safe and reliable high interest returns couldn't get enough of it. Thus a bubble was formed.

      Basically, for mortgage originators, it was like printing monopoly money, and then turning it in for actual currency. When borrowers started defaulting en masse, the whole house of cards came tumbling down.

      Reading recommendations:
      1) The Economist magazine cover story, "House of Cards", from 2003. Check out the multiple links to the separate sub-stories that make up the issue under the "In this special report" heading.

      Viewing recommendations:
      1) The Inside Job - Oscar-winning documentary on the financial crisis.
      2) William K. Black interviewed on Bill Moyers.

    18. Re:and this is how... by Rennt · · Score: 3, Insightful

      The cloud is a bubble in part BECAUSE it is a fad way of renaming existing technologies under one umbrella label.

      "...in the cloud" is the new '...on the internet!' of the dotcom bubble

    19. Re:and this is how... by ThorGod · · Score: 4, Interesting

      I think GP was making a joke. "so on and so forth" is kind of an indicator.

      Bingo! I meant that as half sarcastic and half serious. My understanding is that "some people" took some theoretical concepts and applied them to overly optimistic data. (Amongst all the other problems, and simplified terribly.) This isn't a nerds/business people thing...if you use data that thinks real estate can only go up then how is it ever going to tell you real estate otherwise?

      --
      PS: I don't reply to ACs.
    20. Re:and this is how... by RyuuzakiTetsuya · · Score: 2

      I don't think the cloud is a fad. The cloud for consumers is a fad. But is Dropbox a fad? Facebook? Gawker?

      Cloud Instances are a powerful tool on the back end. Telling the average consumer about cloud computing? Not so much.

      --
      Non impediti ratione cogitationus.
    21. Re:and this is how... by oxdas · · Score: 5, Insightful

      The politicians, funded by the investment bankers, made it possible. It was a really bad idea to tie investment banking to retail banking in the 1920's and a bad idea today. The investment bankers created investments out of the mortgage pools and sold them off by risk (with the top being AAA). This meant that more groups could buy shoddy mortgages (some organizations required AAA investments) and get a higher return. More money flooding into the system meant pressure to make more loans (and more fees). Without any vested interest in the loans (the banks were just going to sell them anyway), oversight became lax. Once that wall was broken down between investment and retail banking in the 1990's, bubbles with traditional retail banking assets were inevitable.

      I worked for a large finance company during that time (just a harmless middle manager, so don't blame me). We had all our clients money market assets in "AAA" mortgage backed securities. We made 6% and paid 0.25% return to our clients. Life was good (until it all came crashing down). So, I guess greed is what really made it possible.

    22. Re:and this is how... by V-similitude · · Score: 4, Insightful

      And of course, you can make the same returns by getting lucky at the craps table . . . This kind of investing tends to be basically gambling (not saying all the time, but most of the time for most people). But good for you in this particular instance. Wonder what your 5 year, or 30 year returns will be. (Also, it's a 900% gain, not 1000%.)

    23. Re:and this is how... by TWX · · Score: 4, Interesting

      Funny that, isn't it?

      There are very few people who have any real wealth besides what's on paper. Even those in illegal economies like drug dealers have their money stored as paper. Not many have their wealth in tangible goods, and many who have tangible goods have luxury items like diamonds.

      Take away all of the paper and all of the records instantly and I'd guess that 99.9999% of the population would be within spitting distance of each other, wealth-wise. Ironically, farmers would probably be the best off, if they have equipment for production and land.

      --
      Do not look into laser with remaining eye.
    24. Re:and this is how... by dadioflex · · Score: 2

      The problem most people overlook is that you can't make plans for the next 30 years based on the current scenario. A lot of thing scan happen in such a large time span.

      Which is kinda the point. Over 30 years a lot of things can happen, but in theory you have the benefit of handing your decisions over to statistical predictions, based on past performance. So there will be wars, and shortages, and fads but overall there will be growth and innovation - now, if there ISN'T then we have a far bigger problem than whether you're making a 4% return on your investment. Many of the rarer raw materials are becoming more difficult to harvest, but we've barely touched the ocean floor. Google Nautilus Minerals and take a look at the machines they're building to harvest minerals around volcanic vents.

      We can safely assume our consumption will reduce in the years ahead, but falling populations globally in the next fifty years or so will alleviate some of the pressure. We'll get used to working with less in the short-term. Today's junkyards and landfills will be rich pickings for tomorrow. Orogen Gold (not a misspelling) are currently re-opening a Roman era gold mine that was closed down decades ago, because more efficient production techniques mean that not only is there probably a lot of mileage left in the actual mine, but a potential "goldmine" in the discarded "processed" ore which will could give up commercial quantities of gold using modern methods.

      There'll be dips and crashes in the short term, but we live in a world where the poorest countries still have a long way to go. The average GDP growth across Africa, as a whole, is around 5% - and that's across an area that ranges from very stable to anarchic. The world's wealth is growing and becoming more fairly distributed. We need to get off the idea that we're doing badly because everyone else is catching us up.

    25. Re:and this is how... by Hognoxious · · Score: 2

      Not really. It's hard to have a huge bubble without fiat currency.

      One word: Tulipmania.

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    26. Re:and this is how... by mwvdlee · · Score: 2

      As far as I can tell, all the "cloud" stuff has actual products with actual value backing it.
      An internet service which is labeled as "cloud" isn't valued higher than the same service without the label and both seem to be valued proportional to the actual product involved.
      In order for a bubble to grow, there has to be a disconnect between actual product value and percieved value.

      Although in the case of Instragram, we might have a very localized bubble. Seriously, what does this service offer that hasn't already been done dozens of times before? To me, the company doesn't seem worth more than a million, if even that.

      --
      Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
    27. Re:and this is how... by TheRaven64 · · Score: 5, Interesting

      Ten years ago, people were deploying exactly the same technologies on the back end (VM instances that were live migrated, spawned and destroyed on demand, and - where needed - fault tolerant using redundant images kept in sync on separate instances). Back then, it was called grid computing, not cloud computing. Twenty years earlier, almost the same thing was called a mainframe, or a mainframe cluster if you wanted your cloud to encompass multiple sites.

      The only real change with the cloud is that now we're doing the same things but with cheap commodity hardware and cheap commodity software. For example, fault tolerance is now part of the standard Xen distribution, but if you wanted to roll it out a decade ago you needed to pay a company like Marathon a lot of money for their hypervisor. If you wanted to roll it out two decades ago, you bought a very expensive VMS system from DEC / Digital (later HP). Now, you can have two (or more) instances of the same VM running on separate sub-$1000 computers, and if one computer dies then people using it don't notice. Total cost of deployment is a couple of thousand dollars of equipment and a couple of hours of time.

      It's the same thing with a lot of other technologies: it's not that they're especially novel, it's that now you can do something everywhere you want to, where previously you could only afford to do it everywhere you absolutely needed to.

      --
      I am TheRaven on Soylent News
    28. Re:and this is how... by hackula · · Score: 2

      Hey, it could be worse. Instead of being up 21 you could easily be down 21,000. Many investors had 40% losses. I was pretty depressed when I invested in my first mutual fund right when the market tanked only to immediately lose a good chunk of change. You cannot let this get you down though. Short term gains and losses have practically no significance if you are investing for the long term.

    29. Re:and this is how... by Guppy06 · · Score: 3, Insightful

      Ironically, farmers would probably be the best off, if they have equipment for production and land.

      What is it that gives a farmer exclusive right over such large tracts of land if not a piece of paper? One person can't reasonably be said to "occupy" tens or hundreds of hectares without the force of law behind them.

      And this is before asking what they're supposed to do with unharvested crops without gasoline and/or laborers. Since they need to be harvested first, all he can do to "pay" for things is write an IOU, another piece of paper.

  2. Was told, not consulted. by HermDog · · Score: 5, Funny

    Pretty much how we all got Timeline.

    --
    JADBP
    1. Re:Was told, not consulted. by rhook · · Score: 3, Informative

      Timeline has not been forced on anyone yet that I know of. You have to click the "Get Timeline Now" button to enable it.

    2. Re:Was told, not consulted. by drpimp · · Score: 5, Funny

      Dude this is /. we all know you only have like 4 friends ... not really a good sample size.

      --
      -- Brought to you by Carl's JR
    3. Re:Was told, not consulted. by Dahamma · · Score: 2

      I'd say that makes not bad, but horrible. An intriguing concept ruined by a just a plain awful UI design decision. The pure disregard for usability is mindboggling...

    4. Re:Was told, not consulted. by gstrickler · · Score: 3, Informative

      Or click on any one of dozens of apps that automatically enable it (e.g. most/all of the "social reader" apps from sites like the Washington Post, HuffPo, etc.)

      --
      make imaginary.friends COUNT=100 VISIBLE=false
    5. Re:Was told, not consulted. by gstrickler · · Score: 5, Insightful

      It's not a bad idea, but it's a terrible implementation. It should be a textbook example of what not to do in the field of information presentation. It puts form over function, makes it difficult to read, hard to find info, and makes terrible use of screen space.

      Aside from that, it's just fine.

      --
      make imaginary.friends COUNT=100 VISIBLE=false
    6. Re:Was told, not consulted. by Nimey · · Score: 3, Insightful

      If you let random apps run on your Facebook account you get what you deserve.

      --
      Hail Eris, full of mischief...

      E pluribus sanguinem
    7. Re:Was told, not consulted. by gstrickler · · Score: 3, Informative

      Apps that tell you in fine print. Apps that if you don't install them, return you to your FB feed rather than let you read the content.

      There is/was also a "Try Timeline Now" button, that enabled Timeline without telling the user that you couldn't turn it off after you "try it".

      But the point is, users don't have to click "Get Timeline Now" to enable it as the GP stated.

      So, while you are technically correct, you've completely missed the point.

      --
      make imaginary.friends COUNT=100 VISIBLE=false
    8. Re:Was told, not consulted. by cffrost · · Score: 5, Insightful

      If you [...] on [...] Facebook [...] you get what you deserve.

      Here's a succinct version with a wider margin of safety.

      --
      Thank you, Edward Snowden.

      "Arguments from authority are worthless." —Carl Sagan
    9. Re:Was told, not consulted. by Hognoxious · · Score: 2

      An intriguing concept ruined by a just a plain awful UI design

      But It doesn't stop you coming here! [drrrrrTish]

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
  3. I'm confused by sir_eccles · · Score: 5, Funny

    Why did it take 3 days for the other guys to say yes to $1bn?

    1. Re:I'm confused by jjohnson · · Score: 5, Funny

      Because the minute someone offers you $1b, you think you're worth 1.1.

      --
      Anyone who loves or hates any language, platform, or manufacturer, doesn't know what they're talking about.
    2. Re:I'm confused by Daniel_is_Legnd · · Score: 2

      My guess is they had their lawyers check everything to make sure they weren't getting shafted.

    3. Re:I'm confused by TWX · · Score: 2

      If I were offered a BILLION dollars for something that I'd created, the first thing I'd do would be to hire a lawyer or firm capable of verifying the functionality of the agreement and letting them give any points as to things that could cheat me out of my money. That doesn't happen in a few minutes. "Yes" is a foregone conclusion for all but such a small number of otherwise reasonable transactions that it's essentially a certainty.

      --
      Do not look into laser with remaining eye.
    4. Re:I'm confused by icebraining · · Score: 5, Insightful

      Actually,

      Negotiating mostly on his own, Mr. Zuckerberg had fielded Mr. Systrom's opening number, $2 billion

      Two billion dollars for a photo sharing social network with no business model /facepalm.

      --
      Dilbert RSS feed
    5. Re:I'm confused by TWX · · Score: 2

      For all we know, in social networking, this could really be the Killer App. We won't know until we see how it's used. I don't personally think that it is, but I'm also not a user of modern social networking either.

      --
      Do not look into laser with remaining eye.
    6. Re:I'm confused by canajin56 · · Score: 3, Funny

      Seems like they had a $1 billion business model! ;)

      --
      ASCII stupid question, get a stupid ANSI
    7. Re:I'm confused by larry+bagina · · Score: 3, Funny

      They had a business model: sell out for $1 billion.

      --
      Do you even lift?

      These aren't the 'roids you're looking for.

    8. Re:I'm confused by euxneks · · Score: 3, Informative

      Two billion dollars for a photo sharing social network with no business model /facepalm.

      It's not the tech he's buying.

      --
      in girum imus nocte et consumimur igni
    9. Re:I'm confused by Jafafa+Hots · · Score: 4, Insightful

      Couldn't Facebook "roll their own" photo-sharing service for less than a billion dollars?

      How in the hell did obvious ideas backed by a few weeks of coding become worth billions?

      --
      This space available.
    10. Re:I'm confused by TWX · · Score: 4, Insightful

      MS-DOS was worth billions of dollars, and it was a hackjob because the creator of CP/M wouldn't give IBM the time of day and they needed something NOW.

      Google was a research project that proved phenomenonally successful yet started out simply.

      Apple was from a few hardware hackers building illegal devices in a garage in the suburbs.

      You don't know where the next killer app will come from. In this case, if Instagram was the first company to do this truly correctly in the technical sense, and if Facebook wanted this technology NOW, then we're back to the same scenario as a bunch of hackers in New Mexico ready to fulfill the needs of a giant company from Armonk.

      --
      Do not look into laser with remaining eye.
    11. Re:I'm confused by moozey · · Score: 2

      It's one thing creating an Instagram clone but it's another thing attracting the ~30 million members to use it. If Facebook created their own Instagram there's every chance it could turn out like Google+. Why compete with something when you can just consume it?

    12. Re:I'm confused by Anonymous Coward · · Score: 5, Insightful

      This acquisition wasn't about the technology, it was about a desirable user population interacting on something that was not Facebook.

      If you're looking for a historical analogy, Yahoo buying GeoCities for billions in stock is probably a good fit.

    13. Re:I'm confused by crafty.munchkin · · Score: 5, Interesting
      Actually, he's buying the GPS data attached to each and every photo taken via Instagram, which will enable him to better target advertisements for places nearby. What appears to be no business model is actually a very clever one - encourage users to take photo's with their iPhone/Android, apply a stupid sepia tone to make it look "classic" and in the process, tell the service where they are down to a GPS co-ordinate, so that companies in the area can have their products advertised to the users.

      Since Facebook (like Google) is an advertising company, this makes a lot of sense.

      --
      ... wait, what?
    14. Re:I'm confused by Jafafa+Hots · · Score: 2

      I see.

      So it's about how the free market increases competition? ;)

      --
      This space available.
    15. Re:I'm confused by Jafafa+Hots · · Score: 4, Insightful

      And look how well that went...

      --
      This space available.
    16. Re:I'm confused by FunkDup · · Score: 2

      Actually, he's buying the GPS data

      I can't find links right now but I'm going to say this anyway.

      Supposedly Zucks was asked point blank why the don't have GPS in their mobile app and said "we don't need it". Whoever it was (Cringely?) suggested they already have the location data from scraping photos for GPS data and cross referencing it with login locations of other users in the photos and other stuff they know (like where people say they live and bars they've tagged etc). Zucks supposedly said they would love to be selling highly targeted location based ads and the only reason they don't is because all off the internal polling they do suggests a big PR backlash because people think its creepy. Whatever I read even mentioned a rumour that Zucks' preferred method to get this implimented is by acquisition.

      Up until I read TFS I still thought the biggest part of this story was buying a fast growing mobile app and denying 30m users to Google or someone else. If Zucks just went all BWOL it certainly adds credence to the idea.

      --
      Great spirits have always encountered violent opposition from mediocre minds -- Albert Einstein
    17. Re:I'm confused by FatLittleMonkey · · Score: 2

      "I've been wanting to switch to Flickr, but it would be too difficult to explain to certain family members and friends."

      Damn, Facebook really is the new AOL. Even my Nan can click a link in an email and bookmark the site that appears in her browser.

      --
      Science is all about firing a drunk pig out of a cannon just to see what happens.
    18. Re:I'm confused by Saint+Fnordius · · Score: 2

      That looks to me as if they were incredulous at first. After the shock wore off, they probably made their opening number almost as a joke, almost in the "we're not really interested" range. Once they figured out that the money offered was real, they had to absorb the shock before saying yes, and rebuild their poker faces.

      And that is how three days can pass.

  4. Not buying into Facebook IPO by Anonymous Coward · · Score: 5, Insightful

    Mr. Z seems to be a bit immature. Maybe this was an amazingly clever purchase, but it strikes me as a childish exercise in spending. Assuming he retains control of FB after the IPO I don't expect that the company will fare well or spend cash well. IMHO..

    1. Re:Not buying into Facebook IPO by chrb · · Score: 4, Insightful

      Business leaders think that Zuckerberg is some kind of genius tech visionary because of the success of Facebook. That's why he gets invited to have dinner with the President, and to talk at the World Economic Forum...

      There is another hypothesis: he got lucky, he happened to be in the right place, at the right time, doing the right things.

      Time will tell...

  5. Personal Deal by SolitaryMan · · Score: 2

    I had the feeling that there is something personal about this deal from day one. This only reinforces my suspicion.

    --
    May Peace Prevail On Earth
    1. Re:Personal Deal by FsG · · Score: 4, Insightful

      I figured the same thing. At least one of Instagram's employees, Philip McAllister, was at Gowalla when it was picked up by Facebook less than 6 months ago.

      That guy might be the luckiest bastard in the world, having worked for 2 tiny companies whose only significant act was getting acquired by Facebook. On the other hand, Zuckerberg could just be funneling company money to friends?

      --
      I made a PHP/MySQL library that prevents SQL injection & makes coding easier!
  6. Profitless? by NovaSupreme · · Score: 5, Interesting

    >> Instagram, the yet-profitless photo-sharing service
    Make that revenue-less!

    Their whole pitch on making money is presented here in its entirety:
    ". There will be opportunities for consumers to buy extra add-ons like special filters, etc. "
    So, folks, that's it - special filters, etc. Magical words.

    1. Re:Profitless? by Burning1 · · Score: 3, Insightful

      Sometimes the value in your product isn't in the ability to make a profit, but in the ability to damage an established market leader that has a lot of money to spend.

  7. Re:Read the card... by readandburn · · Score: 4, Insightful

    CEO and Majority Shareholder, bitch.

    Fixed that for you.

  8. Wait for the next acquisition after the IPO by Kergan · · Score: 2

    Shareholders were told, not consulted, that a year's worth of earnings had been invested in a company with 30M+ users, nearly all Facebook users, and zero revenue...

    I suspect that Zuck needs to work on investor relations somewhat...

  9. He only bought instagram to troll by Cito · · Score: 3, Funny
    Since the Winklevoss twins were interested in purchasing it first. Zuckerberg swooped in and bought it solo with the quickness before the Winklevoss' knew what hit them...

    It's all setup for The Social Network Part 2 :P

  10. Re:CEO 2.0 by TWX · · Score: 2, Insightful

    No different that Bill Gates, that college dropout that was in the right place at the right time, had an ostensible competitor that didn't fit the system correctly, and managed to provide something close enough to what was wanted and needed to cement his place in the market.

    --
    Do not look into laser with remaining eye.
  11. Standing in awe by caffemacchiavelli · · Score: 5, Funny

    While I'm still unsure how they got their investors to accept a $500M valuation (Series B, was it?), going into a meeting thinking "Yeah, $2B for a popular photo sharing app platform sounds about right" must take some cojones. I probably couldn't sell Instagram for $200M, I wouldn't even know where to start.
    "So, we have this platform and our users are totally committed to the experience and not just using it because it's hip...and we all know that social media startups tend to stay popular and don't crash after a year or two...and crap, we can totally monetize that thing, like print photos on mugs and stuff...that's like an instant $80M/year right there, minus the cost of the mugs, of course. So, whaddaya say, two billion?"

    1. Re:Standing in awe by Anonymous Coward · · Score: 4, Interesting

      Facebook is already one of the best software developers in the world.

      1. They "compile" PHP into C++ and then into assembly
      2. Each update to their software requires propagation of a 1.5GB binary blob
      3. ( 2 ) was causing so much trouble that they implemented an internal Bit Torrent system by which the servers pull the blob.
      4. Still, several per cent of servers fail to load the new software image on each deployment and have to be manually updated.
      5. The ( unitary ) release manager has a karma rating system by which to punish developers who make mistakes. This can be "corrected" by bribing him with liquor and cake.

      You still think they are one of the best?

  12. Zuckerberg won't like it when Facebook is Public by rahvin112 · · Score: 3, Interesting

    Once Facebook goes public, Zuckerberg is going to be in for a RUDE awakening. He won't be able to treat it like his little piggybank, he will have to consult the board (his bosses after it goes public) for anything he does and the board can fire him.

    The vast majority of tech companies that have gone public in the last 15 years have ended up firing the founding CEO after a period of mismanagement shortly after the companies go Public. The exceptions to this rule are rare and I doubt Zuckerberg is going to be one of them. This is the type of stuff they do and after the company is public and the founders ownership is GREATLY diluted they end up getting fired by the board of directors. Usually it's from not seeking maximum shareholder value, but in other cases it's for outright in ability to grow the company.

    Personally, I don't think Zuckerberg is going to survive more than 5 years as CEO of the public Facebook. But the VC's and investment banks will have gotten their pound of flesh and moved on.

  13. Re:CEO 2.0 by Anonymous Coward · · Score: 2, Insightful

    Gates & Allen were the first to offer a high level language for microcomputers.

    Zuck was the 423rd person to create a social network website, he was just smart/lucky enough to target Harvard students as his initial user group.

  14. Re:Read the card... by Anne_Nonymous · · Score: 2

    Not to go all Grammar Nazi on you, but I'm pretty sure you capitalize "Bitch", if it's a title on a business card.

  15. Re: I haven't seen timeline by neonsignal · · Score: 2

    imagine the old sequence of updates, except randomly alternated between the left and right hand of two columns, and a faint line with dots down the middle so your eyes hopefully know which way to jump

  16. What will do to Facebook's future IPO? by CaptSwifty · · Score: 4, Informative

    What will this do to Facebook's future IPO when potential investors see a "maverick" CEO who does what he wants without consulting the board? I can't imagine a lot of fund managers will like the idea of putting billions of dollars at stake with someone like Zuckerberg spending huge sums of money without getting input from people who already own a large percentage of the company.

    How does Zuckerberg own only 28% of the stock but have 57% of the voting rights? Are there really that many non-voting shareholders?

    1. Re:What will do to Facebook's future IPO? by Anonymous Coward · · Score: 2, Interesting

      How does Zuckerberg own only 28% of the stock but have 57% of the voting rights? Are there really that many non-voting shareholders?

      Since Google's IPO, dual class ownership structures have become very popular in the tech sector. Google didn't invent the concept; it has been common for a long time in media companies, especially news organizations, where it was felt that it would be detrimental if the shareholders at large could wield their power to exercise editorial control. In Google's case, the concern of the founders was partly that shareholders might attempt to exercise editorial control over search results, for example to inflate the position of sites belonging to advertisers, and partly that shareholders might force a myopic focus on quarterly profitability that drives so many publicly-traded companies. So Google structured its stock into two classes, A and B. Class A shares have the same ownership interest as class B shares, but every class A share has 10 votes, while each class B has only one.

      In the case of Facebook, the editorial control issue isn't really there, because of the nature of what Facebook does. But concern about giving control to people who might care more about the short term than the long is certainly possible. So Facebook, and many other tech companies, go for dual class ownership structures that allow lots of people to invest and reap financial rewards from the company's success, but give a voting majority to a small group.

      Incidentally, Google's founders have realized that as the company issues more class B shares it gradually dilute their control, even with the 10:1 vote ratio. Hence the recent announcement of a plan to create a third class, C, of shares that have no voting rights at all. The plan (if approved by the SEC) will do a 2:1 stock split, effectively, by paying a "dividend" of one class C share to the holder of each class A or B share. So the number of shares outstanding will double, but half will be non-voting. Google can then start giving class C shares to employees, and, if they need to raise money, can issue a new batch of class C shares for sale on the open market without diluting the founders' control. Theoretically, this might allow the founders to sell half of their stock (all their C shares) without losing any control, so they are required to sell an A or B share for every C they sell, meaning they have to stay invested if they want to stay in control.

      I expect that lots of young tech companies will follow Google's lead in this, too. Expect Zuckerberg to retain control through the IPO and for many years afterward.

  17. paid for user data by globaljustin · · Score: 2

    You had me until this: "Since Facebook (like Google) is an advertising company, this makes a lot of sense"

    You're right on about Facebook's $1Billion buying user data, but you're way wrong about it "making a lot of sense"

    It is ridiculously foolish and a waste. Facebook.com is a information trading company that uses social networking to gather user data. They are currently doing the IPO in order for the investors and founders to take profits. The company is a legal blackmail scam essentially...one step up from those online based adventure games. You are projecting your own elementary understanding of advertising onto facebook.com's "business model"

    The core problem is the business world and ignorance...but you don't help by drinking the Kool-Aide that facbook.com is a viable company....its a scammer that is fooling alot of people...that is NOT praiseworthy

    --
    Thank you Dave Raggett
    1. Re:paid for user data by hal2814 · · Score: 3, Funny

      Well, that depends on your definition of "scam." They do have to follow the law. As long as they wrote out the actual details of their scam and put it somewhere on display like in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard' then they're fine. If they don't do that legal legwork, they could get into trouble.

    2. Re:paid for user data by oztiks · · Score: 2

      The fb ad stats comparing to google is what is important and to say the least they are not up to same standard. To insinuate that fb deserves a market cap of 100b would mean that it's ad market is half of that of googles. In realitity it doesn't even come close.

      Fb's only attempt to "grow" is to innovate and that is a tough cookie to swallow, look at the compeition, ms, google, apple, all these brands are delivering communications platforms, media centers, self driving cars ffs. So what is fb to innovate?

      A instagram type product would of been a perfect product to innovate such as adding it too hardware devices like cameras and strike deals with olympus or nikkon. They didn't need to buy this rather work on the cosy deals and actually write the software themselves. The userbase would of just fallen into line he didn't need to buy it.

      The market has given a bucket load of money to a shortsighted moron....

  18. Instagram's Kevin Systrom's Reaction by bhlowe · · Score: 4, Funny
    Kevin Systrom recently sold Instagram to Facebook for a billion dollars and this is how he feels about the sale:

    Here is what he had to say about it. .

  19. I'm smelling a book deal by caffemacchiavelli · · Score: 2

    The Scary Startup - Are you overwhelmed with the complexity of Lean Startup Methodology? Is finding a real business model just too hard? Stop trying, build a free platform with mass appeal, brand it as threatening to the big players and sell for imaginary valuations! Coming Q3 2012, $29.99 Hardcover, $39.99 Kindle Edition with missing pages and no graphics.