Hacker News Reader

Comment by hub_ | Hacker News Reader

I would say "yes". But that's pure speculation. However I wouldn't be surprised there was a bidding and that big names like Google or Apple might have been in the loop.

Time will tell, or maybe not.

View on HN

The dilution is an interesting point. Why would the founders or Facebook accept dilution (at 50% valuation!) just before an acquisition?

It could've gone like this:

Facebook: We'll give you $600M

Instagram: No, we want $1B

FB: No deal

Instagram: Ok we're going to raise our own money

FB: Good luck with that

IG: See, we raised our own money and just closed it too and our Android app has 1M downloads on Google platform...

FB: panic Okay lets do $1B

I think this makes a lot of sense, given the price tag and seemingly quick turnaround.

"FB: Good luck with that"

Instagram: We'll try Google. They could use something to jumpstart Google+

I'm not sure about this. If we say FB offers $600M, and Instagram is holding out for a billion, it wouldn't make sense for Instagram to go prove that it's only worth $500M (valuation), right?

If it was $50M on $500M post, then it's just a bit more than 10% dilution, which isn't too bad. But either way, that $50M buys two things: (1) a floor on near-term future price negotiations, and (2) a strong signal that they were nowhere near needing to sell and instead that they could go another 18+ months growing their walled garden of eyeballs. That second point could have spurred a big company like Facebook to overpay a little now rather than having to risk squelching an upcoming competitor a year from now at a GeoCities-like price.

This was a Geo-Cities-like price - not adjusted for inflation ;)

Reply on news.ycombinator.com