Hacker News Reader

Comment by padobson | Hacker News Reader

You can definitely see why this deal got done. Instagram was maybe 3 or 4 years away from any chance of their own IPO, and probably a year away from a serious $2B aquisition.

Even if the sale price of the company was really $2B, they were able to take Facebook stock that is on the verge of an IPO for 75% of what it will IPO at. If Facebook hits a market cap of $150B in the next 12 months, that would put the value of the Instagram stake at $1.4B a year from now, plus the $300mm in cash that Facebook chipped in.

Looking at the deal that way, it made a lot of sense to do it now if Instagram was shooting for a $2B exit.

View on HN

Ok seriously, why BB?

I don't know, probably a bad habit extending from the mm. Don't have a good reason.

Edit: Changed it to single, capital B's now.

Do you know any companies whose main product is primarily an app (and just an iPhone app at that until recently) that is in the public market?

Zynga, Groupon, LinkedIn, and Pandora all come to mind off the top of my head.

I'm using your definition of app in that the app can be hooked up to a very large social network and thus employ network effects.

I meant a mobile app. Web apps are a different beast, and already have a well established monetization ecosystem.

In this particular instance we are talking about a mobile app hooked to web services, so it's in essence a web app with a mobile UI that was designed for mobile phones from the beginning.

Also, the ecosystem for mobile apps is very young, so the comparison is a little unfair. To the contrary, useful mobile apps have a lot of potential because these new generation smartphones are going to be in everybody's pocket in 1 or 2 years, permanently connected to the Internet, no matter if you're on your daily commute, drinking a coffee at Starbucks or visiting your parents.

To be fair, I wouldn't have paid 1 billion for Instagram, but then again I'm not rich yet.

Reply on news.ycombinator.com