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The Instagram/Facebook deal: 30% cash, 70% stock at 75+ billion valuation
- AznHisoka 15y agoThe more these tech bloggers cover trivial apps such as Instagram, the more people will make these type of apps rather than work on hard problems like healthcare or education.
- orblivion 15y agoIt's self-correcting. Facebook can only buy so many Instagrams.
- bradmccarty 15y agoPlease don't do that. I'm a tech blogger, and it drives me insane that things like healthcare or education apps don't get the attention from readers that they deserve. Do things that matter. Please. I will continue to write about them, even if nobody reads it.
- spindritf 15y agoBut this way smart people can score some money fast and go on to build something with a larger and more lasting impact (vide today's stories about Elon Musk and his space exploration project). While we get a cool product for immediate consumption every once in a while.
- jasonlotito 15y agoPeople are working on healthcare, education, and other problems like that. It's just they aren't all paying much attention to the audience you're paying attention to. These types of startups also aren't focused on being bought, but actually solving real problems. And this takes time, and energy. Don't assume that just because you don't read about us on TechCrunch we aren't out there trying to solve real problems.
- InclinedPlane 15y agoEducation expenditures in the US in 2010: $901 billion Health care expenditures in the US in 2010: $2.6 trillion
- R_Semtex_III 15y agoNot included in this breakdown is the amount pocketed by the Medical Industrial complex (read:FDA/AMA et al) for its 'protection' in such ventures. All a cost of doing business in the sordid World of Health and Medicine in the US, I'm afraid. I wonder how much lobbying, bribes and nefarious acts it took before Eli Lilly could just bounce people off the FDA review panel like an overzealous virgin at a strip club for compromising the release of a (alleged-at-the-time, and confirmed after approval/use) dangerous drug? http://uk.reuters.com/article/2009/02/26/health-us-congress-prasugrel-idUKTRE51P7TV20090226 http://uk.reuters.com/article/2009/02/26/health-us-congress-...
- laconian 15y agoIt's the same problem with politics. The coverage is so much about the meta aspects of politics, the daily "he said, she said", not the actual policies that are being proposed. It's easier to employ people to write about the superficial horse races aspects, and because the subject matter is trivial, the audience is larger. It's profiting on the dilution of the media and everybody loses.
- citricsquid 15y agoDoes the S-1 and other stuff relating to the IPO state how much cash Facebook has / had?
- qq66 15y agoYes, as of the S-1, $3.9 billion in cash and equivalents.
- dzuc 15y agoSo Facebook is about a half a percent of the US GDP: 75000000000/15094025000000 = 0.4969%
- ojbyrne 15y agoIf the $75 billion was revenue rather than worth, sure. Otherwise you're comparing a static number (FB's valuation) to a per year "flow" (GDP).
- beagle3 15y agoCheck your units: GDP is $/year; your Facebook is $; $/($/year) = year. You should end up with a result in years, not in percent (which is unitless)
- smackfu 15y agoRight, the Facebook number should be change in worth per year for a proper comparison. Which is lower taken over the entire company's lifetime, but higher if you just include the last year.
- ajross 15y ago"The USA produces 200 facebook-equivalents a year" doesn't have the same impact, I guess.
- R_Semtex_III 15y agoI find it amusing that you would get pedantic about units, when your argument is pretty much moot since Financial Services has been bundled into what comprises GDP in the US. You know... that all productive sector that creates derivative trading and then gets to pull off a MF Global with impunity. Yeah... good gauge of viability and productivity that is.
- GavinB 15y agoFacebook does consume roughly one and a half percent of Americans' waking hours. ( highly rough estimate based on http://mashable.com/2011/09/30/wasting-time-on-facebook/ http://mashable.com/2011/09/30/wasting-time-on-facebook/ ) These various things aren't directly commensurate, but it shows a certain level of relevance to Americans. (And, though I shudder to admit it, there are other countries in the world.)
- kirpekar 15y agoSo Instagram was about as valuable as Ducati (sold to Audi recently for 1.1B)? Yeah right.
- lbrandy 15y agoI can't believe in 2012 the #1 comment on a topic like this is comparing the valuation of a tech startup to an established brand in a completely different industry, and then appealing to the crowd's incredulity. Have we not yet learned how terrible this particular argument is, has been, and will continue to be?
- kirpekar 15y agoPerhaps you can elaborate why this is a terrible argument?
- goatforce5 15y agoI guess Facebook wanted a hot photo sharing app almost as much as Audi wanted Ducati. What if someone else (eg, Google) had offered $900m for Instagram? Was Facebook still wrong to pay $1bn?
- chmike 15y agoThis looks like a strange and risky deal. I've heard someone in Germany making a similar deal. He sold his company mostly in shares of the buyer's company. Then came the 2000 bubble and the shares had not worth anymore. The next year the IRS showed up knocking at his door. He owned them the IRS percentage of the selling price of the previous year (year of selling) and not of the current year. Today he is still working as an employee trying to pay back his debts.
- vidarh 15y agoIf a deal like that is structured even remotely sensibly then it will be a "merger" where the part that's in shares does not qualify as a purchase and does not trigger any taxes until the new shares are sold. If anything, a story like that, if true, is a demonstration of why you get lawyers involved, nothing more. Part shares, part cash deals are extremely common.