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Amazing app success

Discussion in 'Resources & Success Stories' started by soj, Apr 10, 2012.

  1. soj

    soj Founder

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    Facebook has just purchased Instagram - a profitless, two-year-old photo-sharing application - for $US1 billion.

    This app took just eight weeks to build and launch.

    Read more: http://www.theage.com.au/technology...-mobile-photo-sharing-app-20120410-1wllb.html

    Some highlights:


    • When the Silicon Valley startup released a version for Android phone users this month, it was downloaded 1 million times in its first 12 hours.

    • Instagram took just eight weeks to build and launch, but was the result of more than a year of work.

    • They went from literally a handful of users to the #1 free photography app in a matter of hours.

    .
     
  2. James

    James Membership: VIP

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    Intetesting buy, but I think for what it is facebook could just make a copy of the app and promote it and get a huge user base, as they did when they tried to but Foursquare. With no revenue I think its a huge risk for 1 billion.
     
  3. snoopy

    snoopy Membership: VIP

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    Easier said than done in my view. Often a company gets no more than a small share of the market no matter how large they are and no matter how much money is spent trying to replicate the leader, take Google and social networking, Microsoft and search. Probably the idea of just "a copy" doesn't really entice many.
     
  4. James

    James Membership: VIP

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    But the thing is you are taking a business to the stock exchange to make more money for future investment you need to be wise about investing in other properties, you need to get a trust of the general community, can you honestly say the company is worth 1 billion as it has no revenue. Sure I bet their is a amount they have worked out to make via mobile advertising sales but I think its going to be a long shot to gather ROI.
     
  5. snoopy

    snoopy Membership: VIP

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    How do you know it is not a wise investment?

    No idea as I have no knowledge of the business.

    Wasn't much the same thing said of youtube which was losing alot of money at the time of acquisition and appeared to have all sorts of legal issues?
     
  6. DavidL

    DavidL Membership: VIP

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    I guess it's a strategic purchase rather than one based on ROI.

    Quite an amazing return though and something many of us here could have done if we had the vision, foresight, determination etc. Inspiring.
     
  7. James

    James Membership: VIP

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    It states the reason they have purchased it is to increase a weak mobile offering? Weak Mobile offering? Don't they have around 250 million mobile users on the FB App.

    Sure enough I can see some merit behind the purchase been to increase mobile advertising and the audience, they also say they will not change the name.

    Another funny thing is their is only 13 staff at the whole company, lucky pay day for them but they will get a cut of 100 million of the 1 billion, one CEO gets 400 million and the other co founder gets 100million, the seed investor also snapped up around 100+ million (HUGE ROI)

    With all the developers and the huge user base I am not sure why they didn't just make a killer clone product and get the user base LOL.

    In my eyes 1 billion would be better invested into something like Pinterest user base is around 15mm or even Tumblr.
     
  8. James

    James Membership: VIP

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    best quote:

    Remember this day. 551-day-old Instagram is worth $1 billion. 116-year-old New York Times Co.: $967 million.
     
  9. snoopy

    snoopy Membership: VIP

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    I don't think they'd be able to buy tumblr for $1billion. Let's not forget this company was raising capital on a $500million valuation so it is not like it is some pie in the sky price in my view.

    As I said, the killer clone product rarely is a killer. It is often a money pit. There is only one facebook, only one google, only one coca cola, probably only one instagram.
     
  10. James

    James Membership: VIP

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    Yeah even more crazy is that funding was done a week ago, and the company was valued at only 50 million some 9 months ago lol.

    After some research I do see some merit in the purchase, the only reason I can see them paying double what they should have is probably a competitor such as Google was trying to acquire the company at the same time, hence the crazy inflation.
     
  11. snoopy

    snoopy Membership: VIP

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    I would say that is probably what it took to buy the entire company. Offering 20% more or 50% probably isn't going to get most shareholders on board. Buying a stake is very different to buying the whole lot, the first is probably for working capital (might be high motivation to do a deal with founders) where the other is selling out completely (probably low motivation to do a deal).
     
  12. Rhythm

    Rhythm Membership: VIP

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  13. James

    James Membership: VIP

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  14. Honan

    Honan Membership: VIP

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    auDA Member:
    Yes
    I just started creating my first app
     
  15. neddy

    neddy Membership: VIP

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    Bewdy! Looking forward to hearing more about it.
    .
     
  16. James

    James Membership: VIP

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    Heard the "Draw Something" app + company sold for 180 million over the last few days too.
     
  17. Honan

    Honan Membership: VIP

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    You could buy it from me for only a couple of million subject to a NDA