Ken @kenthecoder What’s your take on @instagram being bought for $1bb?
First off, you say, “new bubble”. What was the old bubble? I don’t understand. Was it EBAY? Which makes billions. Or Amazon? Which makes billions? Or Apple? Which makes more money per year than the United States. Was Google part of what you might thing of as “the old bubble”? Or Cisco, which wired up every house on the planet? When was there an old bubble? The dream of the Internet has come true. We are living it.
Second, on this transaction in particular, most people don’t know this but several companies were bidding for Instagram. I am breaking news here. You can imagine who was bidding. So part of that $1 billion price was the effect of auction.
That said, facebook made a good buy. Facebook has been accused of being weak in mobile. Eventually all 800mm Facebook users will be using smartphones to share photos, just like you and I do today.
Companies like Facebook and Google have stopped caring about words like bubble. Why is that? Because they make a ton of money. Billions. In a bubble, nobody makes anything. No value is created.
VERY IMPORTANT: in a bubble, an asset ONLY goes up in value today because it went up yesterday. That’s it. Google and eventually facebook will go up because they make billions of dollars and create a lot of value for people. Google has saved my life a million times and Facebook has made me lots of friends. If both sites disappeared, I would be unhappy.
If Facebook can make $1.20 extra on every one of their users because they bought Instagram than it was worth it. And, of course, that will be just a start.
Don’t use the word bubble ever again. We are entering a 20 year boom. All the newspaper writers are going to say bubble every day. I will wipe my ass with those news articles.
Laugh in their faces and make money.