Episode 2: Instagram

[0] Okay, listeners now is a great time to thank one of our big partners here at Acquired, Service Now.

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[17] now.

[18] Who got the truth?

[19] Is it you?

[20] Is it you?

[21] Is it you?

[22] Who got the truth now?

[23] Is it you?

[24] Is it you?

[25] Sit me down.

[26] Say it straight.

[27] Another story.

[28] Welcome back to episode two of Acquired.

[29] I'm Ben Gilbert.

[30] I'm David Rosenthal.

[31] And we are your host.

[32] Yet again, at least for the second time and hopefully many, many more.

[33] Hopefully many more.

[34] Thank you to all of our listeners, all a few of you.

[35] you for the amazing few but growing small in number strong in spirit true um thank you for the amazing feedback it was incredible we learned a lot we learned that ben has amazing idioms amazing names david has dulcet tones um thank you for the feedback we will try to incorporate it and uh hope that we keep getting better if uh you have more feedback after this one please send it to us.

[36] You can find us on, you can find the show on Twitter at At Acquired FM.

[37] You can find Ben at Gilbert.

[38] You can find me, David, at DJ Rosent, DJ ROS, E -N -T.

[39] And our website is live at acquired .fm.

[40] So, uh, should we introduce ourselves again?

[41] We think for the first couple so people, so, you know, more than our original five listeners get the lowdown.

[42] I think we do it just this once.

[43] Then once we're viral after episode three, then we can stop introducing ourselves.

[44] Sounds great.

[45] So I'm Ben Gilbert.

[46] I am the co -founder of Pioneer Square Labs and here in Seattle.

[47] We come up with ideas for companies.

[48] We prototype them.

[49] We build them.

[50] We try and get customers.

[51] And if it seems to be working, then we recruit really talented people to come in and take the company from us and we go start at the next thing.

[52] And I'm David.

[53] I am a principal at Madrona Venture Group.

[54] We are an early stage venture capital firm located here in Seattle, invest in Seed, Series A, Series B, stage technology companies.

[55] Always looking for the next great thing, which might become the next great acquirer or maybe a quarry, hence our podcast.

[56] All right.

[57] So with that, let's segue into our second episode.

[58] Our first was Disney acquiring Pixar.

[59] and here for our second as another landmark successful, you know, even in the very recent, last couple of years, this one's not nearly as old.

[60] Landmark successful acquisition, Instagram by Facebook.

[61] Facebook buying Instagram.

[62] So as a quick reminder, the framework that we've decided on for our show is we're going to briefly talk about the acquisition kind of facts and history.

[63] Then each of us, Ben and I, are going to categorize the acquisition.

[64] into a few buckets that we've identified.

[65] And then we're going to do a fun segment called What Would Have Happened had the acquisition not happened?

[66] Trust us, it's fun.

[67] And then we're adding a new one for this episode, which is tech themes that we think are illustrated by this acquisition.

[68] And then finally, we're going to give the deal as a whole a grade.

[69] And we heard the feedback that Ben and I agree too much, so we're going to try and be more controversial here.

[70] I'm not, though.

[71] Yes, you are.

[72] All right.

[73] Instagram.

[74] So I remember vividly.

[75] This was one of those moments in my technology life, at least, exactly where I was the day I found out that Facebook bought Instagram for a billion dollars.

[76] And today, sitting here in 2015, where there are like, 623 unicorn startups out there that are valued at, you know, more than a billion dollars.

[77] Back in April 2012, there were very, very few.

[78] And the even idea that a company that had 13 employees and no revenue and made an app on your phone could be worth a billion dollars was pretty shocking at the time.

[79] And totally shocking because there was no, you know, know, discussion of it being worth a billion dollars pre -acquisition.

[80] The only indicator that that number was ever talked about was when the deal was done and announced to the public.

[81] Yep.

[82] And interestingly, Instagram raised its, I believe, series B around of venture capital just like a week or even less than a week before the acquisition happened and did value it at several hundred million dollars.

[83] But all that only came out just right before or even during and after the acquisition news, which was pretty momentous, really ushered in, Ben and I have been talking about this for this, this acquisition for months.

[84] It was part of the genesis of the idea of this show.

[85] This acquisition, I think, really ushered in, you know, quote -unquote, the age of the unicorn.

[86] Yeah, as much as I hate the term, it sure does see that way, seem that way.

[87] So, quick facts, April 2012, Facebook announces that they are buying Instagram company with 13 employees, no revenue, no obvious monetization model, and had 30 million users at the time.

[88] And interestingly, just a week before Instagram had launched their Android app and added 1 million users.

[89] At that time, with 13 employees and 30 million users, Instagram had 2 .3 million users per employee at acquisition.

[90] Pop quiz.

[91] How many users per employee do you think Instagram has today?

[92] Well, they've hired a whole bunch of people, right?

[93] They have.

[94] They have.

[95] I think what were we talking about earlier.

[96] They have like 150 employees now.

[97] They have about 150 employees, as best as we can tell.

[98] I don't know.

[99] that number's got to be significantly worse now.

[100] It's better.

[101] 2 .6 million users per employee.

[102] Instagram now has two and a half years later, 400 million users.

[103] Huh.

[104] Okay.

[105] So I don't know.

[106] I feel like I'm already hinting at my answer to the question later of my rendered conclusion.

[107] But, you know, this is our second episode.

[108] We're still getting at the easy ones here.

[109] Pretty incredible, honestly.

[110] I think the thing that always amazed me about Instagram was it's so, simple.

[111] They focus their eyes on the prize and the question is like, you know, we'll get to this a little bit later, but what would have happened to that incredible, simple, sheltered platform if it wasn't integrated into the Facebook strategy and they were forced to start clawing and scratching for more of that attention that keeps people tied to Facebook?

[112] So I think the interesting thing that Facebook realized is they're the social fabric.

[113] They're necessary.

[114] And it was getting to the point, you know, everyone's parents were on Facebook.

[115] It became more of a utility in our lives than sort of an escape or an enjoyable thing.

[116] And actually, quick aside, it's crazy.

[117] I was scrolling back through my history of writing on a friend's wall.

[118] And this is freshman New York College.

[119] And our conversation back and forth on each other's public Facebook walls look like text messages.

[120] And they're talking about what grades we got in classes and like sort of private stuff that I wouldn't be posting today.

[121] It's really fascinating that.

[122] that, you know, Facebook was very much that sort of fun place at that point and not this thing that we viewed as kind of necessary and a thing that it could be assumed that pretty much every person would have.

[123] And, you know, you see there's a lot of reports of, hey, kids aren't using Facebook.

[124] They're just using Instagram.

[125] They're just using Snapchat.

[126] They're all using Facebook too, but it's for schoolwork.

[127] I mean, it's for the necessary, less fun things in their lives.

[128] and, you know, starting with Instagram and with other acquisitions later, I mean, Instagram is sort of where you want to hang out and Facebook is where you have to go.

[129] Yep.

[130] And, you know, Facebook, it's so easy to forget now sitting here in 2015 and maybe we'll, maybe if we're looking for something funny in 2018, we'll go back and listen to our podcast that we're recording now.

[131] But it's even so hard to remember.

[132] like this was only three and a half years ago when this acquisition happened and Facebook was in such a different place from where it is today the company had just recently gone public um we Ben and I were just talking about this right before the episode they were still in the whole HTML 5 mobile app hell um their apps were buggy can you remember when that was even a debate oh nightmare and like you know now like what is like half of Facebook's revenue, if not more, we haven't, we should make a note too that we haven't fact checked most of our numbers, so we could be wrong here.

[133] But at least it seems like everything that people talk about with Facebook is their mobile app installs and their CPI ads.

[134] Like, I couldn't even do that with HTML 5.

[135] Remember back, you know, you know, people talk about now, you know, and I think, you know, Mark Zuckerberg has even said, you know, that Facebook really made a huge misstep in mobile and apps like Instagram, like WhatsApp that they would later acquire, like Messenger that they would build within Facebook in the coming years, really stepped in and became, took over a lot of the value that people were getting out of Facebook from back in the day, the fun.

[136] And it's amazing because Facebook, you know, really, really killed it on the desktop.

[137] There's a lot of different boxes everywhere.

[138] If you remember, there was the mini feed, and then there was the wall, and then there was apps that you could have installed.

[139] Super poke.

[140] Each one, oh, super poke.

[141] God, do I miss super poke.

[142] There's these boxes that are sort of floating around all over the place, maximizing your screen real estate.

[143] And when they try to translate that to a mobile experience, you know, it's tough to pare down all that stuff when your app has all this incredible functionality.

[144] Whereas you have Instagram, which is born in the mobile era, and I can have a funny story about this.

[145] It's born in the mobile era and has these immersive, beautiful.

[146] damn near full screen photographs and all of my attention is on that one thing at one time and it was focused on making anybody able to look like a talented creative even if we weren't I mean I specifically remember one of my early Instagrams was of like the torn up bottom of my jeans and my shoe and it looks so artsy with a filter and I couldn't I it was a place where you could show off that's so emo full screen and and really like um you know what they what they did was understand what people's attention span and what people's intention looked like when they were on that platform.

[147] And I remember, this is not a thing that I came close to understanding at the time, because I remember I used to work at Dog Patch Labs at Pier 38, May at Rest in Peace, has recently been demolished.

[148] When you're interning at Cotech?

[149] Yeah, in San Francisco.

[150] It's self an acquisition.

[151] Yeah, yeah.

[152] An acquisition, and then another acquisition.

[153] Yeah.

[154] Everything becomes Salesforce eventually.

[155] in the enterprise yeah anyway so i'm at peer 38 and um uh the guys from bourbon later instagram were upstairs working on a pivot from their kind of location -based thing to this very simple filter focused upload your photos to a social network app and i remember seeing a demo of it when i walked by one time and telling kevin um i'm pretty sure facebook already lets you upload photos from your phone and everybody's already on that And that, Ben, is why you're not a venture capitalist.

[156] We'll leave that to David.

[157] But no, I think, you know, men, what you're saying, I think really illustrates, you know, we're going to talk about themes, you know, as part of our programming in a minute.

[158] But I think this really illustrates something critical about why Facebook needed Instagram.

[159] And that was engagement.

[160] You know, Facebook before mobile, remember, you know, back when it first launched when I was in college, and you were probably in high school when it first launched, right?

[161] Yep.

[162] You know, how much engagement did you have with Facebook?

[163] It's related to this concept of fun, right?

[164] And now Facebook has become this utility, and I barely engage with it at all.

[165] But Instagram and messaging, WhatsApp, and other services like that have become, on mobile, these atomized services where your engagement lies.

[166] And that's the core of driving advertising, right?

[167] revenue.

[168] And Facebook has always been really good at this strategy where social networking is a cool kids game.

[169] I mean, the cool kids go to a thing and then the late adopters come on and then parents come on and that it's boring and that it's built for the old world platform and then it atrophies and it dies.

[170] And what Facebook did in acquiring Instagram is, you know, set their hubris aside and say, we're not the most important platform.

[171] The most important thing is our business staying alive and what we have to do is bet on whatever the thing where the people are on the new platform is and you know after they after that critical first step then they can start learning about what makes that so successful and and kind of integrate all of those really talented um folks to kind of like teach facebook how to do that too so that brings us to section number two of our show what category would you put this acquisition in people technology product business line, other?

[172] It's fine.

[173] I was just talking about people, but that's totally second order here.

[174] I'm going to say this is product.

[175] Facebook left it alone.

[176] Facebook did the thing that every other acquirer can't seem to resist in any scenario, and that is saying, oh, you know what this could do?

[177] This could make our main product better.

[178] And the reason that that product was dangerous to you and potentially kicking your ass was because they figured something out you didn't.

[179] And it's been really incredible to watch Instagram, have its own evolution.

[180] And, you know, I'll be out with some little boosts from, you know, the Facebook news feed and things like that, doing some algorithmic priority.

[181] But it's really remained separate, a separate team, and stayed very true to the core of what they set out to do.

[182] I think everything you said is right.

[183] And totally the natural category to put this in as products.

[184] But I'm going to be a little bit controversial.

[185] I'm actually going to say technology here.

[186] And the reason I'm going to say technology is not because of any specific great computer science -based innovation that the Instagram team had.

[187] But I'm going to say that this became, as I was talking about, really the first piece of Facebook's entire strategy for the mobile technology wave.

[188] um that they missed that they missed uh from from the beginning and um wait david you think that they sorry this is you think that they wouldn't have gotten their act together in making their app what it is today without i mean let's let's look at what their app is today it's a collection of the most talented ios developers in the world and a lot of the best mobile designers in the world packed into one office developing maybe arguably the best suite of apps in the world you just said the critical thing sweet sweet of apps what is facebook today facebook is a suite of apps company i'm not going to disagree with you there i think without instagram without um and it's impossible to know how much of this is uh Zuckerberg and Cheryl Sandberg and the rest of the facebook team court Facebook team strategy versus what's come from from Kevin and Mike uh and the rest of the Instagram team.

[189] But I think without that acquisition happening, I think Facebook probably doesn't or make an offer for Snapchat somewhat a few months or a short time after to buy Snapchat for $3 billion that Snapchat rejected.

[190] I think Facebook doesn't buy WhatsApp for the incredible amount of money that it did.

[191] And maybe, you know, maybe even Oculus to a certain extent.

[192] But even more than that, you know, again, think back to April 2012 when Facebook on mobile is this HTML 5 mess.

[193] And think about Messenger now to go from that HTML 5 mess to the Facebook core Facebook app today, which drives a huge amount of revenue through their paid install program, ad program, and then to develop Messenger on the side and then have the guts to rip it out and make it part of this suite of app strategy.

[194] You know, Messenger, I believe the latest numbers has 700 million active users, which is pretty incredible for something that is now a fully standalone app.

[195] Yeah, so I'll go with you on the technology of Instagram being a kick in the pants.

[196] But I don't think, you know, we talk about like a technology acquisition that is truly about, you know, Um, they, you know, they understood how to do this computationally difficult thing better than we did and we needed it to enhance our core product or, you know, Apple acquiring the touch ID company because they could make a differentiated product based on integrating that technology.

[197] I think that's a far second order thing here to acquiring the product of Instagram.

[198] You might be right.

[199] You'll get me later.

[200] I'll get you later.

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[220] What would have happened if Kevin Sistram had said no?

[221] Yeah.

[222] Instagram had just raised $50 million.

[223] They had plenty of runway, bright future ahead of them.

[224] where would we be today?

[225] Yeah.

[226] You know, I think Instagram as a product to users wouldn't be significantly different.

[227] I think that it would have continued to grow more slowly because they didn't have the resources.

[228] They wouldn't have had the prioritization from, and you know, this is theoretical.

[229] This is something we talked about before.

[230] Did, you know, Facebook really prioritize Instagram post in the news feed algorithm?

[231] Probably, I mean, it sure it looked like it.

[232] It looked like we had a huge spike in that and there was probably a lot more Instagram traffic.

[233] On the other hand, one of the things I'm still bummed about today as a loyal Twitter user, oh, man, how great was it when Instagram was natively integrated into the Twitter stream?

[234] Yeah, that was pretty cool.

[235] And that was a, that was a sad, sad day when that integration broke.

[236] Totally sad.

[237] And actually, it changed my behavior.

[238] Like, I don't tweet photos on, like, I don't put a photo on Instagram and then tweet it because I know it's not going to show up.

[239] I natively upload it to Twitter now.

[240] Yep.

[241] And how often do you do that?

[242] Every third, fourth tweet.

[243] Maybe, yeah, maybe.

[244] But, but I'll say, I was going to say, oh, these things negate each other.

[245] Twitter's at 300 million users and churning out everyone they can bring in, turned out a billion plus so far.

[246] And Facebook's sitting pretty with, you know, a decent chunk of the world's Internet -enabled population.

[247] So I think anything Facebook does is, you know, a 3 -4x, maybe 5x.

[248] force multiplier on top of anything Twitter could do.

[249] No doubt.

[250] However, I do think, you know, Instagram has become itself a huge driver of audience.

[251] Yeah, 400 million active users.

[252] 400 million active users added 100 million this year.

[253] It's crazy.

[254] But I think they, you know, I think you can make an argument that they could have continued bootstrapping their way up into that user base through other platforms like Twitter and using face.

[255] as well.

[256] Yeah.

[257] I mean, here's, here's how I think it would be different.

[258] I think, you know, in the last six months especially, Twitter has a, or I'm sorry, Instagram has a very real ad platform.

[259] And they took their time in developing it first, a very full serve one where you to work directly with the Instagram team, now a self -served dashboard.

[260] But you get these really immersive brand ads that are platform appropriate.

[261] They don't feel like something that I want to scroll past, I want to look at it almost as much as I want to look at the gorgeous nature photography that I see.

[262] They just didn't have the funnel of advertisers to point the ad platform at.

[263] So it would have been very slow to try and get advertiser attention and people to come over and use the Instagram platform and not only to spend their dollars there, but to spend their attention there learning a new platform, whereas in the Facebook acquisition, they have this kind of dual deployment where you can buy ads on either from a single ad dashboard, much like Google did very early on with YouTube.

[264] Yep.

[265] So I'm going to go a little bit kind of out there crazy direction with this.

[266] And this is pure speculation.

[267] But I think if this acquisition hadn't happened, you know, I mean, like I was talking about earlier, this kicked off the era of the constellation of apps, you know, with Facebook and with, you know, Twitter buying Vine.

[268] And, gosh, even Instagram itself now between Boomerang that they just launched and hyperlapse.

[269] And layout.

[270] Yep.

[271] Which kudos to the Instagram design team.

[272] The cohesiveness of those is really nice.

[273] So let's imagine, though, for a second that this constellation of apps thing hasn't become a theme in the technology landscape over the past couple years.

[274] What's really interesting, well, what's really interesting because it has, you now have all of these major social.

[275] platforms that have been created over the past five years, with the exception of Snapchat, all of the U .S. new domestic, U .S.-based social platforms are owned by other companies with other business models and other goals.

[276] And if you think about the level of business model innovation that's happened at this mobile app layer in the U .S. and compare it to Asia and WhatsApp.

[277] Now, it's a pretty bold claim to say the acquisition of Instagram prevented the rise of WhatsApp like business models in the U .S. But let's just, you know, play this out for a minute.

[278] Sorry, not what's a we chat.

[279] Apologies.

[280] I meant we chat.

[281] Yeah, as a quick aside for listeners.

[282] If you haven't been reading up on WeChat, it is insane.

[283] Absolutely insane.

[284] It's on the surface, a messaging app, but it's effectively like an operating system where it's much easier for especially non -technical folks to build a plugin for their business to WeChat that enables all sorts of things from booking doctors' appointments to picking your kids up at school, all within this theoretical messaging platform.

[285] In my opinion, WeChat is nothing short of literally the creation of an entirely new major, major business model for technology companies.

[286] And that is the value -added services and integration's business model.

[287] Before we chat, I mean, it's amazing.

[288] This product is given away for free, not monetized through advertising.

[289] And still, in China, which is a brutally competitive market where it is very hard to monetize users, this product has, I believe the latest estimates are like a seven dollar Arpoo annual revenue per user in China.

[290] Just more, I think more than Twitter and rivaling Facebook, and those are ad platforms.

[291] Exactly.

[292] And that is pretty incredible.

[293] And so what I think is amazing is because in the U .S., you've had these new innovative mobile products be acquired by larger companies with older established business models, you haven't seen that happen in the U .S. as much.

[294] Now, there are lots of other factors.

[295] Like in China, there was no, you know, mobile was really the first computing platform to be widely adoptive across the whole population.

[296] There was no legacy desktop product and technology layer like there was in the U .S. That certainly had a lot to do with it too.

[297] But imagine, you know, what type of business model innovation we might have seen had Instagram remained independent.

[298] I don't know.

[299] And certainly Snapchat is playing with it too.

[300] in terms of constellation of apps in terms of business models yeah yeah yeah their their channels thing will be really interesting to watch play out all right uh new new uh we'll move quickly here but um uh new uh segment for the show for episode two um we've already talked about little theme music for yeah i know new segment new segment um what uh we've talked about this a bunch already.

[301] But, you know, for you, Ben, what kind of broad themes and technology does the Facebook Instagram acquisition kind of represent for you?

[302] Yeah.

[303] So I was thinking about this when you sent me earlier, your idea to do the new segment.

[304] And I was trying to think, you know, I think you did a really nice job in the last segment, kind of bringing in the app constellation theme.

[305] I think the other theme that this sort of opens up is that you really have to do.

[306] own the audience.

[307] And that sounds trivial and obvious at first, but I think what I mean by that is in any distribution channel, you have suppliers, you have a distribution, and then you have the audience.

[308] And with the rise of these services, it's becoming increasingly more important to own the default channel that the users go to for leisure, for distraction, for whatever it is because in the, you know, near infinite nature of the internet, you can push whatever you want through that channel to reach that audience.

[309] And I think Facebook's core asset was, and still sort of is being that core place where people want to go and want to, you know, the first thing you want to do when you open your phone, when you have some downtime or whatever it is, you go there to be distracted.

[310] You go there for fun, you go there to see your friends, to see whatever you aspire to.

[311] And that owning the channel makes you the most powerful advertising platform in the world.

[312] And on top of that, it makes you the most powerful a lot of other things in the world.

[313] I mean, we're seeing it now with Facebook instant articles and other experiments that you're playing with, but you can, you are a very, very powerful force in your business model and to other people's business models, if you are the first step in dishing out who gets the attention after you.

[314] And I think Facebook saw that as an incredible, dangerous threat of people want to look at Instagram instead of us, and then they can start shoving whatever they want in that feed.

[315] Even though that's kind of Instagram's model is to not clutter it up, they've managed to do a really nice job of taking that attention that they're getting as the front door of what you want to go look at and putting that where advertisers are appropriately putting their...

[316] Yeah, I think this is one of the reasons why technology companies with advertising business models have become so much larger in terms of size and reach and revenue and value than old world advertising models.

[317] I started my career steeped in old world media and advertising.

[318] You know, I worked in media technology and media investment banking.

[319] And then I worked at a newspaper at the Wall Street Journal.

[320] And but I worked with when I was in banking, I worked on television and cable networks a lot.

[321] And their content and distribution were separate.

[322] You know, the distribution companies were the cable companies and the satellite companies.

[323] And they owned the distribution pipe and the content companies were the cable networks, the AMCs, the scripts, you know, all the channels.

[324] that you see on cable TV and those were two separate things and they both had their own advertising they shared the advertising pie those two those two stages of the value chain and and although television advertising was and perhaps still might be larger than web digital based advertising as a no one company could become as big as a Google or as a Facebook has because Google and Facebook have or at least Facebook has integrated and through Instagram integrated content and distribution within one single company within one single app or constellation of apps.

[325] Yeah, they are the channel.

[326] Facebook is the channel for where you go when you want social or downtime or the variety of other services that Facebook offers events and messaging all that.

[327] and Google is where you go when you have intent.

[328] Yep.

[329] So for me, I think, you know, we've talked about a few things throughout the episode.

[330] You know, we mentioned briefly technology waves, which is something that Ben and I talk a lot about, this concept.

[331] We should do a whole episode.

[332] We used to do a special episode on waves.

[333] But, you know, the concept that in the tech world, there are these waves of technology that come every few years.

[334] And I think this is a perfect illustration of the wave of mobile coming in and washing over the desktop wave, but bringing with it a whole new set of companies, of content and product models, of business models that may or may not have been implemented in the, at least domestically.

[335] But that's one.

[336] And then the other one that, you know, I think is something I've been thinking about a lot lately in terms of technology themes.

[337] I think is the scalability and the leverage that technology gives you.

[338] And I'm thinking in particular about the number of employees at Instagram.

[339] I mean, this is just incredible.

[340] 13 employees with 30 million users.

[341] Oh, oh.

[342] And on those 13 employees, we were looking on LinkedIn, too.

[343] I think 11 are still at Instagram.

[344] Yeah, something crazy like that, you know, which is not typical for technology.

[345] Yeah, that's yet another example of Facebook doing an acquisition.

[346] Doing a great job here.

[347] But 13 employees at this landmark acquisition, and today, even at, you know, roughly 150 for 400 million users.

[348] And it's impossible to know how much revenue Instagram is generating today.

[349] But there was a great equity research report put out by Citigroup a year ago, almost a year ago, which they valued Instagram at $35 billion.

[350] dollars.

[351] And this was when Instagram had not quite 300 million users.

[352] And what's Facebook's market cap?

[353] I don't know offhand.

[354] I want to say it's right around 200 billion.

[355] Yeah.

[356] So, I mean, that's what a ridiculous chunk, right?

[357] Acquired for a billion dollars.

[358] And it was less back then.

[359] Right, right.

[360] And in that report, they estimate that Instagram revenues are, could be on the order of about $2 billion.

[361] I mean, that's incredible.

[362] And this year, right?

[363] Is it 20, I think it was maybe summer 2015 to 2016 or something like that.

[364] This year, last year, Citigroup estimated $2 billion in revenue for Instagram this year in 2015.

[365] To do that with 150 employees is incredible.

[366] And then WhatsApp, which came later, something like 50 -some -odd employees, you know, acquired for $20 plus billion.

[367] I would, I'll raise the flag here and say, not really fair to do the revenue calculation for the ad network, since they're piggybacking off of Facebook side network, and I'm sure that takes a lot of engineers.

[368] True, true.

[369] But I think about the leverage that is possible with technology and technology companies versus, again, old world media where I spent time earlier in my career, nowhere near that kind of leverage that you can get.

[370] All right, let's wrap up.

[371] Conclusion time?

[372] Conclusion time.

[373] So, acquired for a billion dollars, December of last year, you know, externally valued at $35 billion, even ignoring the fact that that's based on, you know, there's $2 billion in revenues this year.

[374] This is like not grasping at straws.

[375] This is a very real revenue product.

[376] And in fact, when it was acquired, I don't think it had revenue.

[377] They had no ad platform.

[378] They had no. Nothing.

[379] Pretty incredible what they've done since acquired.

[380] 35x multiple post acquisition on that property alone.

[381] Not to mention all the ancillary benefits of potentially steering Facebook as a whole organization in the right direction on mobile.

[382] I mean, do I get a plus?

[383] It's an A plus.

[384] I know we need more disagreement on this show, but man, A plus for me too.

[385] This might even be the very, from a multiple return standpoint.

[386] Even straight financial returns, this might be the very best acquisition in technology history.

[387] I'm curious.

[388] Is there ever, what is, how small of a scale do you have to go down to to get something that was a 35x multiple in three, is it three years?

[389] I mean, bungee, perhaps.

[390] Foreshadowing.

[391] That'll be an interesting episode.

[392] By the way, listeners, if you have requests, suggestions, comments, thoughts, as we said, but.

[393] If you could think of companies, we haven't.

[394] That we haven't.

[395] Please send our way.

[396] We'd also love to have some guests on this show.

[397] And by it, send it our way, there's Twitter.

[398] There's also a little feedback form on our site where you can submit stuff.

[399] We'd also love to have guests.

[400] If you have a particular insight into a great technology acquisition in history, either you were part of it directly or you worked on it as part of a third party and you want to be on our show, shoot us a note.

[401] We'll go down here?

[402] I think we're about done.

[403] All right.

[404] Thanks, everyone.

[405] We'll see you next time.

[406] Who got the truth?

[407] Is it you?

[408] Is it you?

[409] Is it you?

[410] Who got the truth now?

[411] Uh -huh.

[412] Our sponsor for this episode is a brand new one for us.

[413] Statsig.

[414] So many of you reached out to them after hearing their CEO, Vijay, on ACQ2, that we are partnering with them as a sponsor of Acquired.

[415] Yeah.

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[417] Before founding Statsig, VJ spent 10 years at Facebook where he led the development of their mobile app ad product, which, as you all know, went on to become a huge part of their business.

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