Scuttlebutt: Facebook’s New Deal

Mark Zuckerberg and Kevin Systrom

There has been a lot of hand wringing in the press about Facebook’s deal to buy the Bay Area startup Instagram for $1 billion, almost what the New York Times Company is valued at. Mark Zuckerberg, founder and still principal owner of Facebook, negotiated the deal with Kevin Systrom of Instagram, which has 13 employees and zero revenue. People are sniping at Zuckerberg because he did the deal over a weekend without informing his Board of Directors. But in the fast moving world of social media he saw a strategic threat to his $100 billion dollar enterprise, because his users wanted to move photos easily on smartphones, and he had a clunky application to do it.

Systrom of Instagram, who owns 45% of his company, knew he had a piece that Zuckerberg coveted, even if he was a speck. The two guys knew each other from Palo Alto networking. The entire deal was negotiated in Zuckerberg’s refurbished old house, very much the way Steve Jobs once did it at his home. Systrom supposedly said that his company was worth 2% of the value of Facebook. He ultimately settled for 1%, or $1 billion for his “revenue-less” company.

I find the story absolutely compelling on several fronts. Zuckerberg understood the potential threat of Systrom selling to rival Google or doing what he had done himself, going it alone. Systrom had strong venture capital partners behind him, so Zuckerberg knew he could not intimidate him. Before Facebook goes public he can still run the company like a private business, even with a billion dollar deal, and he can thumb his nose at the investment bankers and feel secure. Zuckerberg must be both enormously cocky and a little paranoid to pay such a sum to a startup begun in 2010.

This kid Zuckerberg is remarkable to have learned so many lessons about business on the fly. And he knows enough to know what he doesn’t know and pay what it costs to fill the gaps at Facebook.

Question: Would you vote for Romney, even if he has no discernible “core beliefs” other than desperately wanting to be President?

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34 thoughts on “Scuttlebutt: Facebook’s New Deal

  1. AvatarMichael Fry

    I would vote for howdy doody over Obama, Romney has executive experience in business and government. The problem with liberals they become emotionally charged as they have no facts or substance to back their rhetoric and history has well established, SOCIALISM DOESN’T WORK! WAKE UP!

  2. AvatarGeorge Mitchell

    Once again we are not looking at a “great choice”. It is a matter of the lesser of two evils in my opinion. It seems that everyone in politics is a rich businessman, lawyer, etc. How do any of these politicians know what we the people feel, want or need? To live in a protected world of affulence is NOT a good training ground for public service.
    All my opinion of course.

  3. AvatarRod Eckley

    I’d vote for Bill Clinton and I’m a Conservative………
    I’ts not a fair question.

  4. AvatarGerard Borys

    This is not a question… it’s typical unprofessional pro-Obama anti-Romney rhetoric that pollutes the internet and media

  5. AvatarCharles Leech

    I’d vote for a yelow dog, before I’d vote for Obama, but I might vote for the dog over Romney. Rather a yellow dog, than a blow dried show dog! (Thanks to Ross Perot)

  6. AvatarMike Richards

    I don’t think Obama knows or cares what a balance sheet or income statement looks like. A chief executive officer should be able to swim through such things and immediately see the action items. I will vote for the guy with executive know-how, Romney.

  7. AvatarGail Glidden

    I hope all the previous respondents are rich. Not sorta rich, but very rich, because those will be the only true benefitters of Romney buying the Presidency. He has no respect for poor, middle class, women, or animals. He will say or buy whatever it takes to become President. Once a snake, always a snake.

  8. AvatarJACK FROST

    Political Leadership is expressed by the Art of the Possible. We have two clear examples upon which to base a decision.
    Obamacare divided this country as no other political action has done. When a request was made to discuss the proposed legislation the questions were greeted by an arrogant response,”Just vote for it, you don’t need to know” The legislation was passed by the lowest form of horse trading in the history of our congress.
    Romneycare was a well thought out political strategy which has the public in Massachusettes claiming a political victory of consequence.
    Romney is a leader of national caliber.
    President Obama is a community organizer a pure example of the Peter Principle.

  9. AvatarJerry Johnson

    What a misleading, assumptive question.


    Mitt Romney’s “core principles” are in the best interest of the United States of America and the Constitution. Obama wants to destroy our freedoms, our Constitution and become our Dictator.

    No brainer.

  10. AvatarVincent P

    I 100% agree w/Michael Fry and would vote for Howdy Doody over Obama! He and his “cronies” are killing companies, jobs, our democracy & freedom in this country.

  11. AvatarChris D

    Absolutely, I just hope and pray he can shrink the overly massive, inefficient,progress inhibiting,wastefull government.

  12. AvatarGarry Wilson

    At least with Romney coming from a business environment knows that there are times to relax and take a vacation and that there is the majority of time to take care of the business at hand. President Obama on the other hand knows how to take a majority of time to relax and to talk about taking care of business (but never following through). A robust ecomony providing for jobs for Americans would perpetuate the American Dream for success. Big government handouts with no incentives to work (if physically and mentally able) will kill the American Dream and create a class of people waiting for the next fix from big ‘G’. Then truly a small group of the ‘Elite Politicians’ will control the majority of the votes who have deveoped a dependency on Big Government. Every American High School graduate should have occupational job skills (apprenticeships, etc) to give them a sense of accomplishment and self worth. For all of the money that is spent in public education the majority of graduates are clueless to their potential.

  13. AvatarDick Crosby

    Yes! But I sure wish I and the wife could generate more enthusiasm for him. I’m good with his business background. He just needs to chill out and talk to us. Enough canned remarks, delivered in a semi-preaching manner. Relax, for God’s sake!
    Anyway, we’re scared to death that Chicago crowd may stay in. I apologize to many of my customers for making DC a suburb of Chicago; like Springfield is. If you don’t live in Illinois, you don’t know what I’m talking about. We’re in a hell-of-a-mess too.

  14. AvatarLynn Gorman

    That is a snarky statement in the guise of a question and a perfect example of what has replaced open, respectful debate in this country.

  15. AvatarKevin Wright

    If you would make a little effort to truly learn about the man instead of blindly believing the nonsense in the media you might discover that he has the core beliefs upon which the nation was founded and which we desperately need today.

  16. AvatarBill Moore

    I read all these anti Obama posts with incredulity.( I voted for McCain btw) The facts are the facts gentlemen and they do not show that Obamas policies have done anything untoward toward American buisnesses.

  17. Lloyd GraffLloyd Graff

    I wrote the question that way because Romney ran such a terrible primary campaign that he may lose the independent voters like me who will decide this election. I decided to raise the bar with the question by injecting the negative.

  18. Avatartrashcup

    We don’t need elevators in garages, our wives can only drive one Cadillac at a time, the guy hasn’t had a job in at least 4 years and his investments are in a blind trust fund, so what has this guy been doing? Counting his change. He changes his mind about things faster than most people change their underwear. If you want your opinion, just ask Romney, he will echo what ever you wish just to get your vote. OF ALL the Republicans on the face of the earth, this is the best these guys can come up with? If he’s so great, why has it taken so long for republicans to endorse him? Were they seriously going to endorse Gingrich, Caine, Paul, Sandorum, Bachmann? Were they waiting for one of them to be their fearless leader? Get serious.

  19. AvatarLynn Gorman

    How does being negative “raise the bar”? And, if Mitt ran such a “terrible primary campaign”, would he be the leading nominee right now? I think Kevin Wright has it right. Dig a little deeper about Mitt. Of course, I’m biased because I’m a Michigan girl and, well, I think he’s cute. LOL! In all seriousness, I just think he’s a stronger leader than President Obama, and that’s what we need more than anything.

  20. AvatarGARY GOINS

    The dems. and the repub. have been in way too long. Everyone in DC is bought and paid for. I’ll vote for any independent to replace any incumbent. Send the crooks back and you still have the crooks. FYI, buried in the new Highway Bill is a section that allows the IRS, through the State Dept., to pull your passport if you owe them more than 50K in liens. That will help in our export effort.

  21. AvatarScott Carpenter Sr

    Assuming we all want to save our country (if that is even possible) from the Kenyan Muslim usurper, his communist tzars and the haters on the left…

    If in fact Romney is our candidate it raises two issues in my mind.

    1). We will have to work very hard to generate enthusiasm among the ranks, me included. Romney has totally thumbed his nose at the tea party movement and treated their demands more as a nuisance.

    2). The congressional races have become hugely critical. We will need as many new Constitutionalists as we can get to: A). Re-energize the 2010 batch of freshman senators and representatives. B). Hold Romneys feet to the fire in regards to returning this country to its former glory and cut this monstrosity (the federal govt) down to size.

    To the question: ABO (Anyone but Obummer)

    God save the Republic

  22. AvatarRichard Rudy

    I’ve often wondered about the apparent lack of connection between the topic of Scuttlebutt and the question asked at the bottom. Jumping from an admiring blurb about a billionaire wunderkind’s $1 billion gamble to a cheap shot at another successful business operator takes some serious disconnecton.

    It’s the latest example of in-your-face journalism, which seeks to inflame rather than illuminate, and is at the center of what is wrong with contemporary American media and politics. This question is so loaded that it virtually sags at the spaces between words.

    The question begins by doubting into Romney’s suitability (‘would you vote for Romney, even if…”) and ends with the implication that anyone who would vote for Romney is equally adrift (“he has no discernible core values other than desperately wanting to be President”). As if the assertions contained in the question are commonly known and accepted as fact. What exactly, are your qualifications to discern and value his core beliefs?

    Good journalism would ask the appropriate and useful question:: “Would you vote for Romney, and if so, why?” Instead, you framed the question in the way a sportswriter would ask, deliberate in your intention to arouse rather than inform.

  23. AvatarRobert

    What a snide question. Romney’s core values are God and Country first and that means the USA. If you knew anything about Mormons, they revere the the US Constitution as highly as the 10 Commandments. Obama’s priorities are Big Government and every other country besides the USA. It is no conicidence that Kenya is receiving a huge sum of US foreign aid. Obama was also raised with priviledge by his banker grandmother, educated at private schools with C grades, supported the drug cartels and never worked an honest day in his life.

  24. AvatarLarry G

    Way to keep smacking that hornets nest with the ball bat, Lloyd. The stings can be fatal and hopefully your damaged thought process will be the victim.

    Obama’s socialism is a cancer that needs to be surgically removed from our government. His “our society has victims” mentality has done more to damage the so call victims future than any president in our history. Most so called victims are victims due to self determination.

    Dropping out of hgh school
    Having a baby at 17, 16, 15, 14, 13, 12
    Having fourteen baby daddies
    Having fourteen baby mommies
    Getting a government funded college degree in African Studies
    Preferring a morning breakfast of crack over corn flakes
    Getting blitzed on booze
    I didn’t steal it, I was only borrowing it
    Purchasing a home on the anticipation of additional income or an appreciation in value
    Not appreciating the cost of eight maxed out credit cards at 18 percent interest
    Spending that 401k on that boat I always wanted
    Thinking that the social securty benefit should be greater than the contribution.
    Welfare is free money
    Milking unemployment some how is a good long term strategy

    Unfortunately this list could go on and on and on, maybe for some, self determination should not be an option, especially since I have to pay for it.

  25. AvatarJohn Rogers

    I could say that I would just as soon vote for the devil as opposed to Obama but I believe they are related to each other. He wants us to be a third word country. Vote this bum out before it is impossible to turn our country back in the right direction.

  26. AvatarJerry Levine

    I think the question should have been written differently. Romney is a technocrat without much of an over-riding political philosophy, which differs from traditional American presidential candidates who follow a philosophy to set their agenda. For example, Italy recently invited an economist, Mario Monti, as Prime Minister to head a technocratic government to deal with that country’s problems. A better question might have been, “In these troubled, partisan times, would the United States be better served by a technocrat as President rather than a politician?” That’s a less inflammatory, more thoughtful question. I’m not sure of the answer.

  27. AvatarLou nettles

    I am sure you are very much aware of Romni’s core beliefs as well as Obama’s,the choice is do you want to pay more taxes!

  28. AvatarBill Criss

    Lloyd, you and your son are very bright guys and put out a top notch publication, but let me ask you, you, as a liberal, a question. Who would you rather vote for, a successful businessman or a community organizer? I would like to see a businessman who understands balance sheets take a crack at it.

  29. AvatarRobert Corwin

    Lloyd, you responded to earlier comments 4/20 and no additional comments. Thats very like a liberal wanting to get a response that would promote the left. Since then you have received a number of comments which still need at least another comment from you. Your publication is good when staying with issues dealing with the manufacturing /machining & other items of interest to the business community. It becomes very plain and typical, when your publication starts to read like the talking points of MSNBC etc.

    Obama was bad to start with and has moved the needle to really, really bad with no end in sight.


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