Tag Archives: Palo Alto

When Good Legal Advice Is Worth $10 Million An Hour

When Good Legal Advice Is Worth $10 Million An Hour

One of the highest profile liquidity events in the first half of 2012 was Facebook’s deal to acquire Instagram for $1 billion. The popular mobile photo-sharing service should fit well into Facebook’s growth strategy as a public company, but its eye-popping valuation — more than that of the New York Times, for those keeping score at home — is made more extraordinary by the fact that Instagram, at the time the deal was announced, was run by only 13 employees.

Setting aside questions of unique strategic value for the moment, what could possibly make Instagram worth ten figures? Brand recognition, goodwill, user loyalty, mushrooming usage metrics, sure — but perhaps most importantly, a mountain of intellectual property. My quick-and-dirty assessment, based on pure speculation with no inside knowledge, produced the following taxonomy:

  • Technology, consisting at a minimum of a consumer-facing iPhone app and the server-side innards that handle connections and communications with other users and social networks. Most social media sites and services, at their heart, are gigantic databases connected to Web servers that render the stored data as Web pages, images and other content.
  • Branding Elements including the Instagram name, logo, domain names, trademarks and other identifiers, which nowadays can include everything from Twitter handles to Facebook pages and even vanity domains.
  • User database containing personal information from more than 30 million registered users
  • User-generated content: In Instagram’s case, a vast repository of more than one billion photos contributed by those users, not to mention the 81 comments per second posted on those photos
  • Proprietary content and design: Admittedly modest by comparison, but it would do the designers a disservice not to give a nod to the app’s user interface.

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Evaluating the Risks in Facebook’s IPO: Would You Invest?

Facebook is forthcoming about the challenges of mobile: No revenue currently generated from mobile advertising; unclear how much mobile use could be monetized; failure to solve this puzzle combined with a dramatic shift toward mobile usage could be a serious problem; and they don’t control the iOS and Android platforms. Frankly, if there were one thing that persuaded me not to invest in FB at current valuations, this would be it.Continue Reading

Silicon Valley After the Dot-Com Crash: An Insider Perspective

Silicon Valley After the Dot-Com Crash: An Insider Perspective

After the last ops and engineering staff were laid off, I remember wandering through the cavernous, deserted NOC, strewn with assorted equipment that was left to be carted off to auction, looking up at the huge projection screens that forlornly flickered “No Signal.” It felt downright post-apocalyptic, with huge diesel generators out back standing ready to provide backup power to a NOC and data center that no longer needed it.Continue Reading

Series Seed and WSGR Term Sheet Generator: “Folks, Don’t Try This At Home”

Only a few days later, I’m needing to break my own “Top 10″ rule and add two more valuable resources, making it an even dozen. For founders who want to get into the nitty-gritty details of venture capital and angel financing documents, there are two online resources from leading Silicon Valley law firms that are well worth your time.Continue Reading

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