Instagram worth a half billion dollars? Sure, and I'm Mick Jagger

According to Crunchbase[1], they have 12 employees. I applaud their team for their user and product growth on such a small team, but come on, have they sold anything? Ever? Let's assume they now have 20 employees, that's $2.5M/ employee.

Do these investors know something that I don't? Is the Fed opening up a program for app developers that make no money? Because if they are investing at half a billion dollar valuation, they are looking for an exit north of a billion dollars. I mean, come on, Pandora generated $75M last quarter and as of today their market cap is 1.7B[2] and that's after their stock tanked yesterday.

I wish the best for the instagram team, but a round like this cannot be good for them, the product or the users in the long run.

[1]- http://www.crunchbase.com/company/instagram [2]- https://www.google.com/finance?q=NYSE:P

I am tired to death of this phase of the web economy. I was downvoted in another thread for characterizing this dance as "charlatanism," but I will repeat it here. I hope to God I never need to monetize my HN karma because that would mean I have failed in the actual real economy outside the Peddling of Startups to...actually who are the end investors in these VC funds? Facebook and Google employees and maybe some hedge fund managers who think tech is cool?

Downvote me now to show that you are smarter. To send a message that you will aggressively monetize your Javascript skills, and naysayers will be pushed outside the circle of trust.

Let's assume they have some kind of master plan that will eventually result in them being profitable.

The question coming to mind is how exactly are they going to spend $40m. I mean it's a simple image taking app - not exactly nuclear physics.

wow, I could not agree more with the writer. Some where along the way, the basic concept of making a profit, and making it fast, and making it within a certain period has simply been erased in the mirage and conveniently accepted excuse of "money will come later." Really, why can't money come now, and how later is later. It seems like, the investors are simply putting money in to reap cash in the next round and walk out while the last person or entity to take on the investment burden (public if it goes ipo) will deal with the massive losses of a business that has yet to figure out it's revenue model. Unbelievable.