Asia Stocks Drop on Europe; S&P 500 Futures, Copper Gain.
Asian stocks fell for a sixth day, the longest run of declines since August, and European equity futures slid after Sony (6758) Corp. posted a loss and concern grew that Europe’s debt crisis is worsening. U.S. equity futures and aluminum rose as Alcoa Inc. reported an unexpected profit.
The MSCI Asia Pacific Index lost 0.8 percent as of 3:01 p.m. in Tokyo. Euro Stoxx 50 Index futures dropped 0.6 percent. Standard & Poor’s 500 Index futures added 0.4 percent following a 1.7 percent slump in the equity gauge yesterday. Ten-year Treasury yields rose two basis points to 2 percent. The Australian dollar rose against all 16 major counterparts. Copper and aluminum gained at least 0.5 percent. Sony and Sharp Corp., Japan’s biggest makers of liquid- crystal-display televisions, posted losses totaling 900 billion yen ($11 billion) as global demand weakened for the first time in six years. The U.S. Federal Reserve is scheduled to release its Beige Book business survey later today and Italy will sell 11 billion euros ($14.4 billion) of bills. Spanish Prime Minister Mariano Rajoy said yesterday that the nation’s future is at stake in its battle to tame surging bond yields.
Instagram’s Systrom Builds $1 Billion Application in Two Years.
Silicon Valley is one of the few places where a 27-year-old Web entrepreneur can parlay a photo- sharing application with no known source of revenue into $1 billion -- in two years.
Evidence of that came yesterday, when Facebook Inc. (FB) announced plans to buy Instagram, a startup co-founded in 2010 by Kevin Systrom, a Stanford University graduate and former Google Inc. employee. The Instagram app, owned by Burbn Inc., fetched $1 billion in cash and stock after building an audience of more than 30 million people, mostly users of Apple Inc. (AAPL)’s iPhone. That kind of growth was enabled by the spread of social networking and smartphones, and the plummeting costs required to build an Internet company. Instagram has just 13 employees, up from four a year ago, when the app was used by 4 million consumers.
“It’s a massive accomplishment,” said Shervin Pishevar, a managing director at Menlo Ventures in Menlo Park, California. Pishevar backs social-media companies, though he didn’t invest in Instagram. “This is an indicator of what great teams and great products with amazing execution can accomplish in historic amounts of time,” he said.
While the deal may raise concerns about another technology bubble, the price tag is only about 1 percent of Facebook’s projected valuation when the world’s largest social-networking site sells shares to the public. And Chief Executive Officer Mark Zuckerberg, who founded the company in a Harvard University dormitory, understands the model of establishing an audience before generating sales. That’s how he built Facebook.
After a week in the Android store, Instagram is the top- ranked free app not made by Google and No. 3 overall, behind Google voice search and maps. Facebook is eighth.
The app’s success stems in part from how many users give feedback on Instagram photos, Sacca said. A large percentage of pictures get “liked” by other users, he said.
“That engagement creates the dopamine effect that leaves users feeling fantastic and coming back for more,” Sacca said.
Investors, meanwhile, have been lining up to get in the door. That culminated last week in a $60 million financing round, led by Sequoia Capital, which valued the company at $500 million, according to people with knowledge of the funding.
That means Systrom built Instagram’s valuation from zero to $500 million in two years, then doubled it to $1 billion in a week. Despite the odds, Systrom and Krieger always knew they would reach this point, Sacca said.
“They never once doubted that they were building a billion-dollar company,” he said
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