Facebook paid $521 million in cash for Instagram in 2012, not the full $1 billion headline price. The rest came as Meta stock, which turned into a massive windfall as Meta grew to $1.15 trillion. You can use stock swaps to buy competitors without needing all the cash upfront.
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Let's take a look at how Facebook buying Instagram actually happened. So the deal closed at Facebook buying Instagram for $1 billion, but that's not really how it played out. The final number ended up being about $700 million, but that's a whole different video to make. The point is they didn't actually get to $715 million with all cash. They did give $521 million to them, but they also gave them $194 million in Facebook stock. Do you know how they make that stock? You go call your securities attorney and tell them to issue shares. They print them out of thin air like the Fed does with money. But I've done this before, and you can do this too. If you already own a business and you want to buy a competitor, You can give them mixes of cash and stock. It allows you to save money upfront. It allows the seller to get a real exit and allows the seller to ride the upside potential of the business in the future. And Meta is worth $1.15 trillion. So Zuck saved a couple hundred million dollars and the founders of Instagram got something like 50 times in the long run what they initially were getting paid for the business. Let me know in the comments if you have any questions. A simple stock swap is something that anyone can do. I'd love to show you how.
