How much did instagram sell to facebook for

Money doesn't make you happy

Instagram co-founders Mike Krieger (L) and Kevin Systrom at the 2019 SXSW Conference and Festival at the Austin Convention Center on March 11, 2019 in Austin, Texas.

Jim Bennett | WireImage | Getty Images

Kevin Systrom and Mike Krieger have lived every entrepreneur's dream.

They launched Instagram on the app store at midnight on Oct. 6, 2010. On April 9, 2012, Facebook announced it was acquiring the company for a deal valued at $1 billion.

Virtually overnight, Systrom and Krieger became very, very wealthy.

But Systrom, who with Krieger left Facebook in September, says the experience was eye-opening in ways one might not expect.

"I think the biggest lesson ... coming into a fair amount of money pretty quickly, was that money itself is no end. It doesn't make you happy. It doesn't solve health problems. It can help in those things," Systrom told TechCrunch's Josh Constine at the South by Southwest conference in Austin, Texas, on Monday.

"Maybe the first day you wake up and you are like, 'Yeah, this is great.' But that goes away pretty quickly," Systrom said. "I don't really wake up in the morning and look at the bank account." It's a benefit, Constine noted, of having a large account.

The first thing Krieger did after making the deal with Facebook — was to get a burger.

"I distinctly remember — and I don't know if most people do this — but I think I craved comfort. It's a crazy decision we have been like talking about it for a couple of really intense days, and I went home to [now-wife] Kaitlyn and was like, 'Let's go to Nopa and get their burger.' It's my favorite burger in San Francisco. This is the most normal thing I can imagine doing."

Practically, the money from the deal doesn't instantly drop into your bank account, Krieger pointed out. And tactically, he and Systrom were both careful to not make any rash changes to their lives for the first couple of years after they sold Instagram.

"There is no way of processing it. And it probably took years for us to fully process it," Krieger said Monday. "I think it is very easy to upend your whole life but instead it is like, we are still the same people."

A mentor of Systrom's had warned him that money doesn't solve many of the hardships that come from being human.

"No matter where you are on the spectrum, you struggle in different ways," Systrom recalled being told.

"What ends up mattering — and one of my mentors likes to say — is is your struggle meaningful? Do you wake up in the morning everyday struggling on things that feel like they mean something to you, like they are to some end? And most of Instagram wasn't about how much money we made. It was waking up every single morning, working with awesome people, some of our best friends still to this day were Instagram employees because we met them there, we were in the trenches with them, working on something that we believed. And that's honestly the thing that got us up every morning, working hard at Instagram. It wasn't about the money."

See also:

Sam Adams founder: Unless you're a sociopath, being happy is better than being rich

How a cheap plastic camera on a trip to Italy inspired Instagram, according to co-founder Kevin Systrom

Warren Buffett on wealth inequality: 'A rich family' takes care of its own and the US should too

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Top 5 Companies Owned by Facebook (Meta)

Photo and video-sharing, virtual reality, and messenger services

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Updated October 16, 2022

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Meta Inc. (META), the company which owns Facebook, the world's largest social networking website, was founded by CEO Mark Zuckerberg and several Harvard College roommates in 2004. The company's name initially was FaceMash, which was changed to TheFacebook, eventually dropping "The" from its name to become Facebook, before being changed yet again to Meta in Oct. 2021. Zuckerberg and his co-founders initially launched the service for their Harvard classmates, quickly expanding it to other universities and then to the general public. The company since then has grown into a global giant with 2.8 billion users and a market cap of $926.8 billion. The company reported FY 2020 net income of $29.1 billion on $84.1 billion in revenue, nearly all of which came from advertising.

Meta has expanded far beyond its original social networking platform since its founding 16 years ago. Its products also include messenger services, photo and video sharing, augmented reality, and many other apps and services. Acquisitions have been key to growing these businesses and Meta's revenue in general. Meta's strategy has been to buy potential rivals before they can get too big. In the process, the company sometimes has paid exceptionally high prices for some deals. The company has also drawn attention from the Federal Trade Commission (FTC) due to potential anticompetitive practices, with the FTC recently demanding data on unreported purchases from Meta as well as other big tech companies.

Below, we look in more detail at Meta's 5 biggest acquisitions. The company does not provide a breakdown of how much profit or revenue each acquisition currently contributes to Meta.

Instagram

Type of Business: Photo and video-sharing app
Acquisition Cost: $1.0 billion
Acquisition Date: April 9, 2012

Instagram is a photo and video-sharing social networking platform that was launched in 2010. Through the Instagram app, users can upload, edit, and tag photos and videos. The company remained independent up until it was acquired by Meta for $1.0 billion in 2012. While Meta bought Instagram as the photo-sharing company was garnering significant attention from venture capital firms and other investors. Some estimates indicate that Instagram generates more advertising revenue than its parent company.

When it acquired Instagram, Meta opted to build and grow the Instagram app independently from Meta's main Facebook platform; Instagram remains a separate platform to this day. The price that Meta paid for Instagram, which at that time was generating no revenue, reflects Meta's willingness to pay a premium for young companies.

Type of Business: Mobile messenger service
Acquisition Cost: $19.0 billion
Acquisition Date: February 19, 2014

WhatsApp is a messenger and calling service available to users throughout the world. The platform was launched in 2009 as a low-cost alternative to standard text messaging services. Throughout much of its history, WhatsApp has allowed users to send messages and make calls directly to other users for no cost, regardless of location. Users can also send photos, videos, and documents over the platform. Meta bought WhatsApp at a time when the smaller company boasted more than 400 million active monthly users, making it a fast-growing potential rival to the Facebook network platform.

When Meta purchased WhatsApp, it was an independent company that had recently been valued at $1. 5 billion. Although it is unclear exactly how much revenue WhatsApp generates, some estimates are that WhatsApp revenue will be as high as $5 billion by 2020.

Oculus VR

Type of Business: Virtual reality technology company
Acquisition Cost: $2.0 billion
Acquisition Date: March 25, 2014

Just weeks after announcing its acquisition of WhatsApp, Meta followed up by buying virtual reality hardware and software company Oculus VR. This company was founded in 2012 and is best known for its Oculus Rift product, a virtual reality headset that was designed for video gaming. Since Facebook's purchase of Oculus VR in 2014, the subsidiary has made multiple acquisitions of its own. Perhaps the most prominent was the 2015 purchase of Surreal Vision, a company specializing in 3D scene mapping reconstruction.

At the time that Meta acquired Oculus VR, the company had only produced a development prototype of what would become its popular headset product. Meta's purchase of Oculus VR gave it an instant presence in the virtual reality market at a time when developers were showing growing interest in VR.

Onavo

Type of Business: Mobile web analytics
Acquisition Cost: $100–200 million (estimated)
Acquisition Date: October 2013

Founded in 2010, Israeli company Onavo performs web analytics on other mobile apps to determine customer usage. Meta acquired Onavo in October 2013 for an undisclosed amount that some analysts estimated to be between $100 million and $200 million. At the time of the acquisition, Onavo was an independent company. Although Onavo is not one of Meta's largest acquisitions, Onavo's technology may have allowed Meta to make crucial early determinations about other companies and apps to acquire. Onavo has occasionally been classified as spyware, forcing Meta to pull Onavo from both the iOS and Android app stores in the face of criticism.

Beluga

Type of Business: Messaging service
Acquisition Cost: Undisclosed
Acquisition Date: March 2, 2011

Messaging app service Beluga, founded in 2010, was acquired by Meta a year later. Meta bought Beluga in the midst of the startup's fundraising process for an undisclosed sum. In buying Beluga, Facebook acquired the technology that eventually became the social media company's highly successful Messenger platform. In the process, Meta again expanded its offerings and eliminated a potential rival.

Facebook Diversity & Inclusiveness Transparency

As part of our effort to improve the awareness of the importance of diversity in companies, we have highlighted the transparency of Meta's commitment to diversity, inclusiveness, and social responsibility. The below chart illustrates how Meta reports the diversity of its management and workforce. This shows if Meta discloses data about the diversity of its board of directors, C-Suite, general management, and employees overall, across a variety of markers. We have indicated that transparency with a ✔.

Meta Diversity & Inclusiveness Reporting
	Race	Gender	Ability	Veteran Status	Sexual Orientation
Board of Directors
C-Suite
General Management	✔ (U. S. Only)	✔
Employees	✔ (U.S. Only)	✔

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Meta Newsroom. "Introducing Meta: A Social Technology Company."
Facebook. "Facebook Reports Fourth Quarter and Full Year 2020 Results."
Facebook, Inc. "What are the Facebook Products?"
Reuters. "FTC demands data on small buys by Google, Amazon, Apple, Facebook, Microsoft,"
Facebook, Inc. "Facebook to Acquire Instagram,"
TechCrunch. "Right Before Acquisition, Instagram Closed $50M At A $500M Valuation From Sequoia, Thrive, Greylock And Benchmark,"
Facebook, Inc. "Facebook to Acquire Oculus,"
WhatsApp. "400 Million Stories,"
TechCrunch. "WhatsApp Was Valued At ~$1.5B In Final Round Before Sale,"
Fortune. "What the Surreal Vision acquisition means for Oculus,"
TechCrunch. "Facebook Buys Mobile Data Analytics Company Onavo, Reportedly For Up To $200M… And (Finally?) Gets Its Office In Israel,"
The Wall Street Journal. "Facebook’s Onavo Gives Social-Media Firm Inside Peek at Rivals’ Users,"
TechCrunch. "Facebook Acquires Group Messaging Service Beluga In A Talent AND Technology Deal,"

Why Facebook bought Instagram: “Zuckerberg was just scared”

April 10, 2012

Technologies

Mikhail Levin Author

photo Fotobank / Getty Images

World experts on Facebook's largest acquisition in history: why the social network decided to spend $1 billion to acquire a mobile photo app

Facebook bought the popular Instagram mobile photo app for a fantastic $1 billion. Now founded a year and a half ago Instagram has about 30 million users , but the app is free and does not currently have a proven business model. Why this social network deal? What fate awaits the service itself? Here's what famous Internet entrepreneurs and experts think about it.

Finished reading here

"Facebook was scared of Instagram," says MySpace founder Tom Andersen. Facebook is not going to learn anything from Instagram. Zuckerberg went for the deal as Instagram's skyrocketing user base made him worry. Even if Instagram was only a nascent threat, it is still a threat. If your company is worth $100 billion, and neutralizing a potential competitor would only cost a billion, why not take that step? nine0005

David Kirkpatrick, author of The Facebook Effect, the social network's unofficial chronicle, thinks buying Instagram makes perfect sense, as photo sharing is one of the most important parts of Facebook's DNA. “The takeover of Instagram is a logical step for Facebook for a number of reasons, and above all because photos are one of the key types of content for the social network. Every day, Facebook users upload 250 million photos, for many of them this is the main form of activity on the site. Zuckerberg could not allow any other service to become the main platform for sharing pictures, ”Kirkpatrick emphasizes. nine0005

“Every time you see such a fast-growing social platform, it's a good reason to get a little nervous. Of course, it would have made more sense for Facebook to acquire Twitter when it was at a similar stage of development. However, if you believe that Instagram could be the next Twitter, the purchase is the right move,” said Paul Buckheit, partner at the Y Combinator incubator and founder of FriendsFeed, bought by Facebook a couple of years ago.

Some saw in the deal Facebook's fear of the possibility of Instagram being taken over by competitors. “The application would be of great value not only to Facebook, but, say, to Twitter. I'm also sure that Google was quite interested in buying. So to some extent, Zuckerberg is not only attacking, but also defending: Instagram is a very valuable asset for anyone who would like to compete with Facebook,” says Lou Kerner, founder of the Social Internet Fund. nine0005

MG Siegler, popular tech blogger and VC funder CrunchFund, is optimistic: "People look at the deal and think, 'what the f*ck?' I think Facebook is brilliant. This is one of the few big companies where they understand how and when to buy. You don't buy at the peak, you buy on the way to it." He predicts that with the release of Instagram on the Android mobile operating system (until last week, the service was available exclusively for iPhone owners), the number of users of the application in the very near future will reach 50 million people. nine0005

After the announcement of the deal from Instagram, a protest exodus of some users began, fearing for the future of the service. For example, the message “RIP Instagram” (“Rest in Peace Instagram”) was hugely popular on Twitter. In Zuckerberg's original post about buying Instagram, the Facebook founder promises to keep the brand, independence and impartiality of the service. “Instagram users' ability to share photos with friends from a wide variety of social networks is an essential part of it. We plan to keep this feature, as well as the option not to share photos with other services at all. The user's social graphs on Instagram and Facebook will also not depend on each other," writes Zuckerberg. nine0005

Tom Andersen is sure that the founder of Facebook is not being disingenuous: “Facebook mostly revolves around friends and therefore is terribly afraid of services like Twitter or Instagram, which profess a more open and public model and where the messages of any user are available to everyone else. Therefore, Zuckerberg wants to own the main “private” social network (Facebook) and the main “public” one (now it is Twitter, but you can’t buy it, so the only way out is Instagram). In his opinion, in the near future Instagram may cease to be exclusively a mobile application and settle on personal computers. nine0005

The Russian Internet, due to the difference in time zones, has not really had time to respond to the news yet. “I had just fallen asleep, when suddenly two messages with the same text came - from News360 and from The new york times: they write that Facebook bought Instagram for a billion dollars. [...] What kind of comments can there be? I'm in the a**. I turn off my phone and go to sleep. Tomorrow will be a new day. Perhaps in the morning it will turn out that it was a belated April Fool's joke, ”SUP media director Anton Nosik wrote in his LiveJournal. However, Spout has not yet disclosed the reasons for his skepticism. nine0005

“The trend is simple: we used to say that text content is shrinking. It all started with long Livejournal posts, ended with 140 characters on Twitter [. ..] (Now) progress, grinding everything in its path, from text to pictures. With the advent of Timeline on Facebook, this became more pronounced: photos began to receive more likes, the whole emphasis on viewing photos. So why did Zuckerberg pay this amount? The answer, it seems to me, is banal: he was simply frightened. Because just a little bit more and Instagram is the next Twitter, and some Pinterest is the next Facebook,” says Anton Merkurov, an expert at the Institute for State Ideologies. nine0005

Mikhail Levin

Author

#Facebook #Instagram

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The most important thing about finance, investment, business and technology

How Facebook bought Instagram and what it led to • Excerpts from books on the website of the BOMBORA publishing house

Book excerpts
May 8, 2021

Why did Zuckerberg decide to buy a popular startup for $1 billion and did Instagram employees get rich from this deal. nine0005

More interesting things below

In 2005, Kevin Systrom left Silicon Valley to travel to Florence. There he planned to study photography, so he bought the best camera he could find before the trip.

But the Florentine teacher selected her on the very first day of class. He handed the student a primitive plastic camera that took square blurry pictures. “You must learn to love imperfection,” he told Systrom. The idea for Instagram was largely born that summer. A few years later, Systrom will become the author of one of the most popular and expensive applications on the planet. nine0005

Why Instagram resisted “growth at all costs”, how Facebook managed to buy an independent app, why Instagram lured stars and why the founders of the app were forced to leave, journalist Sarah Fryer tells in the book “No Filter. Instagram Story. We share an excerpt from the book about that very fateful deal.

Facebook decides to buy

When Facebook founder Mark Zuckerberg heard that Instagram was raising funds for a $500 million valuation, he realized that this tiny, noisy competitor pumped up with new money could quickly become an even bigger threat. The only solution was to buy it. nine0005

Zuckerberg thought he knew how to talk to Systrom, like founder to founder. Systrom did not want to lead the Facebook product. He aimed to keep the company alive and continue to shape the future of Instagram without the risks that come with being independent.

Facebook networks have already helped Instagram grow - and if Instagram became a part of Facebook, they would have incredible resources to grow faster. This argument seemed to please Systrom. But serious negotiations were required. nine0005

Meeting of the two founders

On Thursday night at Zuckerberg's new home in Palo Alto's leafy Crescent Park neighborhood, Systrom began by asking for $2 billion. Zuckerberg tried to reduce this figure and later decided to include other participants in the process. He invited Facebook COO Sheryl Sandberg and CFO David Ebersman to a serious talk. They said they trusted his instincts, but first they would need to warn the director of transactions, Amin Zufonun, who could arrange everything. nine0005

There was disagreement about the ratio of money and shares in the transaction. Cash seemed like a safer option compared to risky potential future gains.

Zuckerberg tried to convince Systrom that the price of the deal in the future would be much higher. If Facebook stays the same, 1% of the company will only be worth $1 billion. But Facebook planned to grow, thereby bringing the value of the offered shares closer to Systrom's original figure and even exceeding it. nine0005

The Zuckerberg Hunter and the Surprise Bite

While the deal participants were talking, Bist, Mark's big dog, wandered around looking people in the eye or rolling over on his back as if he wanted to be part of the deal.

- Are you guys hungry? Zuckerberg asked. It was already three in the afternoon, and they only drank beer. — I'll fire up the barbecue.

Mark pulled out of the freezer a large piece of either venison or wild boar—something with lots of bones. “I don’t know what kind of meat it is, but I think I once hunted it,” he said. Last year, Zuckerberg's goal was to only eat meat from animals that he killed himself. nine0005

Zufonun stood next to Zuckerberg while he worked on the meat. Smoke was coming out of the grill. Suddenly, the shepherd looked at the guest and growled. Then Bist threw himself on Amin's leg. "Heck!" exclaimed the director of transactions.

- Did he hurt you? Zuckerberg inquired. If yes, then we will have to report it. And they can take it.

Luckily, Bist did no harm and Zufonun did not bleed to death, but later in meetings he jokingly told the story as if on the eve of the historic event, Zuckerberg was more concerned about the dog than the person in charge of the deals. nine0005

The place of the new app in the company

Usually, when Facebook acquired a company, they found ways to absorb the technology, rebrand and fill in the gaps with their own developments. If Instagram was going to be a standalone product of Facebook, then it was breaking the normal acquisition process, and it wasn't clear how things would work.

How can we integrate something like this? asked Facebook head of engineering Michael Schroepfer.

- Shrep, we're buying magic. We pay for magic. We don't pay a billion dollars for thirteen people. The worst thing we can do is force Facebook on them prematurely. nine0005

Zuckerberg emailed the Facebook board to let them know what was going on. It was then that they first heard about a major and almost completed deal. Since Zuckerberg had a majority vote in the company, the role of the board of directors was only to put stamps on his decisions.

The fate of the Instagram team

After closing the deal, the Instagram team decided to take a breath and went to Vegas. Upon their return from the weekend, the first news they received was that Facebook would not be able to help them with resources or infrastructure until the deal was actually approved by regulators. According to Facebook's lawyers, this could take many months. nine0005

The US and European governments have been investigating whether buying Instagram would give Facebook monopoly power. Until then, Instagram can't be at Facebook's headquarters and can't begin active recruitment, so they'll have to work just as hard.

The second news was personal. Most of the employees didn't get rich. A couple of weeks after the deal, a Facebook representative came to the Instagram office in South Park to offer everyone new contracts with the founders of the application, Systrom and Krieger: new salaries, new stock options and cash bonuses if they stay at Facebook for more than a year. One by one, people entered the conference room, and some came out with gray faces. nine0005

Only three employees have been on Instagram long enough to be able to buy their quarter of Instagram shares and convert them into Facebook shares at a lower price. Everyone else didn’t extract any wealth from Instagram shares.

How much the founders of

earned Systrom and Krieger, on the contrary, received life-changing sums. Krieger owned 10% and Systrom 40%, so at the original deal price they made a net profit of $100 million and $400 million, respectively. nine0005

Both began to explore how to spend the new fortune, and did so in a way that the tight-knit team noticed. Krieger planned charitable work, studied how and where to donate money, and was also interested in collecting contemporary art.

Systrom started looking for a house and invested in Blue Bott le Coff ee. Sometimes Systrom's purchases in online stores were delivered to the office. Employees noticed his new car, new Rolex watch, and new skis. Money finally gave him the opportunity to have what he wanted, in the best possible way - for him, the Instagram feed now seems to have become a reality. nine0005

For more facts and insider information about the mechanics of Instagram and its impact on our lives, read Sarah Fryer's book No Filter. Instagram Story.

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