|An indication of just how important this deal was to Facebook:|
The Instragram Deal: A Mark Zuckerberg Production
By EVELYN M. RUSLI
New York Times
April 12, 2012, 2:18 pm
Mark Zuckerberg, the 27-year-old chief executive and co-founder of Facebook, does not usually play the role of deal maker.
But the social network’s $1 billion purchase of Instagram, the popular photo-sharing service, was a Mark Zuckerberg production.
Less than 24 hours after the ink dried on Instagram’s latest financing round — an investment that valued it at roughly $500 million — Mr. Zuckerberg placed a call to Kevin Systrom, Instagram’s chief executive, according to people with knowledge of the matter, who spoke on the condition of anonymity because the discussions were private.
Mr. Zuckerberg was blunt: Facebook wanted to buy Instagram. Over the next 48 hours, Facebook and Instagram hammered out the details for a $1 billion cash-and-stock deal, the social network’s largest acquisition to date, the people said. By the end of Sunday, the deal was done and announced the following day.
To toast the occasion, Mr. Zuckerberg wrote a lengthy post on his personal Facebook page, calling the transaction an “important milestone” for the company.
The deal — so large and cobbled together so quickly — underscores Mr. Zuckerberg’s control of Facebook and how he drives the social network’s pace. Unlike some founders, Mr. Zuckerberg has an extraordinary hold on his business. He owns about 28.4 percent of all Class B shares, and through agreements with other investors, he has voting control over more than 57 percent of Class B shares. His power is expected to swell over time, as Class B shareholders sell their stock.
Since founding the company in 2004, Mr. Zuckerberg has always been the soul of the social network. Earlier versions of the site were tagged “a Mark Zuckerberg production.”
But despite his power, Mr. Zuckerberg has not always played a heavy hand in the company’s acquisitions, most of which have been small transactions and “acqui-hires,” in which a company is bought for its talent. Most of Facebook’s recent deals have largely been handled by Amin Zoufonoun, a former Google executive hired last year.
The deal also reveals how important mobile is to Mr. Zuckerberg’s and Facebook’s future. It implies that Mr. Zuckerberg saw Instagram’s meteoric rise as a potential threat, whether as a standalone service or in the hands of one of its rivals like Google or Twitter.
While Mr. Zuckerberg had previously expressed interest to Mr. Systrom in early conversations, the transaction came on the heels of the much-heralded release of Instagram’s app on Android in early April. The app recorded five million downloads in six days.
A Facebook spokeswoman declined to comment.