How Facebook Bought Instagram

It Started in Florence 🇮🇹

• In 2005, Kevin Systrom left Silicon Valley to study photography in Florence.
• He bought the best camera he could find — but his teacher took it away on day one.
• Instead, he got a cheap plastic camera that made square, blurry photos.
• The teacher said: "You must learn to love imperfection."
• That summer, the idea of Instagram was born.

Why Facebook Wanted to Buy

• Mark Zuckerberg heard that Instagram was raising money at a $500 million valuation.
• He saw the small but loud competitor as a growing threat.
• With fresh money, Instagram could become even more dangerous to Facebook.
• His answer was simple: the only solution was to buy it.

The Meeting of Two Founders 🤝

• On a Thursday evening, Systrom came to Zuckerberg's home in Palo Alto.
• Systrom started by asking for $2 billion.
• Zuckerberg tried to lower the number.
• He brought in COO Sheryl Sandberg and CFO David Ebersman.
• Deal director Amin Zoufonoun was called in to organize the acquisition.

Cash 💵 vs. Stock 📈

• The sides argued about the mix of cash and stock in the deal.
• Cash felt safer; stock was risky but could grow.
• Zuckerberg argued: if Facebook keeps growing, its stock will be worth much more.
• That could match — or even beat — Systrom's original $2 billion ask.

A Dog, a BBQ, and a Bite 🐕

• During the talks, Zuckerberg's big dog Beast walked around the guests.
• Zuckerberg started a BBQ with mystery meat: "I think I hunted it once."
• Suddenly, Beast jumped at Zoufonoun's leg.
• Luckily, no one was hurt — but the story became a joke at future meetings.

"We Are Buying Magic" ✨

"We are buying magic. We are not paying a billion dollars for thirteen people. The worst thing we can do is force Facebook on them too early."

— Mark Zuckerberg, on keeping Instagram independent

The Deal 💰

The price Facebook paid for Instagram — a team of just 13 people

After the Deal: The Hard Part 😓

• The Instagram team went to Vegas to relax — and came back to bad news.
• Regulators in the US and Europe checked if the deal gave Facebook monopoly power.
• Until approval, Facebook could not help Instagram with resources or hiring.
• This could take many months.

Did Employees Get Rich? 💸

• Short answer: most of them — no.
• Everyone got new contracts: new salaries, new stock options, and cash bonuses for staying over a year.
• Only 3 employees had worked long enough to turn their Instagram shares into Facebook shares at a low price.
• Some people left the meeting room with pale, unhappy faces.

How Much the Founders Made 🤑

• Krieger planned charity work and started collecting modern art.
• Systrom bought a new car, a Rolex, new skis — and invested in Blue Bottle Coffee.

Key Takeaways 🎯

• Big ideas can start from small, imperfect things — like a plastic camera.
• Facebook bought Instagram to remove a threat, not just to add a feature.
• Keeping the product independent was a key part of the acquisition.
• In big deals, founders win big — regular employees often do not.