Why you should care
When Facebook snapped up Instagram in 2012, who among us thought their love would last forever?
In the hurly-burly of a Silicon Valley life cycle, the détente between Facebook, the purchasing company, and Instagram, the purchased company, never should have lasted this long. Specifically, the 2010 success story of Kevin Systrom and Mike Krieger — cofounders of the photo-sharing app who announced Monday they are leaving Facebook — should have gone through a brief transition before wandering off with their $1 billion purchase price to plan future adventures that may or may not have included appearances at Burning Man. But that’s not what happened.
After registering 1 million users months after founding Instagram, then 10 million that first year, Systrom and Krieger attracted the attention of one Mr. Mark Zuckerberg. He bought in for a cool $1 billion in April 2012, and part of the deal, partially unspoken, gave Systrom and Krieger a continued unbridled hand to make their successful business even more so.
Something that continued up to and including crossing the 800 million–user mark last year. That something continued through some decidedly not-so-upbeat times at the mothership. Indeed as annus horribilis go, none could have been more so for Zuckerberg, who has had to face down flat growth in the U.S. and Canada alongside missed revenue projections, privacy concerns, congressional hearings and the still-unresolved election interference issues — with no real end in sight.
Has Facebook kept Facebook thriving?
Michael Borohovski, co-founder and CTO of Tinfoil Security
And with an eye on one of late Intel CEO Andy Grove’s dicta shared during a 1994 interview — “The smartest thing is to fill up the competitive spaces in your business with your business” — the previous distance between Instagram and Facebook, possibly connected to the troubles, had begun to evaporate. And not always necessarily in service of making Instagram a better business but most likely to spackle over spaces in Facebook’s offering.
Which has redounded to Facebook making the cross-platform connections between their offerings easier and more noticeable. Instagram users are now being notified when friends are sharing to Facebook, with the Snap-inspired Stories feature, and most significantly with any and all lures for Instagram’s coveted teen users to come on back to Facebook. For each and every change, a Facebook fingerprint would be left on Instagram, and apparently, it was these handsy moves that, unsurprisingly, rankled.
Also unsurprising was the fact that these moves should have been totally expected. According to global communication firm Hotwire’s CEO Barbara Bates, a founder of a company that was also acquired, “for the founders to be surprised that Facebook is forging closer ties is a bit surprising,” she says. But “founders want to call the shots.”
Especially in the face of a raft of senior-level executives — Jan Koum, Elliot Schrage, Colin Stretch, Alex Stamos, Dan Rose and most recently Rachel Whetstone — leaving Facebook for unknown ports of call. In any case, Systrom, 34, and Krieger, 32, are now indisputably gone with futures unclear. “Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do,” they wrote on Instagram’s blog. Which changes the conversation in total as all eyes swing back around to Zuckerberg and the very significant issue of: Can he keep Instagram thriving without them?
“Well, has Facebook kept Facebook thriving?” asked co-founder and CTO at Tinfoil Security Michael Borohovski, who believes the problem is specifically what makes Facebook, well, Facebook. “Their strategy of ‘growth at all costs’ has never changed, and Instagram was successful because of a lack of that type of policy, not despite it.” So the future for the company that Systrom and Krieger have left behind, a company now valued at $100 billion — a valuation Zuckerberg would probably claim was aided and abetted by its association with Facebook — depends on whether they can keep being who
they are they were in the face of forces that might force change.
And whether Instagram can or not? Of utmost importance to everyone with a dog in the hunt, which is fundamentally all of us when you look at Facebook’s worth of about $140 billion and its approximately 2.2 billion users as of six months ago. “If they apply their strategy to Instagram,” concludes Borohovski, “they’re going to lose a lot of people, I think.”