Instagram now has over 200 million users. The one thing that people keep asking its founder and CEO Kevin Systrom about that is: Did he sell too soon to Facebook and for too little money?
Short answer: If he could have predicted the future and he was interested in making more money, then yes, maybe he sold too soon. Long answer: He’s still pretty happy with his decision, he said at the Fortune Brainstorm conference in Aspen, Colorado, last week.
Facebook bought Instagram in April, 2012 for $US1 billion. At the time, it had about a dozen employees and 30 million users, and this was considered the Unbelievable Exit Of The Year, the stuff that Valley dreams are made of. Systrom, who was 28 years old at the time, reportedly earned himself $US400 million in the deal.
So why are people asking Systrom if he shortchanged himself?
The logic is, at 200 million users, Instagram is now as big as Twitter. Twitter raised nearly $US2 billion in its IPO and has a market cap valuation of over $US21 billion.
Likewise, Facebook spent a mind-blowing $US19 billion on WhatsApp, which had about a 500 million users at the time.
So when he was on stage talking about Instagram, someone, naturally, asked him if he sold too soon.
“I get asked that a lot. If your goal is to maximise value and you know the future, then you can make your own conclusion,” Systrom told attendees, who chuckled at his response.
But, he says, “I love my coworkers and team. I love the things we work on. I love the impact we have in the world. I never think about that question.”
Still, given how fast Instagram was growing on its own, and how much money Facebook is willing to spend on acquisitions (it bought Oculus Rift for $US2 billion), Systrom might have held out for more money, a lot more.
Instagram started in 2011 with 1 million users, grew to 15 million by December of that year, and doubled the number of users in the next four months to 30 million. That’s when Facebook stepped up and offered an amount of money that, at the time, no sane startup would have turned down.
At that pace, in another year, it might have grown big enough to have commanded a far bigger sum, if it still wanted to sell.
Systrom doesn’t think it would have worked out that way.
“Why we are as big as we are is because we are inside the Facebook. We doubled our user base more quickly than any other social network before us and a lot of that has to do with the fact that we are inside of Facebook and have all the benefits of technology, safety, privacy and growing our team,” he says.
But being part of Facebook is not all a bed of roses, either. When asked if there was a downside he said, “Instantly our company effectively went public. So everything we do is no longer Instagram, the little startup. Now we’re part of a public company and subject to all sorts of rules, especially as we start making money.”
While that’s stressful, he says it also “makes us much more diligent early on” so he feels that Instagram is less likely to make big live-and-learn mistakes.