Mark Zuckerberg's Acquisition Of Instagram Is One of The Greatest Deals Ever
Facebook bought Instagram for $1 billion cash and stock in 2012 which is now worth $100 billion.
When Facebook CEO, Mark Zuckerberg decided to buy Instagram, people thought it was a crazy decision to spend $1 billion for a new photo sharing app which had no revenue and only 13 employees.
Instagram was developed by Kevin Systrom and Mike Krieger in 2010. They first launched the app on iOS and got their first 1 million users within 2 months and 10 million within 1 year after launching. They later launched the Android version in 2012 and it was downloaded 1 million times less than 24 hours after launching.
Zuckerberg saw the exponential growth in Instagram and how it will dominate social media in the future. Facebook was entering it’s maturing stage and taking growth to the next level would be integrating a new mobile product.
Zuckerberg offered $1 billion to Kevin Systrom and Mike Krieger to buy Instagram in 2012. The founders accepted the offer and Instagram was sold within 500 days after they launched the app. At the time, this was an unprecedented deal that shook up the tech world and made every entrepreneur aspire to build the next Instagram app.
After acquiring Instagram, Mark attempted to buy Snapchat in 2013 as it rose to prominence with a younger demographic. Snapchat CEO, Evan Spiegel, declined Mark Zuckerberg’s $3 billion offer for Snapchat because he didn’t have any interest in short term gain.
The acquisition of Instagram is one of the best business decisions of all time. Instagram currently has over 1 billion users. Facebook brought in $16.9 billion in revenue in Q2 2019, $16.6 billion of which is advertising revenue (98%). 94% of Facebook Revenue was mobile advertising.
Facebook’s revenue has risen from $7.9 billion in 2013 the year after it started collecting Instagram revenue to $55 billion in 2018.
Takeaway: It's unprecedented how Instagram has grown over the years and taken shape in our daily lives. This is one of those deals that is a gift that will keep on giving to Facebook's product line. This deal is more of a heist than an acquisition.