Facebook by Steven Levy

Author:Steven Levy
Language: eng
Format: epub, azw3
Publisher: Penguin Publishing Group
Published: 2020-02-24T16:00:00+00:00

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EARLY ON, MARK Zuckerberg noticed that Instagram was sharing photos in a new way. Since photo sharing was the most popular feature on Facebook, he realized that this tiny start-up was doing something that Facebook wasn’t. He saw Systrom a number of times over the next couple of years, making it clear that Facebook had interest in the app. But so did Twitter. Instagram fanatic Jack Dorsey had returned to the company after its board installed Dick Costolo as CEO.

By 2012, Instagram was growing exponentially and needed more funding. The company had no revenue, having adopted the standard practice of focusing on product and growth without bothering to come up with a business plan. Instagram’s proposed valuation for the new funding was set at $500 million, and they were having no problem finding investors. The round was shaping up for Sequoia to lead, with other investors chipping in, including Thrive Capital, a VC firm run by Josh Kushner in New York City.

Neither Twitter nor Facebook wanted that to happen.

This was the first test of Zuckerberg and Facebook in trying to acquire a must-have app. Zuckerberg prided himself on an ability to see beyond the horizon. He looked for anything—whether it was a company or a shift in technology—that would threaten his plans. When Google launched its own social network product in 2011, Zuckerberg put the entire company on lockdown for weeks, keeping the cafeterias open on weekends. In an all-hands address, he invoked one of his ancient heroes, Cato the Elder, who ended his own speeches by crying, Cathago delenda est. Carthage must be destroyed! The Analog Research Lab fired up the presses to churn out posters with the Latin phrase. (Zuckerberg didn’t need to worry: Google Plus was a flop.)

Now, a year later, he understood that if someone else snatched the future of social photo sharing, Facebook would suffer. The best course would be for Facebook to buy Instagram.

But Twitter had the inside track.

Systrom’s close connection with Dorsey led Instagram to the brink of a deal that would value Instagram at well beyond the half a billion that the investors in the funding round would have agreed to. Costolo got the board to sign off and thought it would happen. Systrom and Krieger were about to head off to South by Southwest and wanted to think about it first. “We couldn’t get it over the finish line with them,” says Costolo.

Dorsey especially had reason to worry that he and Costolo had missed their chance. When his own company, Twitter, had gone to SXSW in 2007, the hipsters at the conference swooned over it, ending fears that the app could not make it on its own. Indeed, the Instagram guys were treated like rock stars in Austin, and after the conference, Systrom told Dorsey and Costolo that he felt Instagram had a real shot as an independent, and was going to do the Sequoia round. Dorsey was disappointed but wished his protégé luck, and told him that if circumstances changed, he was up for renewing the talks.

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