Instagram eventually caught the eye of Mark Zuckerberg, Facebook’s chief executive, who realized how powerful Instagram’s nascent photo-sharing network would become, and saw the wealth of photo-sharing activity across his own social network. Mr. Zuckerberg handled the negotiations with Mr. Systrom and Mr. Krieger largely on his own.
Facebook purchased Instagram for $1 billion in cash and stock (though the final cost was closer to $715 million because the stock on which part of the deal was based declined in value). It was Facebook’s biggest acquisition to date, and came a month before the social network’s initial public offering.
“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Mr. Zuckerberg wrote in a blog post about the deal. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”
The deal immediately turned Mr. Systrom and Mr. Krieger into millionaires many times over. Instagram has since been valued at 100 times that $1 billion acquisition price by Bloomberg Intelligence, a sizable return on investment on paper.
Facebook went on to purchase Parse, a service that provided tools for mobile developers, and Oculus, a virtual reality hardware start-up, branching into new areas beyond the original social network. Mr. Zuckerberg also spent $19 billion to buy WhatsApp.
But Instagram remained Mr. Zuckerberg’s main success story. As Facebook saw a threat in young people departing the network for Snapchat, a rival photo-sharing network, Instagram was quick to shift and recreate one of Snapchat’s key features of online stories. Since then, Instagram has surged further in popularity, while Snapchat’s growth has been inconsistent.
The departures of Mr. Systrom and Mr. Krieger create uncertainty around the app. It is unclear who will lead the company on the founders’ departures, and if that person can continue Instagram’s longstanding success streak. Marne Levine, who was previously Instagram’s chief operating officer, left her role at Instagram earlier this month to return to Facebook and lead partnerships.