Kevin Systrom won the start-up sweepstakes this week when Facebook Inc. said it would pay $1 billion in cash and stock for his photo-sharing app maker, which has a loyal following of 30 million users but never made a dime.
Facebook Chief Executive Mark Zuckerberg called Systrom to personally negotiate the deal for the social media giant, which is expected to fetch a valuation of $100 billion as soon as next month when it begins selling shares to the public. Zuckerberg promised Systrom that Instagram, which has just 13 employees, could operate as an independent company.
It was an unusual concession, but it was also the third time that Zuckerberg had tried to woo Systrom. The first time they crossed paths was in 2004, when Systrom was a Stanford undergrad building a photo-sharing service. Facebook was working on its own photo-sharing feature and asked Systrom to join the company. Systrom wrestled with the decision but turned down the job offer.
Years later, when Instagram caught fire as a free photo-sharing app on mobile devices, Facebook tried to buy the company. Again, Systrom said no.
Systrom, who owns 40% of Instagram and serves as its chief executive, declined to comment Tuesday, citing the quiet period leading up to Facebook's initial public stock offering.
In an interview with The Times last year, Systrom said he was determined to create a "social tool for social life on the go." He never once doubted that he was building a $1-billion company that could withstand scorching competition from Facebook and others.
"We want to change the way people communicate and share in the real world," Systrom said.
Though still in its infancy, Instagram already posed a competitive threat to Facebook, whose future depends on getting people to share more — and look at more ads — on their smartphones. Analysts said Facebook couldn't pass up the chance to buy Instagram.
On Friday, Instagram closed a $50-million funding round led by Sequoia Capital, which valued the company at $500 million. On Monday, Facebook announced its deal to buy the San Francisco company for twice that amount, doubling Instagram's value in 72 hours.
It was the biggest acquisition Facebook had ever made, and it made Systrom instantly rich.
"In Silicon Valley, there's still too much money chasing too few ideas. If your idea is brilliant and your timing is right, you can become a multimillionaire overnight," Silicon Valley futurist Paul Saffo said.
Systrom, who is likely to play a major role in Facebook's push into mobile devices, grew up outside of Boston, playing with computers, developing his own computer games and taking photographs. He got his first digital camera when he went to summer camp and took a Photoshop class.
"It was the coolest thing ever," he said. "You could mess with photos, change the colors and make cool stuff."
He enrolled at Stanford. He still thought of photography as a hobby, even after he was approached by Zuckerberg and Adam D'Angelo, then Facebook's chief technology officer.
SOURCE:
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