The Story of Instagram’s $1billion Acquisition

Just 18 months after its launch, Facebook decided to buy another business and so acquired Instagram for $1billion in 2012. At the time, Instagram was a 13-person start-up with 30 million users. Now the photo-sharing app boasts over 600 million users.

Just 18 months after its launch, Facebook decided to buy another business and so acquired Instagram for $1billion in 2012. At the time, Instagram was a 13-person start-up with 30 million users. Now the photo-sharing app boasts over 600 million users.

The creation of Instagram

After over a year of planning, Instagram was established in San Francisco by Kevin Systrom and Mike Krieger in only eight weeks. Systrom was actually offered a job at Facebook in 2004 when he was still in college however he turned it down to continue his education; looking back, who knows if it was the right decision? Instead, he got a job working for Google in their marketing department and began engineering during the evenings to help him learn to code. He then developed a prototype app called ‘Burbn’ which allowed people to check-in, post where they are, and share images with others. It was at this point that Systrom teamed up with Mike Krieger. Burbn was somewhat short-lived however, as it was realised that the app was too similar to other existing apps; although one unique aspect of the app was the photo-sharing feature. Burbn was stripped of all other elements except this feature. It was then rebranded as ‘Instagram’ which is short for ‘instant telegram’.

Instagram’s $1billion Acquisition

Instagram officially launched on 6 th October 2010 and 23,621 users joined in the first 24 hours, causing the system to crash; within 3 months, the app had over 1 million users. Systrom repeatedly said he didn’t feel like Facebook was a threat to Instagram, as Facebook’s mobile apps were overly complicated. However, at SXSW Systrom did say that ‘it’s Facebook level engagement that we’re seeing’, whether or not this was taken as a direct threat to Facebook is unclear although after launching on Android (after initially only being available on iOS) and gaining more than 1 million users in 24 hours, Instagram was bought by Mark Zuckerberg, CEO of Facebook, for $1billion, $300million in cash and the rest in Facebook stock.

After the Acquisition

After Facebook bought Instagram in 2012, the app continued to grow; by February 2013, Instagram had 100 million active users per month. The following timeline represents the app’s rapid growth since the acquisition:

February 2013: Instagram reaches 100 million active monthly users
May 2013: Instagram lets users tag other users in photos of them
November 2013: the app began offering space to advertisers
March 2014: Instagram reaches 200 million active monthly users
June 2014: Instagram launched a feature that allowed users to edit their images in more detail and included editing tools such as adjusting brightness, highlights and shadows
December 2014: the app reaches 300 million active monthly users
September 2015: Instagram ads go international, allowing businesses to advertise globally
September 2015: the app reaches 400 million active monthly users
October 2015: Instagram launches ‘Boomerang’
May 2016: Instagram unveils a fresh look including an updated app and icon design
June 2016: the app reaches more than 500 million active monthly users
August 2016: Instagram Stories is launched
November 2016: Instagram introduces live videos
December 2016: the app reaches more than 600 million active monthly users
February 2017: Instagram lets users share multiple photos in one post
June 2018: Instagram TV (IGTV) launches
July/August 2020: Instagram Reels launches.


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