Mark Zuckerberg Bypassed Facebook Board, Bankers & Lawyers During Instagram Deal

While Mark Zuckerberg only owns 28% of Facebook, he still maintains 57% of voting rights.  Zuckerberg flexed this power freely during the Facebook-Instagram deal, reaching a deal in just 3 days without consulting outside sources.  The Wall Street Journal reports that Zuckerberg and Kevin Systrom, CEO of Instagram, worked out the deal over three days of negotiating in Zuck’s 7 million dollar home in Palo Alto.  Absent from the deal were lawyers, bankers, and the Facebook board.

Mark Zuckerberg, Facebook CEO - Photo Courtesy of Bryan Thatcher

Talks between the two companies started when Zuckerberg called Systrom asking to meet on April 5th.  Instragram was about to take on a deal for an extra $50 million in venture capital… until the Facebook CEO called.   The two met each day in the Palo Alto home with Systrom driving back to his San Francisco home each night.

The initial number thrown out by the Instagram CEO was $2 billion dollars.  While the valuation of Instagram was negotiated down quite a bit, it stayed in the 10 digit range.   The strongest negotiating point for Instagram was their mobile dominance.  Facebook has traditionally struggled with mobile, while Instragram is a mobile/tablet app only service.  Not wanting to fall behind in mobile, the deal was made by Facebook.

Kevin, Systrom, Instagram CEO - Picture Courtesy of jdlasica

One of the biggest surprises was that no lawyers, bankers or outside consultants were brought in on the acquisition.  For the most part the two CEOs hashed out the details of the billion dollar deal with no outside help.  The initial post announcing the acquisition on Mark Zuckerberg’s wall seemed unusual, well,  because it was.  The deal just happened so quickly with so few outside sources that it surprised most everyone.   Nobody on the Facebook board had seen or heard of the pending acquisition until April 8th,  one day before the wall post was released making the deal public.  Although mainly symbolic, a vote was taken by the board before the official announcement was released.

For more information see the full Wall Street Journal Post on the topic.

Related Topics: Channel: Industry | Facebook: Acquisitions | Facebook: Instagram


About The Author: is the Director of Marketing for Cypress North, a company that specializes in social media and search marketing services and web-based application development. He has been in the Internet marketing industry for 6+ years and specializes in Social Media Marketing. You can also find Greg on Twitter (@gregfinn) or LinkedIn.

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  • Video Production

    such a nice information thnx for sharing …

  • batteriescompany

    Facebook is valued at $100 Billion dollars meaning that each user is worth about $118. On the other hand, Instagram has 36 Million users which makes a user worth $28 dollars but some of those users are already facebook users.

  • Self Storage Investing

    How interesting. I wonder if the board/bankers/etc are angry about Mark’s decision.

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