Facebook’s board was kept in the dark during the lead-up to its acquisition of Instagram, according to a Wall Street Journal report, which claims CEO and founder Mark Zuckerberg led and concluded the deal himself in just three days.
Zuckerberg, who said to have been “negotiating mostly on his own”, reportedly told the board of his intention to buy the popular photo sharing app on April 8, three days after opening negotiations with its founder Kevin Systrom.
A source close to the Facebook board told the WSJ that it “was told, not consulted” over the landmark deal, although it is reported that the board did vote on the deal.
It wasn’t a complete shut-out however. Facebook COO Sheryl Sandberg was in the loop, hearing Zuckerberg’s intentions from him the Thursday before the deal. While the WSJ says that he “got a hand from Amin Zoufonoun, Facebook’s director of corporate development, to hammer out details later in the talks”, according to another unquoted source.
It seems likely that it was the personal touch from the Facebook founder that took the deal over the line. Systrom is said to have been seeking $2 billion for the company, before several meetings at Zuckerberg’s $7 million Palo Alto home saw a final price agreed between the two young founders.
Twitter was speculated to have “expressed an interest” in buying Instagram, despite comments from its CEO appearing to reject the claim, but Instagram was supposedly “just hours” from agreeing a fresh round of VC funding. That investment would’ve netted the firm $50 million, at a valuation of $500 million, giving it an increased future sale price.
The mobile-only appeal of Instagram, which has saw its new Android app pass 5 million downloads in 6 days and the iOS version top Apple’s App Store charts, is said to have given Zuckerberg the impetus to acquire the firm, which is yet to monetise its service. The Facebook CEO reportedly took greater notice of the app when he witnessed young people signing up to it in droves.
The timing of the Wall Street Journal report, which contains numerous details provided by ‘insiders’ and ‘anonymous sources’, suggests that the Facebook management team is concerned with the approach that Zuckerberg adopted for the Instagram deal.
With Facebook’s upcoming IPO just weeks away, Zuckerberg’s approach to the acquisition went against the lengthy but conventional process of employing legal teams and bankers to shore up a deal. It could represent the final time that he is able to conduct business (albeit successfully) with an entirely personal touch.