I'm excited to share the news that we've agreed to acquire Instagram and that their talented team will be joining Facebook.
For years, we've focused on building the best experience for sharing photos with your friends and family. 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.
We believe these are different experiences that complement each other. But in order to do this well, we need to be mindful about keeping and building on Instagram's strengths and features rather than just trying to integrate everything into Facebook.
That's why we're committed to building and growing Instagram independently. Millions of people around the world love the Instagram app and the brand associated with it, and our goal is to help spread this app and brand to even more people.
We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience. We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook.
These and many other features are important parts of the Instagram experience and we understand that. We will try to learn from Instagram's experience to build similar features into our other products. At the same time, we will try to help Instagram continue to grow by using Facebook's strong engineering team and infrastructure.
This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users. We don't plan on doing many more of these, if any at all. But providing the best photo sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together.
We're looking forward to working with the Instagram team and to all of the great new experiences we're going to be able to build together.
Insta-Rich: $1 Billion for Instagram
Facebook Inks Its Biggest Deal Ever; Neutralizes Threat from a Hot Photo Start-Up
Instagram founders Mike Krieger, left, and Kevin Systrom.
Smile, you're a multimillionaire.
In October 2010, Stanford University graduates Kevin Systrom and Mike Krieger launched a new iPhone application, Instagram, yet another oddly named tech start-up in a crowded field of hopefuls.
On Monday, the two twenty-somethings said they sold their photo-sharing service—which has about a dozen employees and no revenue—to Facebook Inc. for $1 billion in cash and stock.
Facebook is acquiring the popular photo-sharing app Instagram for $1 billion in cash and stock. The deal would rank as Facebook's largest to date. Don Clark has details on the News Hub. Photo: Getty Images
That 18-month journey underscores the frenzied state of the tech investing game, where even the smallest Web companies can develop global followings in a matter of weeks.
Only last week, Instagram closed a $50 million funding round from venture capital firms. The company's valuation: A whopping $500 million.
Incredibly, such a number would turn out to be paltry in the days ahead. Shortly after that deal, Facebook Chief Executive Mark Zuckerberg contacted Mr. Systrom, Instagram's 28-year-old CEO, to buy the company.
Mr. Systrom came up with the idea for Instagram and is the company's largest shareholder with about a 45% stake, said people familiar with the matter.
The two had spoken about a deal the previous summer, according to other people familiar with the matter.
The acquisition came together over the weekend. "It was all Mark," said Steve Anderson, a founding partner of Baseline Ventures, one of the company's early investors. "It was CEO to CEO."
Buying Instagram improves Facebook's mobile offerings while removing a rival for users' attention. Instagram, with more than 30 million registered users, grew rapidly by helping people share photos, a fundamental reason people use Facebook.
The deal is the largest ever for Facebook, which people familiar with the matter say will sell shares to the public in May. The company in the past has paid millions of dollars for a series of small ventures, primarily in an effort to acquire talent.
Mr. Zuckerberg called the deal a "milestone" for his company. But, he said, "We don't plan on doing many more of these, if any at all."
Facebook is acquiring Instagram for $1 billion in cash and stock in what is the social network's biggest acquisition to date, Dennis Berman reports on Mean Street. Photo: Getty Images.
Instagram is one of a cohort of young start-ups that have built products around the iPhone and have registered incredibly fast growth in a short period of time. The company bills its service as a fun and quirky way to share photos with friends. A user can snap a photo with an iPhone, then choose a filter to transform the look of the shot, say by giving it the look of an old Polaroid.
Users can share the photos with followers, where they can post comments and "Like" recommendations. Some people describe the app as a visual version of Twitter, where it is heavily used to share photos.
On March 11, Mr. Systrom gave a keynote talk at the South by Southwest conference in Austin and announced that Instagram's count of registered users had nearly doubled since December, rising to 27 million from 15 million. Last week, the company launched a version of its application that works on smartphones running Google Inc.'s GOOG -0.63%Android system and instantly added millions of users.
All this growth hasn't yet translated to revenue. But in the lingua franca of today's social-media industry that doesn't matter as much as user engagement and the ability to access those users' personal data.
Facebook has about 845 million users, many of whom came to the service to share photos. The company has been falling behind in mobile and has let Instagram capture much of the buzz in photo sharing. The company has rarely changed its photo feature, even as newer companies built more sophisticated apps.
Photos are a key driver of user "engagement," or how long someone spends on Facebook. Users spend an average of 7.5 hours a month on the site, according to research firm ComScore, the highest of any social network.
Those numbers matter to Facebook's marketers, who want users to view advertisements and interact with brands on the site. Advertising accounts for 85% of Facebook's revenue, or $3.1 billion in 2011, up from $1.8 billion a year earlier, according to the company's regulatory filings.
Facebook is acquiring the popular photo-sharing app Instagram for $1 billion in cash and stock, Spencer Ante reports on digits.
But the company has to capitalize on mobile. It only began in February to sell limited advertising on its mobile site, despite the fact that about half of its membership uses Facebook on their mobile phones.
Instagram has yet to develop a model for generating revenue, and substantial obstacles remain, such as whether small smartphone screens are sufficient to draw advertisers' attention.
Ann Taylor owner Ann Inc., ANN -4.12%Urban Outfitters Inc. URBN -3.29%and fashion label Marc Jacobs have created accounts and use Instagram to promote their brands. The app is also popular with celebrities and politicians who have created accounts, including singer Justin Bieber, President Barack Obama, professional skateboarder Tony Hawk and rapper Snoop Dogg. Last year, Apple AAPL -1.22%named Instagram the iPhone app of the year.
The value of Facebook's purchase of Instagram could prove to be worth it if it opens the door to China, the world's fastest-growing market. The WSJ's Deborah Kan speaks to Hong Kong Digital Editor Jake Lee.
The Instagram deal harkens back to Google's $1.6 billion acquisition of video-sharing site YouTube in 2006. At the time, analysts questioned the hefty price tag. But the deal instantly made Google a leader in Internet video and allowed it to expand its advertising to new formats.
In early 2011, Instagram raised $7 million in venture capital from Benchmark Capital, Baseline Ventures, Lowercase Capital and a handful of early-stage investors in a round that valued the company at about $30 million, said people familiar with the matter.
The new company almost immediately drew interest from suitors.
Twitter reached out to the company to express interest in buying it in 2011, people familiar with the matter said. Last summer, Mr. Systrom took a meeting with Mr. Zuckerberg, who floated the idea of a sale to Facebook, the people said.
Messrs. Systrom and Kreiger rebuffed all of the offers and seemed intent on building an independent company, said people familiar with their thinking.
Mr. Zuckerberg convinced Mr. Systrom that Instragram would be stronger under the Facebook umbrella than operating as an independent player.
He told Mr. Systrom that Instragram would function as an independent company under Facebook—a promise that Mr. Zuckerberg had never made to any other acquisition targets.
—Emily Glazer contributed to this article.
Corrections & Amplifications
An earlier version of a photo caption in this article incorrectly reversed the identifications of Instagram founders Mike Krieger and Kevin Systrom. Mr. Krieger is on the left and Mr. Systrom is the right.
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- · Venture Capital: Pretty Picture: Zero to $1 Billion in 15 Months
- · Video: Advice From Founders on Tech Startups
- · Digits: Users React to the Deal
- · China Real Time: Will Instagram Help Facebook Crack China?
- · Deal Journal: Instagram Is Now Bigger Than …
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- · Deal Journal: Text of the release | Video
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根據Mark Zuckerberg表示，Facebook在正式收購Instagram後將會提昇更好的行動照片分享體驗，未來也將配合Instagram發揮更好得社群互動，同時也不會立即將Instagram與Facebook作整合。另外，併購Instagram也是Facebook歷年來接收旗下使用者數量最多的服務內容，在此之前也曾併購包含在使用者介面或使用體驗設計有卓越表現的團體，諸如先前在去年6月間收購的Sofa，以及在去年8月間所併入的Push Pop Press，至於之後會如何運用Instagram本身影響力，就看Facebook下一步將如何走。
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