Facebook Buys Instagram

In April 2012, Facebook paid about $1 billion for a 13-person photo app with no revenue. Eighteen months later it looked like the deal of the decade. Instagram had roughly 30 million iOS users and had just hit Android, and it was visually native in a way Facebook's app wasn't, pulling time and attention from younger users. Mark Zuckerberg saw mobile as where social was heading and Instagram as winning mobile photos. Negotiations with co-founder Kevin Systrom reportedly took just days, closing one day before a milestone that would have made the target more expensive.

For founders and operators, this is the case on neutralizing a competitor while it's still small enough to buy. By the late 2010s, Instagram's standalone value was estimated at $100 to $200 billion, making the price look almost trivial. The hard part wasn't the deal; it was the timing and the self-honesty behind it. It sharpens the decision of which small, speculative threat is quietly eating your strongest segment right now.