Silicon Valley Today: Instagram

Silicon Valley Today: Instagram


Instagram CEO Kevin Systrom Joins Billionaire Ranks As Facebook Stock Soars

August 1, 2016

Four years after he made a billion-dollar deal with Facebook FB +1.21%, Instagram CEO Kevin Systrom is now a billionaire in his own right.

When Systrom first appeared on the cover of FORBES in August 2012, he had recently agreed to sell his photo sharing app Instagram, which had 30 million users and no revenue, to Facebook for $1 billion in cash and stock. Four years later, Instagram’s success as part of Facebook has landed Systrom back on the cover of FORBES—this time as a new billionaire with a fortune that FORBES estimates at $1.1 billion.

One month before Facebook’s May 2012 IPO, Mark Zuckerberg made a deal with Systrom to buy Instagram for $300 million in cash and 23 million shares of stock, a combination worth $1 billion at the time, based on Facebook’s pre-IPO stock price. Systrom had launched his photo-sharing app in October 2010 and had only 13 employees in mid 2012; he owned 40% of Instagram going into the deal, and FORBES’ August 2012 cover story pegged Systrom’s net worth at $400 million.

By the time the deal closed in early September 2012, Facebook stock had plummeted after a rocky IPO to just over $18 per share. As a result, the deal was worth only $715 million when it closed, according to Facebook’s second quarterly report that month. That drove Systrom’s net worth down to just $280 million when he appeared on a list of “Ones To Watch” on the 2012 Forbes 400 issue.

In the four years since then, Facebook stock has risen more than 500%, turning Systrom’s $280 million take-home from the Instagram deal into an estimated $1.1 billion fortune. Systrom joined Wal-Mart’s board in September 2014 and subsequently has been awarded a small amount of Wal-Mart stock.

Systrom could have had another path to a Facebook fortune– although it likely wouldn’t have earned him a spot in the three comma club. In 2005, when Systrom was a college senior, Zuckerberg asked him to drop out of Stanford to build a photo service for his fledgling social network, The Facebook. Systrom declined the job, which would have come with millions of dollars in stock options. Instead, he worked at a coffee shop (where he had to serve Zuckerberg a year later) and Google GOOGL +0.63% before founding a check-in app called Burbn, which eventually became Instagram.

Instagram has grown alongside Systrom’s net worth since the 2012 acquisition. The photo sharing app now boasts 500 million monthly users and FORBES estimates that it would be worth up to $50 billion if it was a standalone company. For more on Instagram’s growth under Facebook, read Kathleen Chaykowski’s FORBES cover story: “Instagram, The $50 Billion Grand Slam Driving Facebook’s Future.”

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