The number of users registered on Instagram has long exceeded one billion people. Its developers received the same amount of USD after the sale of the project. However, several years later, analysts estimated the service to be 30-50 times more expensive.
More than 890 million people open Instagram every day. Among them are ordinary users, celebrities, professionals, and businessmen. For many, the network has become not just a platform for communication, but a tool for brand promotion. How much did the creators earn from their invention?
What is Instagram?
Instagram was developed as a mobile application for sharing photos and videos, but as its popularity grows, it has acquired all the features of a full-fledged social network. The base of registered users of the service, according to RBC, reached 1.1 billion people in mid-June 2018. According to a study conducted by We Are Social and the Hootsuite service, the number of people who use Instagram daily at the beginning of 2019 was almost 895 million.
Instagram is not an independent company – it exists precisely as a service. In April 2012, it was bought by Mark Zuckerberg’s Facebook company. The current owner of Instagram paid about 1 billion USD for its acquisition.
Zuckerberg owns over 50% of Facebook’s voting rights. In addition, he serves as CEO and Chairman of the Board of Directors.
About the creators
Instagram authors are two people – Kevin Systrom and Mike Krieger.
Kevin Systrom graduated from Stanford University with a BS in Science and Technology Management. Kevin started as a programmer at Odeon, where he was selected for an internship among university fellows. This company later morphed into Twitter. Systrom then worked at Google Marketing, where he contributed to the development of Gmail and Google Reader.
Mike Krieger graduated from Stanford with a master’s degree. Before joining the Instagram project, he worked for Meebo as a user interface designer and frontend developer.
The future creators of the popular service collaborated on the Burbn project. It was a geolocation network with photo processing capabilities. Even then, they realized that people love the idea of sharing moments of their lives through photos.
In 2010, it was decided to collect all the photo processing capabilities from Burbn and make a standalone application. It got the name Instagram. In early October 2011, the developers posted it to the App Store, and it quickly became quite popular. In its first year of existence, Apple named Instagram the best iPhone app, according to techli.com.
In 2011, the second version of the application appeared. Its feature was additional photo processing capabilities – new filters, quick rotation, change of the angle of inclination. However, Instagram was still only available to iOS users.
The Android version appeared in 2012. As Kevin Systrom said then in an interview with The New York Times, after the appearance of Instagram on Google Play, about 2 thousand people registered on it every minute.
Facebook announced its intention to acquire Instagram in April 2012. Systrom and Krieger were to receive USD 300 million in cash and 23 million Facebook shares. Under the terms of the agreement, the latter was obliged to pay a forfeit of USD 200 million in the event of a breakdown in the transaction. However, everything went well, and Instagram became a division of Facebook.
The founders stayed in the project for a long time. Kevin Systrom was the executive director of services and Michael Krieger was in charge of the engineering department. They both left the company in 2018.
The RBC portal then wrote concerning the New York Times that the founders decided to leave due to the crisis in Facebook. It flared up because of criticism of the social network for incorrect handling of user data.
There is also another point of view. According to Bloomberg, the creators of Instagram left the project due to disagreements with Mark Zuckerberg over the future of the service. The agency reported that the Facebook leader began to show increased attention to the service. However, according to the agreements between him and the developers, they should be given complete freedom of action.
How much does Instagram cost?
So, the smartphone app has brought hundreds of millions of dollars to its developers. But was this purchase beneficial to Facebook? The acquisition of the service became a major deal for the social network since at that time it spent no more than USD 100 million on acquisitions.
However, after that, Instagram managed to grow significantly. Facebook does not disclose information about the profit that certain divisions bring to it, including Instagram. But back in 2015, analysts at Bank of America Merrill Lynch (now Bank of America) estimated its value at 37 billion USD. Also, according to their calculations, the service could earn about USD 4 billion in revenue annually from advertising.
In 2016, according to Forbes, Instagram could be worth up to 50 billion USD. Bloomberg in mid-2018 estimated the annual profit of the service at USD 10 billion, and the total cost at USD 100 billion.
Will the service become independent?
In May 2019, rumors surfaced about a possible Instagram branch. The Canadian newspaper then wrote that Chris Hughes, one of the co-founders of Facebook, called on Mark Zuckerberg to do this. He proposed to split the company into 3 separate parts – the social network itself, the WhatsApp messenger, and Instagram.
As the reason, Hughes cited the monopolization of Facebook and the fact that Zuckerberg, as its leader, can influence the opinion of individuals. Earlier, the social network was accused of influencing the results of the presidential elections in the United States through the selective display of campaign materials.
However, according to Interfax, Zuckerberg refused to take such a step. He admitted that Facebook has problems, including in terms of protecting information. But fragmentation, in his opinion, is impossible and senseless. Thus, he denied rumors that Instagram could soon become an independent company.
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