Boyden Executive Search

The abrupt departure of Instagram’s founders from Facebook illustrates what can happen when parent companies get too close.

Kevin Systrom, Instagram’s Chief Executive, and Mike Krieger, its Chief Technology Officer, did not give a specific reason for leaving the company, saying only that they were “ready for our next chapter” and “leaving Instagram to explore our curiosity and creativity again.” Insiders cite a growing discomfort with Facebook’s increasing interest in Instagram’s direction and growth. While the photo-sharing organization had been allowed to operate independently inside Facebook, Zuckerberg reportedly saw it as one of a “family of apps” under Facebook, which he thought should work more closely together. The dynamic between parent and subsidiary was shifting.

Instagram is regarded as one of Facebook’s most successful acquisitions. It started as an offshoot of a location check-in app called Burbn, created by Systrom in 2010. The app took off when it was relaunched as Instagram with a new focus on photo-sharing. Before long, its growth became more than Systrom and Krieger could manage. Then in 2012, shortly before Facebook’s IPO, Zuckerberg purchased Instagram for $1 billion. It was Facebook’s biggest acquisition to date, and raised eyebrows, since the app only had about 30 million users and a handful of employees.

Following the acquisition, Systrom and Krieger were allowed to make many of their own decisions as senior management, and Instagram grew faster than anyone anticipated. In June 2018 it hit the billion-user mark. Notably, the relationship between Facebook and Instagram was held up as a model for how start-up acquisitions should work. Facebook executives often mentioned how well things had worked out when courting other potential acquisitions, the New York Times reports.

But earlier this year, Zuckerberg reorganized his senior management team. This included adding a layer of management between himself and Instagram’s co-founders, namely Chief Product Officer Chris Cox. In May, Zuckerberg appointed Adam Mosseri as Instagram’s Vice President of Product. Mosseri has been with Facebook since 2009 and is considered part of its founder’s “inner circle.” He is now the heir apparent of Instagram. As Business Insider noted, “Mosseri will have to tread the line between growing Instagram and keeping it fresh, as well as keeping rank-and-file staff happy about greater integration with Facebook.”

A similar pattern played out in April, when Jan Koum, then Chief Executive of WhatsApp, resigned from the messaging start-up Facebook acquired in 2014. After years of allowing WhatsApp to function independently, Zuckerberg began asserting more control. Koum balked when he insisted that the free service start making money.

The Instagram announcement adds to what has been a troublesome two years for Facebook. It has had to manage multiple crises, such as the spread of Russian disinformation on its platform, the Cambridge Analytica user-data scandal, and looming regulatory intervention. The issues could be taking a toll the business. In July, growth in digital advertising sales and user numbers had slowed.

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