One billion dollars is a pretty huge price to pay for an 18-month-old, thirteen-person company with no revenue. But, apparently, that's just half of what Instagram co-founder Kevin Systrom was hoping to get out of his company's acquisition by Facebook.
The Wall Street Journal reports Systrom had initially asked Facebook CEO Mark Zuckerberg for a whopping $2 billion for the popular photo-sharing service.
Over the course of their quick 3-day dealing, the two eventually negotiated the price down to $1 billion. Unnamed sources told the Wall Street Journal that Zuckerberg finally convinced Systrom to lower the price by asking him what he thought Facebook would be worth down the road. "If he believed Facebook would one day be worth as much as a company like Google at $200 billion or more, then the equivalent of 1% of Facebook would be sufficient to meet his price," reports the Wall Street Journal. (You can read the rest of their coverage here.)
After Facebook announced its acquisition of Instagram on April 9, some argued that the social network was overpaying for the app. Inc. magazine's Erik Sherman, for example, argued that Instagram as a company on its own is worth nowhere near $1 billion, or even the $500 million at which venture capital firms had valued it just days before the acquisition.
Others, however, could see why Facebook was willing to drop such a huge wad of cash on Instagram.
The Washington Post's Hayley Tsukayama asserts Facebook made the $1 billion move because of Instagram's strength and influence in the mobile market. And with apps for both Android and iOS and more than 40 million registered users, who upload upwards of 5 million photos per day, Instagram brings clout to an area of Facebook's business that sorely needed it.
Watch the video above to learn more about Systrom's deal with Zuckerberg from the Wall Street Journal's bureau chief Andrew Dowell and senior technology editor Julia Angwin. Do you think Facebook should have paid more for Instagram? How much do you think the photo-sharing service is worth? Share your thoughts with us below!
Take a look at the slideshow (below) to see some of the coolest Instagram alternatives.