INSUBCONTINENT EXCLUSIVE:
Mark Zuckerberg was quick to realize that Facebook, the largest social network in the world, doesn''t have a monopoly on all users nor can
it bank on holding its position as top dog forever
Thus he instituted a policy of buying up promising rivals and integrating them into the Facebook ‘group& in a strategy designed to be a
win-win for all.
But by leaving Facebook in abrupt fashion this week, Kevin Systrom and Mike Krieger — the founders of Instagram — have
shown that the social network vision of letting acquired businesses operate independently simply isn''t feasible.
Few
large-scaleacquisitions run smoothly, so it is to Facebook credit that Systrom andKrieger remained with the company for six years after
Instagram was acquired for $1 billion in 2012.
That a long stretch by any tech acquisition standard, but it is still short of Facebook
vision of entrepreneurs who continue their startup journeys inside its walls.
The Facebook Family
The original idea is a best-of-both-worlds
approach: a company finances are infinitely secured and it can grow as needed inside the Facebook ‘family,& with access to resources like
engineering, marketing, admin, etc.
That was also the plan for WhatsApp, but founding pair Jan Koum and Brian Acton managed four and three
and a half years, respectively, at Facebook following their $19 billion acquisition in 2014
VR firm Oculus, another billion-dollar purchase, lost co-founders Palmer Lucky (political scandal)andBrendan Iribe (reshuffled)three years
after its deal.Ex-Xiaomi executive Hugo Barra now runs the unit as &Facebook VP of VR.
In the normal state of tech acquisitions, getting six
years — or even just three — from a founder post-acquisition is impressive
It requires a strong vision and autonomy for the incoming business.
Many founders become serial founders, even after an exit has set them up
There a thrill in building something new, taking sole charge and growing it
But post-acquisition, the basic dynamics change
As a founder, youcall the shots — you are the boss — rather than part of the company hierarchy post-deal
Going from employee to founder requires adjustment, but back the other direction is oftentrickier — particularly when your business is
part of a strategy for a larger one that rife with politics.
Facebook tried to mitigate that by promising autonomy for its
founders.
Instagram duo retained a lot of control — Systrom was the face of the company and hereportedly approved all ads personally —
while the same was true of WhatsApp, with Koum made a member of the Facebook board
Indeed,the WhatsApp founders dubbed the acquisition a &partnership& such was their insistence that things wouldn''t change under Facebook
ownership.
Jan Koum, once a member of Facebook board, is said to have clashed with the social network management over its intentions for
his WhatsApp service
Independence Vs Facebook Interests
But it didn''t work.
All four founders of WhatsApp and Instagram have left as
Facebook inevitably sought further control of their companies in order to advance its wider goals as a business
WhatsApp, for example, has
embraced business-consumer communication, is working on payments and has an advertising tie-in with Facebook
These are all features that would have troubled founders Koum and Acton, whose previous public manifesto railed against anything that takes
away from a simple user experience, and particularly advertising.
After reported friction with Facebook management,Koum left in April 2018to
&do things I enjoy outside of technology, such as collecting rare air-cooled Porsches, working on my cars and playing ultimate frisbee.&
Acton, meanwhile, quietly exited the year before but then tellingly wrote a $50 million check for Signal, an encrypted chat app that rivals
WhatsApp, and publicly backed the #deletefacebook campaign over privacy concerns.
Over at Instagram, a similar situation seems to have
happened with Systrom andKrieger
As TechCrunch Josh Constine reports, sources suggested that the leadership &weakening independence& from Facebook was a source of
frustration for them that ultimately led to their untimely exit.
Reading the short farewell note from Systrom seems to hammer that home
There no thank you for Mark Zuckerberg, Sheryl Sandberg or any other Facebook executive
Systrom instead stated that Krieger and he are keen to explore their &curiosity and creativity again& by building new products.
Instagram
CEO Kevin Systrom continued to be the service public face even after its acquisition by Facebook in 2012
Facebook had a good run with its
independence policy, but ultimately these four exits illustrate that founders can''t be caged and tamed
While, on the other side, a buyer is always going to want to get their pound of flesh from billion-dollar acquisitions
Facebook can bend the rules and get a lengthier service from founders than most, but you can''t defy gravity forever.
While it has lost the
original founders, Facebook has also seen wild success from its purchases
Instagram went from 30 million users pre-acquisition to over one billion today, while WhatsApp has more than 1.5 billion active users up
from 450 million at the time of its deal.
The important question now is whether Facebook in-house team managing these services can continue
to scale them without the inventors in place
Beyond talent, losing that original culture is a blow.These acquired services need to remain differentiated from Facebook from a consumer
perspective, otherwise the entire point of owning them — the bet that the future of social networks may not be Facebook — is moot.
