Facebook CEO Mark Zuckerberg left his board out of the loop as he personally hammered out a $1bn deal with Instagram for its colour-changing photo software in three days of negotiations in his house in Palo Alto, culminating in the deal on Sunday 8 April, a report in the Wall Street Journal claims.
Citing a person familiar with the matter, the WSJ said that the CEO of Instagram, 29-year-old Kevin Systrom, initially asked for $2bn for the company, which has 13 employees and no cash flow.
Facebook's board was only informed of the deal later that day – after it had already been agreed, the source said, stating that the board "was told, not consulted". The story broke to the media on 9 April.
Facebook COO Sheryl Sandberg only found out that Zuckerberg wanted to do that deal on the Thursday before the deal was hammered out.
If the valuation of Instagram was unorthodox, so were the negotiations. No bankers or lawyers were involved in the sitting-room deal which was thrashed out between Zuckerberg and Systrom.
Zuckerberg had expressed interest in Instagram before but, according to the WSJ, he was pushed to make the move after Instagram announced a $50m round of venture funding, valuing the company at $500m, and also saw a successful launch on Android, much to the chagrin of many an Apple fan. ®