"Take It Or Leave It": Zuckerberg's Approach To Advising Instagram After Acquisition

Facebook spent $1 billion to acquire Instagram, and Mark Zuckerberg has let the photo-sharing startup operate relatively autonomously ever since. Is YouTube-Google the acquisition model for Instagram-Facebook?

Earlier this year, Kevin Systrom and members of the Instagram team gathered in Mark Zuckerberg's first-floor glass office for a so-called "Zuck review." They were there to showcase one of the first new features of the photo-sharing service since the Facebook CEO had acquired the startup. But instead of getting pushed in one direction or another by their new boss, the meeting ended up crystalizing how Instagram could remain independent even at its new home.

"It was a funny review," says Instagram product manager Gregor Hochmuth. "We presented it; Mark liked what we did; and then he goes, 'Well, usually I would tell a team what to do now'--like make some changes he wanted to see--'but I really want to stick to my word and have you guys be in charge. So I'm going to give you my advice and you can take it or leave it.'"

It caught some present by surprise. "[Facebook CTO Mike Schroepfer] said to me after, 'I don't think I've ever seen a product review where [Mark's] advice was: Take it or leave it. Usually he's a little more decisive,'" Systrom recalls.

Zuckerberg's hands-off approach is by design. Since acquiring Instagram for $1 billion, Zuckerberg has been dogged by questions over the startup's future: whether Instagram would lose its magic; get riddled with ads; or be folded into Facebook, as so many purchased startups had before it (Gowalla, Beluga, Drop.io). But rather than bigfooting Systrom, Zuckerberg's strategy is to let him operate relatively autonomously inside Facebook. As Fast Company outlined in our recent feature on the startup's first year at Facebook, Systrom's mandate is to build out his product in an organic way that will let Instagram make money without disillusioning its adoring users. "It’s not like we have a big corporation behind us driving the strategy," Systrom says. "Instagram should be thought of as a separate entity on a different track, yet very much aligned with the Facebook mission. The long-term value for shareholders is much, much greater."

The relationship between Facebook and Instagram is akin to the one fostered between Google and YouTube, which the search giant acquired in 2006 and successfully built into a money-making machine, in part by leaving it alone. "That's the one that jumps out in my mind as a pretty successful [model]: maintaining independence, getting resources, continuing to be its own destination," says Emily White, Instagram's director of business operations. (Systrom clarifies that the parallel only goes so far: "What's misunderstood [by the public] is that Instagram is not a feature like YouTube, which at the end of the day is Google's video play.")

But given recent billion-dollar acquisitions in the Valley, from the failed (HP and Palm) to the botched (Apple and Dropbox) to the impending (Yahoo and Tumblr), there's no such thing as a sure thing. And the Instagram team was wary of its future at Facebook. "To be honest, in the history of acquisitions [at Facebook], I was totally worried we would just dissolve and they would turn off the service," says Instagram engineer Shayne Sweeney.

Instagram cofounder Mike Krieger, who says he spent time studying failed acquisitions before the deal, acknowledges there were endless unknown variables involved. "Without naming names, you often read about [the acquisitions] where it was like, 'We showed up and by week two, they were talking about migrating all of our data to this other system; by week three, they had replaced our management; and by week four, they changed our product process and the company was unrecognizable,'" he says. "Sure, there’s always the risk of a personality or culture clash, but those are all things that you can’t know until you put things together. You have to take that leap of faith of saying, I take Mark at his word."

By all accounts, Zuckerberg has kept his promise, lending Instagram his company's resources and experience while letting it maintain its own direction. He even gave Systrom the option of keeping Instagram in San Francisco, but Systrom chose to move to Facebook's well-appointed campus. Krieger explains that Instagram has gained a huge amount of understanding in how to grow its business, as well as tremendous engineering, PR, legal, security, and spam-fighting resources. "We can come to [Facebook's engineers] and say, 'Here's a challenge we're hitting,' and they're like, 'We solved this years ago,'" he adds. "We've cut out a year in terms of trial and error."

That has allowed the development of enhancements that had been on the drawing board since Instagram's earliest days--such as Photos of You, a tagging feature, and its recently launched video component--but that the small team couldn't get to because its priority was keeping Instagram running smoothly. "The Instagram acquisition has been a great model for Facebook," Zuckerberg says. "[It] has allowed them to stay focused on their product and scale faster than they would have if they weren't part of our team."

The benefits aren't one-sided. The larger aim is to foster a symbiotic relationship between Facebook and Instagram, where the lines are blurred between the two companies. There are no walls separating Instagram’s office, for instance; its desks and talent literally bleed into Facebook's space. Even Instagram T-shirts are becoming increasingly popular on campus--and you'll see far more people sporting the branded apparel than there are Instagram employees--a sign that the startup's DNA is spreading. "Kevin and Mike are now some of the most influential leaders across all of Facebook and all of the products that we develop," Zuckerberg said recently.

Krieger says everyone gets to test Facebook's mobile products as they're being built and that he's been "super vocal" about giving feedback. "I'm relentless: This looks a little weird, how can we make it better? Ten minutes later, the [product manager] or engineer will walk over and be like, 'Can you show me?' There’s not a sense of, 'You're Instagram; you can’t talk about [Facebook] Messenger bugs." When Krieger recently checked his internal Facebook profile, he saw that he'd earned a "bug reporter badge."

A more significant sign of the potential for cross-pollination between Instagram and Facebook came when Facebook's Android team was struggling to replicate the way Instagram's app scrolls "like a piece of glass that you are flowing through," as Krieger puts it.

"This was Facebook's push to rebuild mobile," says Shayne Sweeney, the Instagram engineer, "and they were struggling with [the app's] performance, Mark's number-one thing for this project." Zuckerberg facilitated a meeting between the Facebook and Instagram teams, and, Sweeney recalls, "We walked into this room, and there were 10 Android engineers saying, 'Tell us how you did this.' "We were like, 'You guys bought us, so yeah.' We handed over the keys. Here's our secret. Within 48 hours, they'd solved scrolling."

"We wouldn't have shared it with anyone else, but we were like, Wait, no, we really are the same company," says Gregor Hochmuth, the Instagram product manager.

Getting the teams to think like collaborators and not competitors is part of the end game. Systrom says Zuckerberg didn't acquire Instagram to force an arbitrary rivalry between the groups to boost productivity--there are far too many examples of internal competition causing more harm than good, namely Microsoft. "[Mark's] theory has always been there’s overlap in everything we do. Like I’m sure there’s some overlap between Instagram and Facebook Photos, but figuring out how to make them work together is often the better thing to do," Systrom explains.

The team is also cognizant of potential downsides to working on different tracks. “An anti-pattern would be that in two or three years, people find it really frustrating that we both have almost the same features but can’t collaborate or connect these things together," Krieger says.

He adds, "We’re all the same company. It’s all about finding the right balance together--understanding what makes Instagram Instagram, but also understanding how Instagram is part of Facebook."

[Image: Flickr user Dwayne Bent]

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8 Comments

  • Bonniebam

    On different note:  so glad I found you Mr. Carr - love your style of writing and loved your article!  You found a new fan, thank you for an excellent article and look forward to much more from you in the future!

  • Bonniebam

    Funny, I didn't have impression from headline that he was not willing to compromise but that is because I am mother of individual with Asperger's and it is rumored Mark Zuckerberg has Asperger's.  Their brains are very  quick, to the point and social skills are not their strong suit which includes having no filters - they say exactly what they are thinking and move on to the next item of business.  He obviously likes the product, trusts the management enough, will offer suggestions /changes and they can take it or leave it.  Of course Mr Zuckerberg is still getting used to the new concept of answering to shareholders so in the long run, we will all see how this plays out because all cool companies have to "grow up" and become the "stiff" machines where unfortunately amazing minds like Mr. Zuckerberg's may run into a bit of trouble.   

  • CrosbyTee

    The title here is very misleading. It implies that Zuckerberg is a dictator who rules with an iron fist and has no interest in compromise. That's what "take it or leave it" means. Then you read the article and discover he's the exact opposite of this.

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  • timrpeterson

    wow i'm so impressed he just did exactly what Google did with Youtube, 

    this guy is so smart please write more articles about him

  • Tyler Fastcompany Gray

    We're glad you agree, Timr. And it's nice to see you acknowledge the same comparison we made in the second headline of this story. We don't always get such positive reinforcement, but this is nice. Thanks for reading and commenting.

  • Thomas

    I am not that good with sarcasm. Struggling with the fact whether you realized that the Tim R Peterson was being sarcastic and you were countering sarcastically or you didn't get it.

    Or you both weren't sarcastic and I am a lost cause.