Instagram, Oculus, WhatsApp and More: Here’s How Things Panned Out for 5 Founders Who Sold to Facebook | Social Media
Instagram’s founders are leaving Facebook. Here’s what happened to other entrepreneurs who sold their companies to the social media giant.
7 min read
The past seven months have been some of the most tumultuous in Facebook’s 14-year history.
In March, the public learned of Facebook’s user data scandal and the now infamous Cambridge Analytica. The following month, CEO Mark Zuckerberg testified in a series of Congressional hearings. May marked reports that the FBI and Justice Department were investigating the social media giant, and weeks later, more alleged data-sharing partnerships came to light. In July, the company’s stock plummeted almost 20 percent after its quarterly earnings report, and an interview misstep by Zuckerberg — when he mentioned that Facebook wouldn’t necessarily remove content from Holocaust deniers — led to public outcry. By August, a score of prominent executives had left the company.
But this month marked one of the biggest blows to the social media giant: The co-founders of Instagram, the popular photo-sharing app said to be driving a significant portion of Facebook’s growth, announced their resignation. Here’s their story — and the stories of four other founders who sold their companies to Zuckerberg.
Kevin Systrom and Mike Krieger (Instagram)
The backstory: When Kevin Systrom created one of the earliest iterations of Instagram, he had a wealth of experience — at a company that would later become Twitter, at a travel startup that sold to Facebook and at Google working in corporate development. It was early 2010, and the app — called Burbn — allowed users to check in to certain locations or post their plans. Instead, however, Systrom noticed they were sharing photos more than anything else. His co-founder Mike Krieger came aboard, and the two worked to create a social photo-sharing app. Instagram launched in October 2010, and less than two years later, Facebook shelled out $1 billion to call Instagram its own.
The split: On Monday, Systrom and Krieger announced their resignation from Instagram and its parent company with a diplomatic statement. But reports point to rising tensions between the co-founders and Zuckerberg himself as key to their decision. Recently, Zuckerberg increased his involvement in Instagram’s day-to-day operations. What’s more, Systrom and Krieger reportedly clashed with Facebook over a range of decisions, including the latter’s pushback over the creation of IGTV for fear it would compete with Facebook Watch.
The status: In their statement, Systrom and Kriger said they wanted to “explore [their] curiosity and creativity again.” As for what else is on their horizon? “Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do,” they wrote.
Palmer Luckey (Oculus)
The backstory: Oculus co-founder Palmer Luckey had a heavy hand in the rocket-like rise of virtual reality, thanks to a VR headset he built in his parents’ garage. The prototype’s Kickstarter campaign made waves with investors including Andreessen Horowitz and Founders Fund, even attracting Facebook, which paid $2 billion for Oculus in 2014.
The split: Luckey stayed on as a Facebook employee until last year, when he and the company parted ways after reports said Luckey allegedly funded a pro-Trump troll group leading up to the 2016 presidential election. Zuckerberg maintains that politics did not factor into Facebook’s decision to end its relationship with Luckey.
The status: At his new company, Anduril Industries, Luckey is working on a new system to detect unauthorized border crossings at the U.S. border. He aims to replace Trump’s idea for a physical wall with a digital one — an intelligent surveillance tool with virtual reality wrapped in — that’s always watching the country’s border. Luckey hopes to work with the Department of Homeland Security to implement the technology.
Brian Acton (WhatsApp)
The backstory: Brian Acton, the 44th employee at Yahoo, met Jan Koum in 1997, when Koum came to inspect the company’s advertising system. The two went on to become fast friends — and after they both left Yahoo 10 years later, Facebook rejected their job applications. When Apple launched the App Store, Koum went through a few iterations of the secure international texting app before almost throwing in the towel in 2009. Acton convinced him to stick with WhatsApp, and a few months later, he raised $250,000 in seed funding — earning him the title of co-founder, granted by Koum. Five years later, Facebook bought WhatsApp for close to $22 million in a bombshell acquisition, paying about $55 per user.
The split: When Acton left Facebook last year, he attributed the decision to his desire to focus on a nonprofit. But in March, the Cambridge Analytica scandal sparked Acton to write a bold message on Twitter: “It is time. #deletefacebook.” It remains the most recent post on his Twitter page. (Koum, for his part, left Facebook in April.) Acton spoke publicly for the first time on Wednesday, telling Forbes that he and executives disagreed about the level of encryption necessary for WhatsApp — as well as Facebook’s desire to incorporate targeted ads and commercial messaging. He walked away from the social media giant in September 2017, deciding to leave as much as $850 million on the table in not-yet-vested stock.
The status: Acton has invested $50 million in Signal, a messaging app he’s working with in order to essentially realize his original dream for WhatsApp: free, end-to-end encrypted calls and messages without ad partnerships. He’s also siphoned $1 billion from his Facebook earnings into philanthropy efforts serving healthcare in low-income areas and early childhood development.
Jonathan Perlow (Beluga)
The backstory: In 2011, three former Google employees launched Beluga, a group messaging service for Android and iOS that was designed for easy use with Facebook. One of them, Jonathan Perlow, made use of his past experience developing Gmail’s user interface. After Beluga went viral — and less than a year after its launch — Facebook acquired the company, hiring Perlow and his co-founders. The social media giant aimed to create a standalone messaging client, and Beluga would become the foundation for today’s Facebook Messenger.
The split: Perlow left Facebook in June 2016 to start Trove Technologies, a full-service storage service that picks up, stores and returns items to customers. He co-founded the company with Michael Pao, Uber’s former head of product, and the two designed Trove’s online view of your own storage space, with items photographed, catalogued and available for delivery request.
The status: Perlow’s roles at Trove mirrors the ones he held at Beluga: co-founder and chief technology officer (CTO). In 2017, Trove secured $8 million in funding.
Nikita Bier (TBH)
The backstory: Nikita Bier launched TBH, an app allowing users to send anonymous compliments to their friends, with three co-founders in the summer of 2017. He didn’t have high hopes — he had tried to launch as many as 14 apps in the past, and he knew the team would soon run out of funding. But within two days of TBH’s soft launch in a Georgia high school, about 40 percent of the original high school had downloaded the app — and it had spread to three other schools. In order to combat trolling, Bier made sure the app’s questions were structured in poll format — for example, “Who has the best laugh?” followed by the option to select one of four friends. By October 2017, Facebook had acquired TBH, reportedly for less than $100 million.
The split: In July, Facebook announced it would shut down TBH due to “low usage.” The app reportedly had 5 million downloads at the time it was acquired, and the day after the deal went through, it ranked number one on the App Store’s daily download charts. But a little over a month later, TBH had fallen off the list of the top 500 daily downloads, which didn’t bode well for its future.
The status: Bier told Business Insider that despite Facebook’s decision to discontinue the app, he would stay with the company and, as a product manager on the Youth team, continue to build new products alongside the former TBH team.