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Instagram founders clash with Zuckerberg, leave Facebook

NEW YORK — The founders of Instagram are leaving Facebook Inc after growing tensions with Chief Executive Officer Mark Zuckerberg over the direction of the photo-sharing app, people familiar with the matter said.

Mr Kevin Systrom (left) and Mr Mike Krieger, Instagram's co-founders, have quit the company, adding to the challenges facing its parent company Facebook.

Mr Kevin Systrom (left) and Mr Mike Krieger, Instagram's co-founders, have quit the company, adding to the challenges facing its parent company Facebook.

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NEW YORK — The founders of Instagram are leaving Facebook Inc after growing tensions with Chief Executive Officer Mark Zuckerberg over the direction of the photo-sharing app, people familiar with the matter said.

Mr Kevin Systrom and Mr Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, were frustrated with an unusual uptick in day-to-day involvement by Mr Zuckerberg, who is now more reliant on Instagram for Facebook’s future growth.

The duo confirmed their departure in a blog post, although Facebook didn’t immediately have a comment on the tension.

The two built Instagram and sold it to Facebook for US$1 billion (S$1.37 billion) six years ago. Instagram, which now has more than one billion users, is a key driver of revenue for Facebook. The social media giant’s shares posted the biggest one-day stock-market wipeout in American history in July after sales and user growth disappointed investors.

While Facebook has endured scandals on privacy, fake news and election interference, Instagram’s brand has remained mostly untarnished, and continued to grow past 1 billion monthly users globally. Facebook, which is running out of people in the world to add to its product, has become increasingly reliant on the photo-sharing app for its future.

The company has started mentioning Instagram more frequently on its earnings calls and taking credit for its success. In the most recent call, Mr Zuckerberg explained that Instagram grew twice as fast being part of Facebook as it could have on its own, a statement that many Instagram insiders felt was unnecessary and unprovable. 

Mr Systrom and Mr Krieger resigned on Monday (Sept 24) and plan to leave the company in the coming weeks, The New York Times reported. Their departure adds to the challenges facing Facebook.

Mr Systrom, 34, and Mr Krieger, 32, have known each other since 2010, when they met and transformed a software project built by Mr Systrom into what eventually became Instagram, which now has more than one billion users.

In a statement late Monday, Mr Systrom said he and Mr Krieger were “ready for our next chapter,” and hinted that they would create something new.

“We’re planning on taking some time off to explore our curiosity and creativity again,” Systrom said in a statement on the Instagram blog. “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.”

Mr Zuckerberg praised the Instagram founders in a statement and said that he wished them “all the best and I’m looking forward to seeing what they build next.”

The departures raise questions about Instagram’s future at a time when Facebook faces its most sustained set of crises in its 14-year history. For much of the past two years, critics have railed against Facebook for being careless with user data and for not preventing foreign interference across its network of more than two billion people. The issues have started taking a toll on Facebook’s business, with the company saying in July that growth in digital advertising sales and in the number of its users had slowed down.

Against those problems, Instagram has been one of the jewels of Facebook. Since the acquisition in 2012, when the photo-sharing site was used by around 30 million people, Instagram’s reach has ballooned and it has widely been seen as one of Facebook’s most successful acquisitions.

Facebook has lost other founders of businesses it has acquired. In April, Mr Jan Koum, a Facebook board member and a founder of WhatsApp, the messaging app that the social network purchased in 2014, said he was leaving. Mr Koum had grown increasingly concerned about Facebook’s position on user data in recent years, people with knowledge of the situation said at the time.

Instagram was founded in 2010 and at first was a location check-in app called Burbn. Mr Krieger, an enthusiastic user of Burbn, met Mr Systrom at a Stanford University fellowship program and they decided to work together. Eventually, Burbn was retooled and renamed Instagram.

Instagram became popular in Silicon Valley almost immediately. The app heavily emphasised the use of a smartphone camera as iPhones were being widely adopted, turning everyday people into amateur photographers. Mr Systrom and Mr Krieger popularised photo filters and camera lenses, spurring a wave of copycat apps for the iPhone and Android-based smartphones.

The duo worked out of a small office in the South Park neighborhood of San Francisco. Instagram spent a lot of money in its early years just trying to keep its app online as its servers struggled under the constant stream of new user sign-ups.

Instagram eventually caught the eye of Mr Zuckerberg, who realised how powerful Instagram’s nascent photo-sharing network would become, and saw the wealth of photo-sharing activity across his own social network. Mr Zuckerberg handled the negotiations with Mr Systrom and Mr Krieger largely on his own.

Facebook purchased Instagram for US$1 billion in cash and stock (though the final cost was closer to US$715 million because the stock on which part of the deal was based declined in value). It was Facebook’s biggest acquisition to date, and came a month before the social network’s initial public offering.

“For years, we’ve focused on building the best experience for sharing photos with your friends and family,” Mr Zuckerberg wrote in a blog post about the deal. “Now, we’ll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests.”

The deal immediately turned Mr Systrom and Mr Krieger into millionaires many times over. Instagram has since been valued at 100 times that US$1 billion acquisition price by Bloomberg Intelligence, a sizable return on investment on paper.

Facebook went on to purchase Parse, a service that provided tools for mobile developers, and Oculus, a virtual reality hardware start-up, branching into new areas beyond the original social network. Mr Zuckerberg also spent US$19 billion to buy WhatsApp.

But Instagram remained Mr Zuckerberg’s main success story. As Facebook saw a threat in young people departing the network for Snapchat, a rival photo-sharing network, Instagram was quick to shift and recreate one of

Snapchat’s key features of online stories. Since then, Instagram has surged further in popularity, while Snapchat’s growth has been inconsistent.

The departures of Mr Systrom and Mr Krieger create uncertainty around the app. It is unclear who will lead the company on the founders’ departures, and if that person can continue Instagram’s longstanding success streak. Ms Marne Levine, who was previously Instagram’s chief operating officer, left her role at Instagram earlier this month to return to Facebook and lead partnerships.  AGENCIES

 

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