Mark Zuckerberg Kept Facebook Board Out of the Loop on Instagram Buy (Report)
The CEO of the social network, which is planning to go public soon, negotiated the $1 billion deal on his own.
When negotiating the deal for Facebook's $1 billion purchase of Instagram, Mark Zuckerberg kept his board of directors out of the action, the Wall Street Journal reported.
Following three days of talks with Instagram CEO Kevin Systrom, the Facebook founder alerted the board of the intended acquisition -- the company's largest-ever -- on the morning of April 8, the day the buy became a done deal.
Negotiations happened at Zuckerberg's $7 million Palo Alto home, according to the Journal, with Systrom initially starting with a price of $2 billion for the sale of his wildly popular photo-sharing company.
Sources familiar with the situation told the newspaper that the board was "told, not consulted," and that Zuckerberg opted for a solo approach out of worry that Systrom might get turned off if approached by lawyers rather than the Facebook CEO.
Zuckerberg, in fact, owns 28 percent of Facebook stock and 57 percent of its voting rights, giving him the power to bypass board-related red tape in such deals.
Also kept in the dark, albeit not for long: Facebook's COO, Sheryl Sandberg, who learned of the talks via Zuckerberg the Thursday before the company announced the buy.
San Francisco-based Instagram has experienced tremendous growth since launching in 2010. The company most recently reported about 30 million users, about double from the beginning of the year. A recent launch onto the Android platform had the potential of doubling the number of users again.
Launched in 2010 by Systrom and Mike Krieger, Instagram instantly took off in the social media universe by allowing users a way of more conveniently sharing photos from their mobile phones.
Instagram is the first big purchase by the social media giant, which is expected to go through with its IPO as soon as next month. The IPO will raise about $5 billion for Facebook, though Zuckerberg cautions not to expect many more splashy acquisitions.