Instagram founders leave Facebook as tension grows

Bloomberg

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. The stock dropped 2 percent in pre-market trading on Tuesday.
Kevin Systrom and Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, had been able to keep the brand and product independent while relying on Facebook’s infrastructure and resources to grow. Lately, they were frustrated with an uptick in day-to-day involvement by Zuckerberg, who has become more reliant on Instagram in planning for Facebook’s future, said the people, who asked not to be identified sharing internal details.
Without the founders around, Instagram is likely to become more tightly integrated with Facebook, making it more of a product division within the larger company than an independent operation.
For years, Systrom and Krieger were able to amicably resist certain Facebook product initiatives that they felt went against their vision, while leaning on Facebook for resources, infrastructure and engineering talent. A new leader may not be able to keep the same balance, or may be more willing to make changes that help the overall company at the expense of some of Instagram’s unique qualities.
The New York Times earlier reported Systrom and Krieger’s departure. The founders confirmed their decision in a blog post, although Facebook didn’t have a comment on the tension.
“Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents,” Zuckerberg said. “I’ve learned a lot working with them for the past six years and have really enjoyed it.”
Krieger and Systrom built Instagram and sold it to Facebook for $715 million six years ago. When the deal was announced, the company had only 13 employees and 30 million registered users. Now more than 1 billion people use the app monthly, and it is the main source of advertising revenue for Facebook outside the social network’s main news feed.
“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.”
While Facebook has weathered scandals on privacy, fake news and election interference, Instagram’s brand has remained mostly untarnished, and continued to quickly add users. With more than 2.2 billion users, Facebook is running out of people in the world to sign up for its social network, and can only push so many advertisements into its news feed. That means it has become increasingly dependent on the standalone photo-sharing app for its future.
In a July earnings call, company executives explained that revenue growth would slow in the coming years, and that Facebook would have to spend more to expand. That announcement caused the biggest one-day stock market wipeout in American history. Menlo Park, California-based Facebook is still a drag on technology stocks, which overall have propelled the US stock market to record highs. FAANG shares — for Facebook, Apple, Amazon, Netflix and Google — soared about 58 percent last year.
Facebook shares are down more than 6 percent this year after rising in every one of the previous five years.