Jack Dorsey Was 'Heartbroken' When Instagram Sold To Facebook
But with the fresh $50 million from investors, Systrom and Krieger weren't interested in selling – at least not to Twitter.
According to Swisher, Systrom called Twitter CEO Dick Costolo on April 4 2012 to tell him Instagram had raised $50 million and would remain a private company. He also called Mark Zuckerberg at Facebook, who had been an acquaintance of Systrom's since his Stanford days.
To Zuckerberg, Systrom's "no" just meant he had to try harder. Zuckerberg sent Systrom a text and invited him over to discuss options. It was Easter Weekend and over the course of those few days, Zuckerberg and Systrom cut a deal. Zuckerberg doubled Twitter's offer and agreed to buy Instagram for more than $730 million in cash and stock.
While Systrom called many of his investors to get the deal approved and to give them news of the sale early, he never called Dorsey.
Dorsey says he learned of the acquisition during work from one of his employees. The friendship between Dorsey and Systrom hasn't been repaired since.
"I found out about the deal when I got to work and one of my employees told me about it, after reading it online I got a notice later that day since I was an investor,” Dorsey tells Swisher. “So I was heartbroken, since I did not hear from Kevin at all. We exchanged e-mails once or twice, and I have seen him at parties. But we have not really talked at all since then, and that’s sad.”
Systrom didn't mean to snub Dorsey. He tells Swisher he isn't sure what changed his mind and made him decide to sell to Facebook, just days after turning down Twitter. The "equation," says Systrom, was very different.
"I’m not sure what changed my mind, but [Zuckerberg] presented an entire plan of action, and it went from a $500 million valuation from Sequoia to a $1 billion [one from Facebook],” Systrom says. "I think everyone thinks that the acquisition was made in a dark room with Trent Reznor music playing. And it turns out that some of the biggest decisions get made relatively quickly, without much fanfare.”