If I ask anyone of you about Instagram-Facebook deal, The first thing that will come to your mind is $1 billion. Yes, because $1 billion is cool. Infact very cool. Most of Entrepreneur’s have a dream to build $1 billion company. Even my twitter bio says something similar. When the Instagram-Facebook deal was announced, for everyone Kevin Systrom became an Entrepreneur to build his $1 billion company.
But things are not that simple. Let me take you through the numbers. It was not $1 billion cash deal but it was combination of $300 million cash and 23 million stocks in facebook (Source : The Washington Post)
What happened to the facebook share in last three months. Here’s screenshot of facebook share price ($38 to $19) :
While share price went down from $38 to $19, For Kevin Systrom and company it’s a loss of around $350 million over their 23 million shares in facebook. They took no protection in the deal for major fallback in share price of parent company so that they can get all the benefits of increase. Kevin Systrom and company might not have ever imagined such a graph for facebook share (neither I). May be that’s the reason they got acquired to facebook and choose fixed shares instead of fixed dollars.
Few will say this is cautionable tale for Startups, Some will call it poor negotiation. But for me this is what that excites entrepreneurs the most. My bet on facebook share is still on like Kevin Systrom and company 
P.S. : I tweet @sbaghla
blogpost is republished from bluegape.com blog ! At bluegape, few rockstars are building India’s Biggest Personalization Store. Check them out.
