Facebook, the world’s largest social networking service, is buying Instagram for around $1 billion in cash and stock. Instagram is the most popular free photo-sharing application on Apple’s App Store and has over 30 million users.
An interesting aspect of this deal is that Instagram’s CEO, Kevin Systrom, reportedly said no to Facebook several times. Mark Zuckerberg, Facebook’s CEO, first tried to hire Systrom in 2004 and sought to acquire Instagram more than once.
The lesson here is the importance of getting your timing right and having the foresight to say “no” when a deal is premature. Systrom could have sold out much earlier for significantly less money. Instead, he waited until Instagram had become the market leader. From a negotiation perspective, he smartly maximized his leverage before closing this blockbuster deal.