Selling Versus Selling Out

“For many Instagram users it’s discomfiting to see a giant company they distrust purchase a tiny company they adore — like if Coldplay acquired Dirty Projectors, or a Gang of Four reunion was sponsored by Foxconn.”Paul Ford

” They didn’t sell “out”. They just sold. They’re a company not the fucking Rolling Stones.”Paul Carr

“They could have done so much more,” is a quip I’ve been hearing a lot the past few days, about, who else? Instagram. The news that the Silicon Valley darling sold to Facebook left so many people heartbroken. Paul Ford over at New York magazine even wrote a long article about why so many people were heartbroken and, gasp, threatening to delete their Instagram accounts.

When I found out that Instagram co-founders Kevin Systrom and Mike Krieger sold (and if you ever have the chance, ask me to tell you this funny story in person) I was shocked, but also delighted, mostly because I have been around enough entrepreneurs to understand that, although they share many of the same characteristics as artists, they aren’t artists purely — They are also businesspeople. And businesspeople, and especially businesspeople with VC-backing, have one goal only: Exit.

Sure “exit” is a vague term, sometimes, rarely, it means IPO, but more often than not it means “sell.” And in the Valley “sell” doesn’t neatly equate with “sell out” as it does in the music and art worlds. Former Digg CEO Jay Adelson, who has learned this the hard way, assuaged some of the guilt surrounding this issue,”If someone offers you a billion dollars for your business you should say ‘Yes’ [Caveat: With some exceptions].”

But a funny thing happened as tech went mainstream; All of a sudden network news pundits and your parents were weighing in on startup M&A activity, and mainstream rhetoric was slowly projected onto a somewhat niche industry. Everyone knows what it’s like to cringe when you hear your favorite song used in a car commercial. It’s a purely emotional thing, you get attached to a song and feel like it’s signifying you, but now it’s also signifying Toyota.

Bands, well at least indie bands, aren’t supposed to sell out. And Instagram was as “indie” a startup as you can get, employing 13 people and working out of a small office in SOMA. Systrom, who coded all the filters himself, is a self-taught programmer who interned for Jack Dorsey and worked at Google before starting Burbn out of Dogpatch Labs. Mike Krieger, who famously carried a laptop with him everywhere he went as Burbn scaled, built the startup while on a H1B visa from Brazil. They’ve got the tech equivalent of street cred.

While, as a backseat startup CEO, I would have done something differently — like said no to Facebook and leaked the offer to press ;) — you can’t really begrudge Systrom and Krieger for building their business to do what most businesses were built to do, in one way or another create value or more concretely make money (Fun fact: Sequoia, which dropped $25 million in the startup’s most recent funding round, made back its Color investment with Instagram).

It’s sort of a selfish, myopic impulse to want the products you love to subvert this natural order of things and stay “indie.” Startups want to scale! It’s truly an exception to be that startup that keeps up momentum and control to the point where its scale takes over everything: You can count them on one hand, Facebook, Apple, Google, Amazon — Schmidt’s “Gang of Four.”

Instagram had a real chance at being the world’s mobile-only social network, hitting more than 30 million users in a little under two years. Which is why Zuck rapidly panicquired it after it received funding on Thursday, doing the deal in a weekend according to what we’ve heard. Same thing with Zynga target OMGPop, which was showing similar potential for mobile market domination as it overcame the Zynga games in the App Store.

But not every company is cut out for manifest destiny, it is seriously just fine for a small company to partner up with a larger company in order to grow. In fact that’s the way the ecosystem works — It is extremely difficult to build a giant network, giant team and big company. There are a lot of variables that go into any decision to sell a startup, and I am sure there are a lot of variables that we as outsiders are not seeing here.

“Then along comes Facebook, the great alien presence that just hovers over our cities, year after year, as we wait and fear. You turn on the television and there it is, right above the Empire State Building, humming. And now a hole has opened up on its base and it has dumped a billion dollars into a public square — which turned out to not be public, but actually belongs to a few suddenly-very-rich dudes. You can’t blame users for becoming hooting primates when a giant spaceship dumps a billion dollars out of its money hole.”

Just think, Ford could have easily written these words if Facebook had succumbed to Microsoft’s acquisition offer years ago. Is something there now something evil/alien about Facebook simply because its gotten bigger? Maybe. In any case Ford does a really great job of dramatizing sort of simple events, as media are wont to do.

“Borg” rhetoric aside, there are many good things about being acquired, namely, seriously though, more resources to feed employees, fight lawsuits, keep the servers running, etc. If anything it’s just awesome that Krieger won’t have to run around chained to his laptop anymore.

I guess this is what people mean when they debate whether or not Instagram “sold out,” like, did Systrom and Krieger cave for the “right” reasons or were they purely motivated by cash? Well we won’t be able to tell, really, until six months from now when we know whether the product has kept growing and kept getting better.

Hell, all they’d really need to do is find a way to let you edit individual post comments and they’d break even in the court of public perception, with me at least.

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