The resignation of Kevin Systrom and Mike Krieger could be bad news for the future of Instagram — and for the management of Facebook.
- Instagram cofounders Kevin Systrom and Mike Krieger announced on Monday they are leaving the company.
- Their departure poses big risks for the service they created and for Facebook, its corporate parent.
- Their resignations come as Facebook has becoming increasingly reliant on the revenue and user growth Instagram provides.
- It also follows a series of scandals at Facebook that have exposed the shortcomings of Mark Zuckerberg as a leader and CEO.
It's usually not huge news when the founders of a startup leave after their company is acquired.
But the departure of Kevin Systrom and Mike Krieger from Instagram is a big deal — and not just because it was so unexpected. Their resignations are a huge blow to parent company Facebook.
Their move puts the future of Instagram up in the air even as it has become increasingly important to Facebook's overall business. And their departure — which follows that of other other top executives — comes as it's become increasingly clear that Facebook CEO Mark Zuckerberg could use more, not fewer, strong voices to check his impulses and guide the company.
Perhaps not so coincidentally, the early indications are that Systrom and Krieger are leaving Instagram precisely over a difference of opinion with Zuckerberg about the future of Instagram.
Up until recently, Systrom was largely able to run Instagram on his own, according to multiple reports. Although Instagram tapped into Facebook's engineering resources and infrastructure, its founders were largely able to stick to their own vision when running the service, and to shrug off product suggestions from their corporate parent.
But Facebook had recently begun to alter the nature of its relationship with the photo-sharing service. Zuckerberg has been personally taking a more active interest in Instagram's direction of late, according to the Wall Street Journal. A management shakeup earlier this year appeared to decrease Systrom's power over the service and access to the CEO, the Journal reported. Meanwhile, Facebook has dramatically cut back on promoting Instagram inside its main social networking app, according to the Journal.
Systrom and Krieger were upset about the loss of the site's autonomy and their ability to steer its direction, according to multiple reports.
Instagram was doing great under Systrom and Krieger's leadership
At least from the outside, the two have done a terrific job with the service. In the six years since Facebook acquired Instagram, it's grown from 30 million to a billion active users. When it became part of Facebook, Instagram was basically generating no revenue. This year, it's expected to pull in $8 billion advertising sales, according to eMarketer.
As it's grown, Instagram has become an increasingly key part of Facebook's overall business. This year, the photo service's revenue will account for an estimated 17% of its corporate parent's ad sales, up from 9% last year.
Instagram's fast sales and user growth have come as the revenue growth from Facebook's core app has started to slow. They also come as the number of Facebook users in developed countries has started to stagnate and the amount of time those users spend on the service has started to fall.
Indeed, Instagram has started to look like Facebook's bright hope for the future. Young consumers increasingly signing up for and spending time with it instead of with Facebook's main social network. And while the reputation of Facebook's main service has been sullied by a succession of scandals, including the Cambridge Analytica fiasco, Instagram has largely maintained its positive image.
But Facebook is risking that success with Systrom and Krieger leaving. Consumers bought into their vision, which was a site that was distinct from Facebook. If Facebook muddies that vision by remaking the service so it's more like, or more integrated into the company's core social network, users may go elsewhere.
It's clear that Zuckerberg needs outside voices on his team
But that's not the only danger Facebook faces from the departure of the Instagram founders. Perhaps the bigger risk is to the company's management and leadership.
Thanks to a stock structure that gives him outsized voting power in any corporate matter, Zuckerberg appears to rule Facebook unchecked by the company's board. That makes the role of the top managers around him even more important, giving them a key role in help shape shape and influence the company's direction.
It's clear that Zuckerberg could use some help. The company has been stumbling through a series of crises for much of the last two years, from the Russian-linked propaganda campaign during the 2016 election to the persecuting of Myanmar's Rohingya people to the massive compromise of customer data to Cambridge Analytica. To a large degree, those problems have been of the company's own making, stemming from a culture that promoted growth above just about all else, no matter whether it was privacy or social harm.
But at a time when Zuckerberg could use some voices in the upper levels of management who might offer a different vision for how to grow and run a social network, he's been losing just the kinds of executives who could provide that kind of insight.
Jan Koum and Brian Acton, the cofounders of WhatsApp, who promoted privacy within the chat app and criticized Facebook's efforts to commercialize it, left within the past year. Alex Stamos, Facebook's security chief who warned that the US is unprepared from a security standpoint for this year's election, left last month. And now Systrom and Krieger are gone.
The remaining cadre around Zuckerberg is mostly comprised of managers who have been at the company and working on its core social network for years, many since its early days. They're precisely not the sort of people who might be able to offer Zuckerberg an outside perspective that's not heavily steeped in how the company has always done things.
If Instagram falters in the wake of Systrom and Krieger's departure, that will be a bad thing for its users, for Facebook, and for Facebook's shareholders. But if their resignation helps lead to a CEO and company that are even more insulated from outside perspectives and contrary visions, that will be bad for the rest of us too, given how much power the company has and how much social harm it can and has caused.