Instagram

Episode 2 of Acquired covers Facebook's April 2012 acquisition of Instagram: a company with 13 employees, no revenue, and no obvious monetization model, bought for $1 billion with 30 million users. The hosts stress how shocking the number was in context — in 2015, with hundreds of unicorns, it is easy to forget that in April 2012 a 13-person, zero-revenue phone app being worth a billion dollars had almost no precedent, and the figure had never been discussed before the deal was announced. Instagram had raised its Series B at several hundred million dollars only about a week earlier, and had launched its Android app days before, adding a million users in a week. The hosts credit this deal as part of the genesis of the show itself and as the opening of the "age of the unicorn."

At acquisition, Instagram served 2.3 million users per employee. Two and a half years later, with roughly 150 employees and 400 million users, the figure is 2.6 million — arguably better. One host notes he is already tipping his hand on the eventual grade.

The hosts build the deal's logic on a cultural observation: Facebook had become a utility — the place where everyone's parents were, where your college-era wall posts now read like careless text messages — while Instagram remained fun. Reports abounded that kids were leaving Facebook for Instagram and Snapchat; the hosts' framing is that Facebook is where you have to go and Instagram is where you want to hang out, and that starting with Instagram, Facebook began buying the fun.