Ma$e, B Horowitz - Instagram lyrics

Now what the hell is you lookin’ for?
Can’t a young man get money anymore?
Let my pants sag down to the floor
Really do it matter as long as I score?
Mase, Lookin’ at me

Two years ago we invested $250
000 in Instagram thanks to the
Spectacular vision and effort
Of Kevin Systrom and the Instagram team, the
Investment will be worth $78, 000
000 when the Faceboook acquisition closes
The work that Kevin and
Team did will go down as
Legend in the industry
And we thank them immensely we
Also thank our co-investors
Steve Anderson of Baseline and
Matt Cohler of Benchmark

Despite Instagram’s awesome performance and
Our monstrous return
A number of articles have come out
Criticizing us for not making
Even more money on our investment ordinarily
When someone criticizes
Me for only making 312 times my money
I let the logic of their statement speak
For it'self however, in this case
The narrative that some critics
Put forth has the
Nasty side effect of casting
Two outstanding entrepreneurs
Kevin and Dalton Caldwell in an
Unfair light and glosses over
An important ethical issue that we
Faced as a result
I will clarify what happened and why
We didn’t make even more money

When we invested in Instagram
It wasn’t actually
Instagram it was a company called Burbn
And the idea was roughly to build
A mobile micro blogging
Service technologically
It was also different: an HTML 5 application
Rather than a native app as
Kevin iterated on Burbn
We made another investment in an
Excellent entrepreneur
Dalton Caldwell dalton’s
Company, Mixed Media Labs, initially built
A product called PicPlz picPlz aimed
To be a mobile photo
Sharing service built on it's
Own social graph furthermore
The graph would be public like Twitter
Rather than private like Facebook
Subsequently, Kevin noticed that while
Burbn wasn’t taking off
The photo-sharing component of it
Was doing quite well as a result
He pivoted Burbn into Instagram
Which then competed directly with
PicPlz it’s important
To note that Kevin did not
Steal Dalton’s idea Kevin came to it
Organically based on the Burbn data

Still, we needed to make a decision should we
Fund the venture round of PicPlz, Instagram
Both or neither? We loved both
Entrepreneurs, but they were building the
Exact same product since we
Were less than a year old
Ourselves at the time
This kind of conflict which happens
Frequently in the venture capital
Business as companies evolve was
Brand new to us

Here’s how it looked then:

- We liked both entrepreneurs very much
So there was no issue there
We would gladly back either
- Instagram’s numbers were much
Better at the time
As it had already begun it's rocket run
- From the perspective of the entrepreneurs
We’d invested in Dalton
When he planned to build
A photo sharing service
But we’d invested in a different
Initial product from Kevin

After speaking with both entrepreneurs
And much internal discussion
We concluded that funding Kevin to compete
With Dalton would be a
Violation of the original implicit commitment
We made to Dalton to
Not fund competitors to PicPlz
On the other hand
Funding Dalton did not violate our
Implicit agreement with Kevin because
He changed his business we’d
Funded Burbn not Instagram

So our choices were: a) invest in Dalton b)
Invest in neither or c) invest in Kevin
And violate our commitment to
Dalton as soon as
We fully recognized those were the choices
We ruled out option c and elected option a

However, we still had a problem: because we
Had invested in Kevin’s seed round
We had both information rights and pro
Rata rights to the series
B these are important and valuable rights
But it seemed completely unethical to
Us to exercise them since we funded
A competitor as a result
We unilaterally and without compensation or
Consideration gave Kevin back
Those rights and did not
Invest further in Instagram

And that’s the thing that we did
That many writers think was
Really stupid despite that, if we
Had to do it again, we would

As an epilogue
Dalton later pivoted out of PicPlz and is now
Building an exciting new
Service called AppNet

I’d like to make two things
Absolutely clear that some writers
In their zeal to find something
Wrong with our investment
Have gotten completely wrong:

1 kevin absolutely did not steal
Dalton’s idea he pivoted
To Instagram because that’s where
His users were period, end of story

2 we are excited and enthusiastic
Investors in Dalton’s company
Several reporters implied that we
Regret funding Dalton
Because he did not sell
His company to Facebook
For $1 billion after two years news
To world: it generally takes longer than two
Years to create a billion dollars
In value what Kevin and team did was
Special and unique we expect great things
From Dalton and look forward to another
Massive return from his new idea

So, write what you will about us
But please get that right