Twitter made a very real offer in the hundreds of millions of dollars range, according to two sources with knowledge of the deal. Twitter chairman Jack Dorsey, an early Instagram investor and a one-time avid photo-sharer, was said to be involved in all aspects of the deal. But Instagram shrewdly did not sign the term sheet, which would have bound it to a no-shop clause, and went ahead and closed its financing round.
This put Systrom in an odd — but useful — situation in which he had both the new funding and the Twitter offer still on the table. According to one source, Systrom went to Zuckerberg for a better deal and Zuckerberg bid just to block the Twitter deal.
But the negotiation process was far more nuanced than Systrom simply playing Twitter against Facebook to get a better deal, and Instagram’s choice to go with Facebook had more to do with product and vision alignment than price, a person familiar with the negotiations said.
Instagram’s CEO, Kevin Systrom is apparently one heck of a negotiator.