In April 2012, Facebook made a decision that would become one of the most significant acquisitions in the history of social media.

It agreed to buy Instagram for approximately $1 billion in cash and Facebook shares. At the time, Instagram was a young photo-sharing company with a relatively small team and no major revenue stream.

But there was an interesting detail behind the deal.

Facebook was not the only major technology company that saw Instagram’s potential. Twitter had also explored buying it.

And that story offers an important lesson for entrepreneurs:

Seeing an opportunity is not the same as capturing it.

Twitter Saw Instagram’s Potential

Jack Dorsey, Twitter’s co-founder, was already an investor in Instagram and had a relationship with Instagram founder Kevin Systrom.

In early 2012, Twitter became interested in acquiring the photo-sharing company.

According to later reporting, Twitter executives discussed an acquisition with Systrom, and reports put the proposed value in the range of $500 million to $700 million, depending on the account of the negotiations. One detailed account put Twitter’s proposed package at roughly $525 million.

There is some disagreement over exactly how formal the Twitter proposal became.

Systrom later testified that Instagram had not received another formal offer or term sheet before Facebook’s negotiations. Other accounts from people involved in the discussions said Twitter had presented a serious proposal and, according to some reporting, a term sheet.

What is clear is that Twitter was interested in Instagram before Facebook completed its acquisition.

But Twitter did not end up owning Instagram.

Facebook did.

Then Facebook Moved

On April 6, 2012, Mark Zuckerberg contacted Systrom.

What followed was a remarkably rapid negotiation.

Just three days later, on April 9, Facebook publicly announced that it had reached an agreement to acquire Instagram for approximately $1 billion.

Instagram had only launched in 2010.

In roughly two years, it had gone from a new mobile application to a company valuable enough to attract a billion-dollar acquisition offer.

That alone is an extraordinary entrepreneurial story.

But there is another lesson.

Sometimes the Opportunity Is Sitting in Front of Everyone

Twitter saw Instagram.

Facebook saw Instagram.

Investors saw Instagram.

The founders of Instagram saw Instagram.

The difference was what each company ultimately did with that opportunity.

This happens in business all the time.

Two companies can see the same market.

Two entrepreneurs can hear about the same technology.

Two investors can meet the same founder.

Two businesses can identify the same customer problem.

Yet only one may act decisively.

Opportunity does not belong to the person who sees it first.

Sometimes it belongs to the person who is prepared to act when the opportunity becomes available.

Don’t Wait for Perfect Certainty

One reason businesses miss opportunities is that they want certainty.

They want to know:

• How much money will we make?
• Will customers accept it?
• What if it fails?
• What will our competitors do?
• What if we invest and the market doesn’t develop?
• What if we are paying too much?

These are reasonable questions.

But business rarely provides complete certainty.

If you wait until an opportunity becomes completely obvious, someone else may already have acted.

Facebook didn’t need to know exactly what Instagram would become.

It needed to recognise that Instagram was becoming strategically important.

The Value of a Business Isn’t Always Its Current Revenue

Instagram’s value in 2012 wasn’t simply about how much money it was making.

Its strategic value mattered.

Instagram had built a rapidly growing mobile photography community and had strong user engagement. Facebook itself recognised the importance of mobile photography and saw Instagram as complementary to its own platform.

This is an important lesson for entrepreneurs.

When evaluating a business, don’t look only at today’s revenue.

Consider:

What could this business become?

A company may have:

• A rapidly growing audience
• A strong brand
• Valuable technology
• A loyal community
• Unique intellectual property
• A powerful distribution network
• A talented team
• Data or insights
• Access to a new market

Sometimes the future potential is more important than the current income statement.

Don’t Confuse Small With Unimportant

Instagram was relatively small when Facebook bought it.

That didn’t mean it was insignificant.

Many businesses make the mistake of looking at a small company and thinking:

“They are too small to matter.”

But a small company with rapid growth can eventually become a major competitor.

A small startup may have only a handful of employees but possess an idea that could change an entire industry.

A small African business today could become a major regional company tomorrow.

Size today does not necessarily tell you about potential tomorrow.

Sometimes You Have to Move Before Your Competitors

There is another lesson here for established businesses.

If you see a company, technology or market that could become strategically important, waiting too long can allow a competitor to acquire it, develop it or dominate it.

Facebook was already a massive social network.

Instagram was much smaller.

But Facebook understood that mobile photography and social sharing were strategically important.

It acted.

The acquisition gave Facebook access to Instagram’s growing community while allowing Instagram to continue operating as a distinct product and brand.

What Entrepreneurs Can Learn

1. Pay attention to emerging businesses

Don’t only study the biggest companies.

Watch the small companies growing quickly.

2. Look for changing customer behaviour

Instagram wasn’t simply another photo application. It was part of a shift toward mobile photography and social sharing.

Businesses should watch how customers are changing how they live, communicate and spend money.

3. Don’t wait for everyone to agree

If every person already agrees that an opportunity is valuable, the opportunity may become much more expensive.

4. Move when the evidence is strong enough

Acting quickly doesn’t mean acting recklessly.

It means gathering enough information to make a decision without demanding perfect certainty.

5. Think about strategic value

A business can be valuable because of what it could unlock—not simply because of what it earns today.

6. Build relationships before you need them

Jack Dorsey’s connection with Systrom existed before the acquisition discussions.

Relationships can create access to opportunities that aren’t available to everyone.

The Biggest Lesson

The Instagram story isn’t simply about Twitter losing an acquisition to Facebook.

It’s about something much broader.

Multiple people can see the same opportunity and reach completely different outcomes.

Twitter recognised Instagram’s potential.

Facebook recognised it too.

But Facebook ultimately completed the acquisition.

And today, when people look back at the $1 billion Instagram deal, the interesting question isn’t only:

“How much did Facebook pay?”

It’s also:

“What did Facebook see that made it willing to act?”

For entrepreneurs, that is the question worth asking.

Because the next Instagram may already exist.

It may be a small startup with 10 employees.

It may be a new technology nobody takes seriously yet.

It may even be a business operating in your own city.

The opportunity may be visible.

The real question is whether you will recognise it, prepare for it and act before someone else does.

Seeing the opportunity is the beginning. Acting on it is what turns opportunity into value.