This is the story of what’s widely regarded as one of the most successful acquisitions of all time. Two founders and a small group of employees built a product and a company that was acquired for $1 billion. However, even with such a lucrative exit, many early employees did not benefit from their equity grants:

Most of the employees weren’t getting rich. A couple weeks after the deal, a Facebook representative came into Instagram’s South Park office to join Systrom and Krieger in offering everyone new contracts: new salaries, new stock options, and cash bonuses if they stayed at Facebook for more than a year. One by one, they went into the conference room, and some came out ashen-faced.

Silicon Valley employees often decide to take lower salaries in order to work at a startup like Instagram that offers stock options—the option to purchase shares cheaply at a later date. Those options are restricted based on time. Usually a quarter of the total grant in the job offer becomes available after each year that they continue working, giving an incentive to stick around. For an employee who picks a winning company, the small slice of ownership yields life-changing wealth, like winning the lottery. Instagram was the biggest mobile app acquisition that had ever happened—the best equity they could have chosen. But if the Instagrammers accepted Facebook job offers, Facebook would cancel their stock options in Instagram and grant them restricted stock units in Facebook instead. Their equity vesting schedule would start over, as if they hadn’t already worked many months.

Only three employees had been at Instagram long enough to have the option to buy a quarter of their Instagram shares and convert them to Facebook shares at a lower price. Everyone else would have no wealth from Instagram stock. Because Facebook was about to go public, the three long-term employees had to act quickly. At least one of them couldn’t actually afford to purchase their Instagram shares to turn them into Facebook ones. Because of the value of the deal, that employee would have needed to get a more than $ 300,000 loan to afford it. Their lawyer advised against the financial risk, explaining that Facebook was not a safe financial investment to take on as a twenty-something. Nobody knew if the shares were going to do well. (Facebook shares have increased in value by about 10x since Instagram joined, meaning this employee’s share would be worth about $ 3 million today.)

Systrom and Krieger, on the other hand, were awarded life-changing sums. Krieger solidly owned 10 percent and Systrom 40 percent, and so netted an estimated $100 million and $400 million, respectively, per the original deal price. Systrom was proud; he told friends that the day after the deal, he went into the local deli to buy five copies of the New York Times and was amused that the cashier didn’t recognize him as the man pictured above the fold.