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Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

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Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#241

Post by smackfu »

chadillac wrote: post #175
nwh wrote: post #60

400,000,000 active users [0] 16,000,000,000 USD ---- $40 per user That's an incredible cost. We can assume Facebook is paying for the userbase, the app itself and it's infrastructure would basically run itself. It's less appealing when you realise that there's probably a miniscule fraction of WhatsApp users that don't have a Facebook account. > WhatsApp will remain autonomous and operate independently. You can contin…

The part that confuses me is Facebook has a messaging component... I can use it to message international people without incurring international SMS rates (which is a big reason a lot of people I know use WhatsApp). WhatsApp charges annually for this (already free elsewhere) service. So I'm pretty confused why people would use WhatsApp rather than one of the many (Kik, Hangouts, Facebook, etc.) alternatives available?…

>WhatsApp charges annually for this (already free elsewhere) service.

You get a free trial year. "For all phone types, WhatsApp is free to download and try for the first year. After, you have the option of extending your subscription for $0.99 USD per year."

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#242

Post by dba7dba »

yawz wrote: post #211

$40/user - $345m/employee Truly amazing! If you remember the days when JBoss was acquired by Red Hat, this is the same "value" as one JBoss per Whatsapp employee. Incredible!

haha, and where is JBoss now and what has it done for Red Hat?

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#243

Post by olegious »

robbiep wrote: post #219
ozgune wrote: post #194

Earlier quoted context omitted.

Except that people weren't paying to get a Hotmail account. WhatsApp users pay $1/year, so their revenues are around that of Twitter's.

you mean $1 once when they first install it? the 'pay this amount' was a well known scam message

Android users pay an annual fee.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#244

Post by lancewiggs »

frandroid wrote: post #223
flyinglizard wrote: post #176

Earlier quoted context omitted.

Your argument makes perfect sense when you're talking about real companies, with R&D, marketing, technology and all that. GM buying Tesla for 15% of its worth might make sense. But in the social space, companies are entirely seasonal, the barriers to entry are none, there's no way to predict user traction or behavior. I understand this is how Facebook intends to keep itself at the top of the social heap, but with rec…

Facebook and Twitter are seasonal?

Where the seasons extend over a few years - yes. MySpace, Friendster, Slashdot, Hotmail etc. were the same.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#245

Post by KaoruAoiShiho »

dhoulb wrote: post #196

I just can't get my head around that valuation. For something that's basically a feature, when they already have that functionality baked in, built out to a similar scale? It's not an acquisition for talent, or technology, so what is it? It's an acquisition for investors probably. To argue back against the people who say the kids are leaving FB. Well guess what, we BOUGHT the thing the kids are using. And it's 'mobil…

This is your heads up to stop thinking in terms of features. Value != technology.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#246

Post by pitchups »

muyuu wrote: post #180
pitchups wrote: post #131

Earlier quoted context omitted.

Pretty amazing that this is precisely what Microsoft paid for Hotmail in 1998 : $400 million for 10 million users = $40 / User. [1] The parallels are striking : Whatsapp is to messaging today what Hotmail was to messaging in the late '90s. [1] http://news.cnet.com/2100-1033-206717.html

It made more sense for MS though. They were basically kickstarting their internet services and had very few users. Facebook can mine some more data from this I guess, but something rather marginal from what they already have.

True, the reasons are different. But the motivation is the same : to stay ahead of the competition. In my view, and based on my own experience, Whatsapp is being used as a light-weight social network built around messaging and optimized for mobile phones. In fact, I share a lot more stuff with friends and family on Whatsapp - including pictures/videos/messages - than I do on Facebook.

The more Whatsapp satisifies my sharing needs, the less I use Facebook. And that is a competitive threat to Facebook. Instagram was similar - a light-weight social network built around photo-sharing.

I think Zuckerberg is a deeply strategic thinker trying to avoid the pitfalls of the "Innovator's Dilemma". Both Instagram and Whatsapp are classic examples of what is described in Innovator's Dilemma - light-weight products that can slowly eat into the market share of the incumbent, and ultimately displace it.

Edits : formatting.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#248

Post by andrewfelix »

frandroid wrote: post #223
flyinglizard wrote: post #176

Earlier quoted context omitted.

Your argument makes perfect sense when you're talking about real companies, with R&D, marketing, technology and all that. GM buying Tesla for 15% of its worth might make sense. But in the social space, companies are entirely seasonal, the barriers to entry are none, there's no way to predict user traction or behavior. I understand this is how Facebook intends to keep itself at the top of the social heap, but with rec…

Facebook and Twitter are seasonal?

Usage fluctuates. The value is in the users not necessarily the company or the tech. When users start bailing to another platform what's left?

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#249

Post by tomkarlo »

mschuster91 wrote: post #155
tomkarlo wrote: post #88

Earlier quoted context omitted.

That's a lot of money for an app with relatively little lock-in and a $0.70 (maximum) ARPU.

The lock-in is the network effect, and well, if you're aiming for 1-1.5B users (which can be served with virtually no employment and hosting costs) you're looking at 1B $ yearly profit .

Not sure how you're figuring that. At best - 1.5Bn users locked in - you're at less than $1bn _revenue_ (after you net-out the 30% that goes to Apple or Google for an in-app transaction) and much lower net profits (presumably, it costs some fraction of a dollar in ops, bandwidth and cpu to support a paying user for a year.)

Also, even at $1bn in revenue, this is 16X sales... that's usually the kind of price you'd see for a company that can still grow a lot. When you have 1/12 of the world's population as users, and you're capped at $1 per year per user, there's not a lot of places to grow. Clearly FB valued this based on strategic value to their broader platform.

Re: Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs

#250

Post by sasvari »

pearjuice wrote: post #153

Am I the only one upset with this? I don't use Facebook - haven't and never will - because I hate how I and all my data will become their product on registration. Sure, Whatsapp has its quirks being proprietary and all, but now, I am basically doomed. Whatsapp says they will stick to their core and stay independent, but I have 16 billion reasons to believe otherwise. The sad part is that due to Whatsapp, I can't esca…

  The sad part is that due to Whatsapp, I can't escape my
  doom because EVERYONE I contact daily uses Whatsapp. I
  would basically kill myself socially if I were to delete
  Whatsapp.
I have been playing around with deleting my whatsapp account (for different reasons) in the last couple of months, but haven't because of everybody uses whatsapp. But I don't share your sentiment. I just used this acquisition as a trigger to actually delete my whatsapp account. And I don't think I'll miss anything really significant (the SNR went done quite a lot lately anyway): I'm still as reachable as I've been before.

Maybe I can manage to bring more of my social contacts to actually use an open XMPP client anyway ...

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