Numbers That Explain Why Facebook Acquired WhatsApp • Hacker News Board

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#41

Post by fredgrott » Thu, Feb 20, 2014, 2:37 AM UTC

adventured wrote: post #31

habosa wrote: post #13

So I understand the value of WhatsApp now that the network is absolutely enormous, but can anyone shed some light on how WhatsApp differentiated itself at first? It seems like it's just basic user-to-user messaging over data, with a list-like interface that looks like every messaging app on my phone. How did they convince people that this particular proprietary solution was the best? Did they somehow remove friction…

I'm trying to find an explanation for how WhatsApp's network is supposedly worth drastically more than Gmail / Yahoo / Hotmail webmail is. Just because users connect, doesn't mean you have a pot of gold. I believe this is a critical, flawed assumption that is being nearly universally made. Last generation's instant messaging apps were nearly worthless monetarily, and are still nearly worthless even today with tons of…

okay look at this way on mobile Facebook is essentially a message app spread across multiple apps...

Any message app that threatens to overtake Facebook is worth that amount to facebook

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#42

Post by tim333 » Thu, Feb 20, 2014, 2:42 AM UTC

adventured wrote: post #31

habosa wrote: post #13

So I understand the value of WhatsApp now that the network is absolutely enormous, but can anyone shed some light on how WhatsApp differentiated itself at first? It seems like it's just basic user-to-user messaging over data, with a list-like interface that looks like every messaging app on my phone. How did they convince people that this particular proprietary solution was the best? Did they somehow remove friction…

I'm trying to find an explanation for how WhatsApp's network is supposedly worth drastically more than Gmail / Yahoo / Hotmail webmail is. Just because users connect, doesn't mean you have a pot of gold. I believe this is a critical, flawed assumption that is being nearly universally made. Last generation's instant messaging apps were nearly worthless monetarily, and are still nearly worthless even today with tons of…

People do pay for WhatsApp - the article says $1/yr although I think I paid 69p for life (approx $1) for the iphone app. If they get 1bn people paying $1 then that's a decent income. I was reluctant to pay - I'm tight like that - but I had to because my friends were on it and wanted to communicate. Though I note people are moving to Viber to some extent which is similar but free.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#43

Post by dredmorbius » Thu, Feb 20, 2014, 2:55 AM UTC

Interesting to note that WhatsApp had started circulating some overly broad and ill-formed "DMCA takedown" notices a few days back: https://github.com/github/dmca/blob/master/2014-02-12-WhatsA...

By this email, please accept this formal notice and takedown request for the following content on the GitHub site. I am starting with these requests to ensure you will take action on our request. We will have follow-on requests, as the list of infringing content below is not exhaustive.

Specifically:

The following URLs use of the WhatsApp name and logo, use of other WhatsApp content, unauthorized use of WhatsApp APIs, software, and/or services, and provision of software and services related to WhatsApp infringes on WhatsApp's copyrights and trademarks, including those related to WhatsApp's name and logo. WhatsApp's trademarks are registered in the United States and countries throughout the world.

Note that:

• Trademarks aren't subject to the DMCA.

• APIs aren't copyrightable.

• TOU violations aren't subject to the DMCA.

Given that the letter isn't clearly formatted as a DMCA takedown (though it uses some sample language) the effect is ... curious.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#44

Post by kumarski » Thu, Feb 20, 2014, 3:01 AM UTC

Just for good measure................

Activison-Blizzard – $13.9B

Alcoa – $12.2B

American Airlines – $12.3B

Akamai – $10.9B

AmerisourceBergen – $15.9

Blackstone Group – $17.8B

Campbell Soup – $13.6

Chesapeake Energy – $17.2B

Chipotle – $17.1B

Citrix Systems – $10.7B

Coach – $13.5B

Consolidated Edison (ConEd) – $16.2B

Discovery Communicatons – $19.1B

Dr. Pepper Snapple Group – $10.2B

Expedia -$10.2B

The Gap – $19B

Fidelity – $15.8B

Harley-Davidson – $14.1B

Hertz – $11.5B

Icahn Enterprises -$13.1B

The J.M. Smucker Company – $10B

Kohl’s – $11.1B

Kroger – $19.4

Loews – $17B

Macy’s – $19.6B

Marriott International – $15.4B

Mattel – $12B

MGM Resorts – $12.7

Monster Beverage – $12B

Moody’s – $17.08B

News Corp – $10.27B

Nielsen – $17.6B

Nordstrom – $11.4B

Progressive – $14.3B

Ralph Lauren – $14.2B

Red Hat – $11.1B

Royal Caribbean Cruises – $11.4B

Ryanair – $15.5B

Sherwin-Williams – $19.4B

Southwest Airlines – $14.7B

Starwood Hotels & Resorts – $14.9B

Symantec – $14.4B

TD Ameritrade – $18.4B

The Carlyle Group – $11.1B

Tiffany & Co. – $11.4B

Tyson Foods – $13.1B

Under Armour – $11.4B

Whole Foods Market – $19.3B

Workday – $17B

Xerox – $13.2B

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#45

Post by jgalt212 » Thu, Feb 20, 2014, 3:17 AM UTC

Tragedy of the commons.

Anything free will be overused. FB is paying $X per user for an overused product. Once they try to monetize (ads, higher fees, user tracking), it will quickly become underused.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#46

Post by interstitial » Thu, Feb 20, 2014, 3:33 AM UTC

Irishsteve wrote: post #21

America Online President and Chief Operating Officer Bob Pittman said: "Acquiring ICQ fits perfectly into our multiple-brand strategy. Like CompuServe, ICQ substantially broadens our reach in important markets not served by AOL-branded products. In addition to its international reach, ICQ has tremendous appeal among young, technically sophisticated Web users and there is remarkably little overlap with AOL."

Cpanel still has a section for ICQ support.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#47

Post by prewett » Thu, Feb 20, 2014, 3:36 AM UTC

kumarski wrote: post #44

Just for good measure................ Activison-Blizzard – $13.9B Alcoa – $12.2B American Airlines – $12.3B Akamai – $10.9B AmerisourceBergen – $15.9 Blackstone Group – $17.8B Campbell Soup – $13.6 Chesapeake Energy – $17.2B Chipotle – $17.1B Citrix Systems – $10.7B Coach – $13.5B Consolidated Edison (ConEd) – $16.2B Discovery Communicatons – $19.1B Dr. Pepper Snapple Group – $10.2B Expedia -$10.2B The Gap – $19B Fid…

Sobering list :)

But FB only paid $4B in cash, the rest is in stock. At a P/E of 111, I'd say FB is grossly overvalued. It's a great thing to swap overvalued pieces of paper for something, just ask AOL, which bought Time-Warner with worthless pieces of paper in 1999. AOL was a modem company in a world beginning to move to broadband. Time-Warner had actual physical cables in the ground and utility-style monopolies in most major cities, along with a bunch of movie/TV IP (if I recall correctly). Unfortunately for Time-Warner shareholders, management apparently assumed that pieces of paper labeled "stock" were equivalent to the limited-edition green and black pieces of paper labeled "$".

I estimate FB paid <= $8.5B. Which is still pretty ridiculous. If I were the WhatsApp founders, I would start selling my FB stock ASAP and buying something with some staying power. Such as perhaps one of the companies on your list :)

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#48

Post by interstitial » Thu, Feb 20, 2014, 3:36 AM UTC

revelation wrote: post #35

4. The number of times WhatsApp has through unprecedented incompetence compromised the privacy and security of its users and failed to keep even basic authenticity guarantees in what is a decades old central server model. Why muck around, they were bought because of their massive user base and user base only. They succeeded regardless of their constant attempts at sabotaging their success, and its testament of massiv…

The twitter business model never fails.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#49

Post by eru » Thu, Feb 20, 2014, 4:03 AM UTC

quaunaut wrote: post #17

umeshunni wrote: post #11

They charge $1/year with the first year free. Last year they had ~250M users and today they have 450M. So, about 50% (or 40% or 20%) of their user base is paying $1/year. So, their annual revenue is $90M - $225M depending on the assumption. Even with a $1M/employee burn rate, their op ex is Another data point on their finances - The only external funding they've taken is $8M from Sequoia in 2011. It's unlikely that t…

Profitable sure, but I'm curious what their plans for expansion on that profit is. At best right now, they can hope for $450m next year. Even if they got all of that, it'd take more than 30 years to make Facebook their money back. So there's something they're wanting to do, a means of making money, that we don't know yet. I'm genuinely curious what they're thinking about.

They could just over more `premium' services for more than 1$ per year.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#50

Post by kosei » Thu, Feb 20, 2014, 4:22 AM UTC

450. I can't believe they spent 16 billion dollars for just 450 million active users. That's $35 per user.

32. Well, they can't be acquiring the talent, because no matter how good they are, it's crazy to spend $500,000,000 per employee.

1. Speaks to the potential risk that it'll be to monetize this base and change the business strategy considering it's built on the idea of no ads and a low charge.

0. Fair enough, they created a massively successful product without any marketing. That said, not exactly sure how it translates to future profitability.