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Numbers That Explain Why Facebook Acquired WhatsApp

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Re: Numbers That Explain Why Facebook Acquired WhatsApp

#61

Post by sschueller »

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…

I have been using whats app for way more than a year and never had to pay the $1. They would tell you how long you have left but when it was up it would just go on for another year.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#62

Post by edwintorok »

naterator wrote: post #15
jackgavigan wrote: post #9

The nmbers are actually irrelevant. The key thing is that Whatsapp has the potential to become a rival to Facebook (or be acquired by some company that seeks to compete with Facebook). Facebook needs to avoid that at all costs, so is prepared to pay whatever it takes to acquire potential rivals, thus removing the threat. See https://news.ycombinator.com/item?id=7267516

You know, since I heard the news I kept hearing people make that argument and I thought, "But Whatsapp and Facebook are completely different products and markets." ... And then I realized that the only thing I use Facebook for is keeping in touch with people. And Whatsapp could easily fill in for 80% of what I do on Facebook. Indeed, they are trying to neutralize competition. Sadly, I remember the days of Microsoft's…

It surprises me that there people still using WhatsApp given its bad security, and having to pay for it after a year? What keeps people from switching to other alternatives? Doesn't Telegram/Textsecure etc. offer the same, while being completely free?

But I guess Facebook acquiring them explains it: I don't use Facebook either, so now I'm even less inclined to use WhatsApp.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#63

Post by kjackson2012 »

derekchiang wrote: post #18
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…

The post mentioned that all WhatsApp's early competitors benefited through advertising, while WhatsApp dedicated to keep the UI clean, and earn revenues by charging users one dollar a year.

No. It's not $1/yr. it's $1. That's it. There is no recurring revenue stream. That's what makes this even more insane.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#64

Post by pi-err »

panarky wrote: post #4

From WSJ liveblog of the FB-WA conf call: “Monetization is not going to be a priority for us,” Koum says. “We’re focused on the growth.” He says he’s looking ahead 10-15 years. http://blogs.wsj.com/moneybeat/2014/02/19/live-blog-the-face...

Good link.

> "Mr. Zuckerberg says the deal fits into Facebook’s journey to become a mobile company."

Can you morph from desktop to mobile? Who succeeded in this? I wonder what's the price tag on previous pivots to mobile.

Apple - mostly organic, mini acquisitions. Possibly $3-5b for iDevices development?

Google - half organic with some big (failed) acquisitions (Moto). Possibly $10b net

MS - mostly acquisitions. Possibly $15b including Nokia.

FB - mostly acquisitions. Total "journey" cost so far: ~$20b

This certainly feels like FB is walking in MS steps.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#65

Post by niekmaas »

dm8 wrote: post #3
zt wrote: post #2

Let's assume that Sequia owned 25% of WhatsApp for their $8M investment. That means that they turned $8M in to $4,000M in three years.

This investment must've returned their entire fund

I assume they have to pay taxes over this.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#66

Post by vayarajesh »

If facebook promised to let whatsApp stay as an independent product and not pollute it with ads then why did facebook purchase it in the first place. They are not going to integrate whatsApp as a part of facebook messenger. They might make something else something all together but still a costly price to pay whatsApp to make whatsApp what its already doing. (could be a different reason to take out competition, either way a pretty expensive agreement.)

One thing is sure, any app which connects a billion users, facebook will go after it.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#67

Post by Grue3 »

jackgavigan wrote: post #9

The nmbers are actually irrelevant. The key thing is that Whatsapp has the potential to become a rival to Facebook (or be acquired by some company that seeks to compete with Facebook). Facebook needs to avoid that at all costs, so is prepared to pay whatever it takes to acquire potential rivals, thus removing the threat. See https://news.ycombinator.com/item?id=7267516

How is Whatsapp even remotely the same thing as Facebook? Were SMS ever considered to be a rival to Facebook?

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#68

Post by josefresco »

Love how the article repeats how much the founders hate advertising yet their new owners are purely in the advertising market. I guess when someone backs up a truck load of cash your principles go flying out the window. How long until daddy Facebook starts asking for WhatsApp for more revenue via ... ads? I guess that would be around the time the founders cash out and start looking at their next startup.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#69

Post by ckuehne »

oevi wrote: post #60
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…

As a daily WhatsApp User myself, here are the reasons why I prefer it over other similar messenger services: 1. It's the facebook of messengers (now it's just facebook...). In most of Europe an Africa there's a 90% chance , that your friend with a smartphone has also WhatsAp installed. Even the older generation (40+) uses it frequently. In Africa, they even have a song about it [1]. 2. Cross-Platform: It's available…

> In Africa, they even have a song about it

They also have a song about it in Germany. It's called "Whatsapper": http://youtu.be/Rxb2A4uASqc

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#70

Post by theintern »

kjackson2012 wrote: post #63
derekchiang wrote: post #18

Earlier quoted context omitted.

The post mentioned that all WhatsApp's early competitors benefited through advertising, while WhatsApp dedicated to keep the UI clean, and earn revenues by charging users one dollar a year.

No. It's not $1/yr. it's $1. That's it. There is no recurring revenue stream. That's what makes this even more insane.

On Android at least it's $1 per year, I'm looking at the payment page right now that offers 1 year for $1, 3 for $2.67 and 5 for $3.71.

That said, I've been using it for years and have never paid a cent. Each time as the free year has about to run out, they've extended it.

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