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America Online to Buy Internet Chat Service for $287 Million (1998)

nytimes.com

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Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#51

Post by thrush »

ggreenbe wrote: post #47
ama729 wrote: post #23

Earlier quoted context omitted.

> WhatsApp is a real company with real monetization strategies. Yes and no, they only got 20 millions in revenue last year, not even profit: http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-...

I'm not sure that's a fair comparison to make. Most of their revenue comes after the first year. With the growth they had last year and current growth, their revenue should exponentially rise over 2014 and 2015. Also, I wonder if being bought by facebook could help reduce hardware costs by utilizing facebook's infustracture

You might be right about reduced infrastructure costs, but remember that Revenue is incoming cash before costs like infrastructure and other overhead.

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#52

Post by chavesn »

ggreenbe wrote: post #47
ama729 wrote: post #23

Earlier quoted context omitted.

> WhatsApp is a real company with real monetization strategies. Yes and no, they only got 20 millions in revenue last year, not even profit: http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-...

I'm not sure that's a fair comparison to make. Most of their revenue comes after the first year. With the growth they had last year and current growth, their revenue should exponentially rise over 2014 and 2015. Also, I wonder if being bought by facebook could help reduce hardware costs by utilizing facebook's infustracture

> With the growth they had last year and current growth, their revenue should exponentially rise over 2014 and 2015.

You're assuming:

A) Their growth stays the same as it is now.

B) Users on year-long free trials will convert to paying users.

These are crazy assumptions absent years worth of data.

Not saying WhatsApp doesn't have something good going, but in what world have either of the above things ever been predictable in this short of time?

Especially to validate the claim "revenue should exponentially rise"...?

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#54

Post by 89vision »

Implicated wrote: post #44
alaskamiller wrote: post #15

Earlier quoted context omitted.

To contextualize requires relativity. ICQ in 1999 had about 45 million users. There were only 248 million internet users back in 1999. That's 18% of mostly international users. AOL was optimistic. So much so this is the actual response when they beat the street during their earning reports. "(ICQ is) growing like a weed," said AOL President Bob Pittman. "Monetizing it" will be "relatively easy," he added. WhatsApp ha…

10554049 how do I remember that?

2476319

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#55

Post by russell_h »

chavesn wrote: post #52
ggreenbe wrote: post #47

Earlier quoted context omitted.

I'm not sure that's a fair comparison to make. Most of their revenue comes after the first year. With the growth they had last year and current growth, their revenue should exponentially rise over 2014 and 2015. Also, I wonder if being bought by facebook could help reduce hardware costs by utilizing facebook's infustracture

> With the growth they had last year and current growth, their revenue should exponentially rise over 2014 and 2015. You're assuming: A) Their growth stays the same as it is now. B) Users on year-long free trials will convert to paying users. These are crazy assumptions absent years worth of data. Not saying WhatsApp doesn't have something good going, but in what world have either of the above things ever been predic…

I don't think it matters that much. Does anyone think that Facebook acquired WhatsApp for their revenue?

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#56

Post by higherpurpose »

slg wrote: post #7

I assume the motivation for pulling this out of the archive is the WhatsApp purchase. However, I don't think this comparison is truly fair. Not only is WhatsApp monthly adding over twice the userbase ICQ had at the time of purchase, but it is also actually collecting revenue from them. WhatsApp is a real company with real monetization strategies.

Whatsapp makes extremely little revenue right now - like it would take Facebook hundreds of years to recuperate what they paid [1]. Even if it doubles in user-base and grows by an order of magnitude (on top of that) through some magic Facebook monetization strategy, it would still take them decades.

But if we discount the fact that Facebook mostly paid their own "worthless" (mostly overhyped/overvalued) stock for this overvalued Whatsapp acquisition, then maybe with an order of magnitude profit, they could recover the money somewhere between 10-20 years.

For Facebook's sake, they better hope some other new disruptive technology doesn't come along in the next 10-20 years, because they won't be able to keep this sort of acquisition strategy for long.

I've noticed some articles call Facebook/Zuckerberg "smart" for noticing Whatsapp is disrupting them - if you can call noticing a disruption so late in the game that you now have to pay $19 billion to buy it, and with almost zero expectations of recovering the bulk of the money in the next decade.

What would be much smarter is using your own engineers to build that next disruption, or at least buy the ones appearing very early in the game. Zuckerberg could've bought tens of such apps in their early days a few years ago, and he'd still be much better off today. He could've owned Whatsapp, Kik, Viber, Line, and many others for much less.

[1] - Analysis of Whatsapp's revenue and profit when it had half the user-base it has today:

http://www.quora.com/WhatsApp-Messenger/How-much-revenue-is-...

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#57

Post by jgalt212 »

slg wrote: post #7

I assume the motivation for pulling this out of the archive is the WhatsApp purchase. However, I don't think this comparison is truly fair. Not only is WhatsApp monthly adding over twice the userbase ICQ had at the time of purchase, but it is also actually collecting revenue from them. WhatsApp is a real company with real monetization strategies.

I dunno about that. If you adjust for the number of internet connected people in 1998, ICQ was then just as much of a big deal as WhatsApp is now.

Re: America Online to Buy Internet Chat Service for $287 Million (1998)

#59

Post by josu »

securingsincity wrote: post #12
securingsincity wrote: post #11

$19 billion and whatsapp has 465 million users, and ICQ was purchased for $287 million had 12 million users at the time. $40 dollars per user vs $24 dollars per user. Now if the goal were to acquire users. its far more likely that facebook would have a huge overlap in the number of users it has already and those on whatsapp. That means maybe a cost of acquisition at let's completely speculate $100 dollars per user(ma…

oh and the fact that whatsapp actually is very profitable

20 million in revenue last year is very profitable? Twitter makes that in a day.
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