Numbers That Explain Why Facebook Acquired WhatsApp

#1

Post by benworthen » Wed, Feb 19, 2014, 10:24 PM UTC

Numbers That Explain Why Facebook Acquired WhatsApp
sequoiacapital.tumblr.com

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#2

Post by zt » Wed, Feb 19, 2014, 11:22 PM UTC

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.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#3

Post by dm8 » Wed, Feb 19, 2014, 11:31 PM UTC

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

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#4

Post by panarky » Wed, Feb 19, 2014, 11:32 PM UTC

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...

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#5

Post by brownbat » Wed, Feb 19, 2014, 11:42 PM UTC

I'm astounded at how frequently people are apparently making breakthroughs in sending raw text between people.

I keep thinking that's a mousetrap, and people somehow keep making money off of* better ones.

Shows how much I know.

* Or at least building huge userbases on...

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#6

Post by rwissmann » Wed, Feb 19, 2014, 11:48 PM UTC

Facebook is running 2b+ in Ad profits at an 8x YoY growth. If owning social networking and communication stays this profitable and Whatsapp helps solidify Facebook's dominance, the purchase is entirely justified. Remember, Whatsapp basically killed SMS outside the US.

We always scold people and companies for not taking huge bets once they become successful. Huge props to Zuckerberg for staying hungry and willing to take risks.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#7

Post by josephjrobison » Wed, Feb 19, 2014, 11:49 PM UTC

From 5 minutes of reading it seems that it's huge in overseas markets where people want to avoid the cost per SMS message fee, am I correct?

If you have a standard plan with the phone giants in the US, all calls and texts are generally unlimited, but you pay for data now. Is that why it's not as big in the US?

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#8

Post by ulfw » Wed, Feb 19, 2014, 11:51 PM UTC

Those numbers don't explain why FB bought them. They don't really explain paying $19,000,000,000 at all.

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#9

Post by jackgavigan » Wed, Feb 19, 2014, 11:54 PM UTC

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

Re: Numbers That Explain Why Facebook Acquired WhatsApp

#10

Post by jeremy_k » Wed, Feb 19, 2014, 11:58 PM UTC

josephjrobison wrote: post #7

From 5 minutes of reading it seems that it's huge in overseas markets where people want to avoid the cost per SMS message fee, am I correct? If you have a standard plan with the phone giants in the US, all calls and texts are generally unlimited, but you pay for data now. Is that why it's not as big in the US?

Exactly, Europe is an inverse of the US when it comes to SMS and data prices.