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Comment by el_nahual | Hacker News Reader

And yet their purchase of WA shows Zuck's ruthlessness and business genius. He saw his team fail to beat WA, he realized they would never beat them, and he made a decision to buy WA for what was an insane price.

16 billion dollars for a 24(?) person company with no revenue.

I think 99% of executives on earth wouldn't have made that decision. They would have believed their teams that said victory was around the corner, or deluded themselves into thinking success was inevitable, or would have been afraid to demoralize their team, or would have rationalized away why messaging wasn't important after all.

He just acted and won, for what now seems like a bargain.

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It was a smart acquisition for sure, but "ruthless business genius" is a bit of hyperbole imho. FB's market cap was in excess of 200B at the time and they were growing like crazy. 16B on buying what they had failed to build internally and needed as a moat around their core business seems pretty straightforward. Mere mortals like us just get caught up on all the extra zeroes these guys are playing around with.

Exactly, spending 10% (!) of your business to buy something that adds no revenue, was built by 20 people, where your team is working on an alternative that is "better", "just around the corner", etc is actually insanely counterintuitive. If it were one percent of the business, sure, play defense, whatever--but 10%, over an abstract notion of "defensibility" is a really hard pill to swallow.

It would be amazing to know what the FB board thought at the time, and if zuck had to push hard for the transaction or not .

Zuck controls the board though! Majority voting rights. Still, have to give it to him. Need guts to make such a call. WA and Instagram, the Crown Jewels of Meta.

Then again, nobody wins all the time (cough oculus cough).

Maybe we're too early to talk about Oculus, there might be a reason why Facebook then is called Meta now.

I don’t think Facebook’s social graph / ad-based business model can be connected to a successful hw/sw XR experience.

However, Oculus is way too early to call as a bad bet.

Oculus could be like late model, pre-touchscreen Blackberry.

Where it is proving potential and demand for a new type of connectivity, but unable to leap forward far enough and fast enough to counter an entrance from Apple.

It could pivot its business model and become the most successful XR platform for Android users, consolidating support from Epic, Snap and others.

If Zuck wrote that email in 2013, he knows the headwinds against this direction and I don’t think he’s reached the Bowling Alley scene of There Will Be Blood quite yet.

I surely wouldn't want to bet against Zuck, having bought multiple Quest2s, it surely has hit the product-market fit! Unless Apple steals their lunch coming year, Meta is going to be a big hit.

The quest2's standalone casual gaming capabilities are great - it's easy to setup a party guest for a round of beat saber in a couple of minutes, reminiscent of how accessible the Wii was

if the rumors of Apple's device costing $2000 are correct, they're not going to push the Quest out of that market.

I own the Quest 2. Right now it's still a gimmick. It comes out of the case for about 45 minutes a month.

What's gimmicky about it?

There are a significant people who spend tbe majority of their waking hours in VR already, and it's entirely still in early adopter phase.

Lots of people found smartphones to be a gimick early on too.

Not sure what you allude to with Oculus, but the Oculus Quest is the best selling VR headset ever and is growing like crazy. With their research, they've also pushed the technological boundaries (things like inside out tracking, the new pancake lenses coming with Cambria by the end of this year, passthrough).

I truly believe that VR headsets will become the major computing platform. Not in the next 5 years, and not overnight, but eventually.

They sell Quest units at a loss and absolutely nobody is using VR to interact with any of Facebook's properties in a meaningful way. As of right now, it's a total distraction to their core business.

Granted, Oculus makes fantastic products that are making VR more accessible. However, as a business, it has been investment heavy[1]. Meta continues to make 10s of billions of dollars worth of investment to build an ecosystem around it.

I don’t think Zuck foresaw the level of investment he’ll need to make before turning profit.

Oculus (and the “Metaverse”) is a 10-20 year play, betting on people changing their habits and using VR as their primary medium of engagement online. They’re trying to build an iPhone/iOS like integrated hardware and marketplace experience, but it remains to be seen if they’ll be profitable as a business.

[1] https://www.androidcentral.com/despite-quest-2-sales-success...

You're giving him way too much credit by underestimating grossly what the value of WhatsApp was: around 0.6 billion users.

It's the exact same reason why Microsoft bought Minecraft for 2B. Not because the game was worth anything near that, but because the community was.

> Exactly, spending 10% (!) of your business to buy something that adds no revenue, was built by 20 people, where your team is working on an alternative that is "better", "just around the corner", etc is actually insanely counterintuitive.

It's not, and Facebook of all companies knows why. What they have is not some stupendous, irreplaceable technology. What they have is users and their relationships. That's how they killed myspace, not with revenue, not with their employee count, and not with their masses of technology, but with their users and the network effect. And that's how they will be killed.

https://news.ycombinator.com/item?id=7266618

You don’t need to respect him but continuing to disregard the intelligence of people you’re against (or not ) arbitrarily isn’t a smart move. Zuckerberg has proven beyond doubt that he’s more of a visionary than all other tech bro cEOs he gew along side.

In addition to the agreed price of $16B, Facebook added $3.6B to retain employees. WhatsApp had 55 employees at the time [0]. Near the end of the referenced article is an interesting comparison of different prices/employee for other acquisitions.

32 of the employees were engineers [1].

[0] https://theconversation.com/whatsapp-bought-for-19-billion-w...

[1] https://india.sequoiacap.com/article/four-numbers-that-expla...

>I think 99% of executives

That is giving too much credit to 1% of executives, I am willing to bet 99.999% wouldn't have made that decision.

Although arguably speaking, executives are managerial mindset. Which is very different to entrepreneur.

WhatsApp had revenue; part of their “what could have been” tragic narrative was they charged $1/yr, iirc.

Most of users never paid it, and skeleton of the team they had was supported also by contractors, and most importantly, ignoring any abuse. That was ok in those days, but it wasn’t sustainable as they grew. Dealing with abuse, spam, misinformation is very costly, even when you’re e2ee.

what is misinformation?

It’s when you disagree with me.

I don't trust big tech to regulate truth, but let's not dismiss misinformation with such broad strokes.

There are deliberate attempts by politically and monetarily motivated groups to spread objectively false propaganda. FUD/HODL to mislead investors, conspiracy theories to sway public opinion, pseudoscience to peddle ineffective medical treatments... The people doing this effectively aren't individuals disagreeing with mainstream discourse, they know exactly what they're doing.

https://en.wikipedia.org/wiki/Indian_WhatsApp_lynchings

According to Wikipedia: "Misinformation is incorrect or misleading information presented as fact. It is differentiated from disinformation, which is deliberately deceptive."

https://en.m.wikipedia.org/wiki/Misinformation

> shows Zuck's [...] business genius

> I think 99% of executives on earth wouldn't have made that decision.

We conclude, 99% of executives are geniuses. I just feel like the term 'genius' gets thrown around inflationary. Being successful != being a genius. There is more to it (it actually isn't even a requirement) . At least I want to believe that.

> 16 billion dollars for a 24(?) person company with no revenue.

You are minimizing the impact of WA….. by a lot. At that time, almost all the smartphone users in India were using WA. The transaction gave FB all of those ~half billion users in just one shot.

It’s notable here that none of the founders of IG and WA are with Meta today - due to ethical differences.

Fair point, but he also had the opportunity to buy Twitter for 500m and passed on it.

He knew it was all bots then and still is now :)

Is it really a bargain though? What does FB get out of WA?

A chance to monetize billions of users. There’s not much else to it.

Contacts and metadata. Who knows who and how often they talk. Good for building shadow graphs.

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