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144 pointsCoachRufus8784 comments

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I ask, cause I'm not sure- do anybody make real companies anymore?

What's your definition of a real company which excludes WhatsApp?

One that generates revenue?

They charge $1/year/user, though the first year is free.

One year ago they had 200m users. That number has not shrunk.

There is a free year, and then it seems like "everyone" gets a free year renewal.

I would not be surprised if 10% of their userbase or less had ever paid. Which is still a good number, but not the one you make it out to be.

Revenue is a part of it, but also remember that it's only a proportion of generated value. The fact that so many people use the app to communicate indicates that it's providing them with substantial value, even if the company chooses not to capture more of that value.

Having close to a half a billion MAU isn't a real company?

Yes, Whatsapp does.

Bow in the presence of a great acquisition.

http://rapgenius.com/Kanye-west-stronger-lyrics#note-40415

The numbers are staggering: 450 million users in less than three years. That's a real company. That's more users than most startups will ever see in a lifetime of use let alone daily usage.

Yea, whatsapp has a nosebleed valuation because of it's user base size and lock in effect(zuck hopes at-least, vulnerable to changes in ios and android default messenger), but i'd say its definitely real. I respect them a lot more than say groupon, because they are actually a reasonable size(just 32 engineers) for the complexity of their tech, and they provide a really useful service. Compared to say groupon which hires thousands of salespeople and provides a marginally useful service. Their success has and will continue to drive down sms price gouging, and I think that's a good thing.

That's apples to orange, you are comparing the tech employees of a tech company to the sales employees of a marketing company that needs to call its customers and prospects all over the world again and again.

I have no love for Groupon but that comparison is nonsense.

I'm just saying groupon it's a stupid company that wastes capital IMO(obviously everyone has a different idea of how capital should be put to use). If groupon actually had a good product, retailers would be calling them.

No.

Most companies are conceived with an explicit exit strategy in mind from day one, and that strategy is usually:

  SELL OUT TO THE HIGHEST BIDDER AS FAST AS POSSIBLE, AND
  RETIRE EARLY, WHILE SOME OF US ARE STILL YOUNG ENOUGH TO 
  ENJOY LIFE.

You might have a point if they hadn't previously turned down a $1billion bid from Google.

How does a rejection of a significantly smaller offer disprove the point?

$1B isn't a small offer, though.

It just means they were hungry. 1B is a relatively small offer in the world of IT IPOs nowadays.

I own a metal working company and car parts stores. I jumped from software developing to metal fabrications, I can assure you that being able to administer everything from my own erp at almost no cost is the key of my success.

This is a real company by any measure. Their revenue comes from charging users for using their app. Maybe the sentiment you are really expressing is that their revenue doesn't seem, ignoring all other aspects of the company's value, to justify the price of acquisition?

Relevant article Why Selling WhatsApp To Facebook Would Be The Biggest Mistake Of Jan Koum's And Brian Acton's Lives (2012):

http://www.forbes.com/sites/ericjackson/2012/12/03/why-selli...

Well, it makes them billionaires instantly, so they have that going for them.

It took FB 10 years to get to where it is today. Is that a process that WhatsApp wants to go through? I mean the finality usually ends in either an acquisition or an IPO; having shareholders on your mind constantly seems pretty stressful. I suppose they could've stayed private and seen what's possible.

Either way the Forbes website is visual chaos and I'm still nauseous and disoriented after reading that article.

Update for you! Hahaha, I love that you said that about Forbes.Com. Hate that site...

Selling anything for billions of dollars has never been and never will be a mistake for anyone.

Unless money wasn't driving your exit. WhatsApp isn't Tesla or Spacex though.

Despide the fact that everybody got a strange feeling when reading the name "Facebook" in combination with WhatsApp:

Congrats to the team of WhatsApp to build such a successful product in five years with a team of 32 engineers (~ $500 million/engineer). Reminder: They nearly replaced the SMS service worldwide.

Let's hope that the words by Mark Zuckerberg will be the truth and WhatsApp will be kept as an independent product in the future.

>> "a team of 32 engineers (~ $500 million/engineer)"

Only if you consider the other employees worth/value to be $0.

An article mentions that Whatsapp spent $0 on user acquisition and marketing. If that's true, then yes, it's around $500 million/engineer.

Even if the company had nonengineers, it doesn't affect the ratio between revenue and engineers. The statistic usually does not imply that engineering is solely responsible for the success. Further, it generally can be hard to determine what portion of revenue is due to engineering versus marketing/sales, since the functions work together in a dependent way to make money.

Good luck creating an app used by so many without having a stellar support team.

Clearly this team has been quite successful! I can't agree say that they have almost replaced SMS, as many people communicate with me through SMS or iMessage. I have never used whatsapp nor has anybody a requested that I use it with them. As far as other messaging, everybody I know uses kik or Skype.

The fact about WhatsApp that blew me away is that they have 72% DAILY active users. I can't think of any other service with that kind of engagement. Even Facebook must be impressed at how often people come back to WhatsApp.

Facebook is around 60% DAU I think.

It's just the nature of the service. It's a text messaging app. When you get a text you open it. I bet gmail has a similar active user ratio.

Of course, but it's amazing that a start up with such basic features has gotten to the point where you can compare it to texting or email as far as engagement.

What do you mean? IT IS TEXTING! It's texting via a TCP connection and with the help of Apple's and Google's push messaging servers instead of going through the SMS channel of a GSM network. As a product it's the exact same as SMS/MMS. Just the technical implementation is different.

Well that different technical implementation made it much more attractive to millions of people worldwide. Sounds like a win.

Also I don't think they use Apple and Google's push servers since this also runs on J2ME devices, Windows phone, Symbian, etc.

Of course they're not using Apple's push servers on J2ME devices. They're using it on iOS. Of course they're not using Google's push servers on Windows Phone devices. They're using it on Android.... How else would you get notified?

Also I never said it wasn't attractive. I just tried to explain that conceptionally as a product it's the same as text messaging and should thus have similar Daily to Monthly User ratios.

Think how many active daily users the global phone network has. And how many of those calls don't have ads injected into them.

People use it as a cross-plattform SMS replacement where I live, so that number isn’t that surprising to me.

You're kidding right? It's text messaging. Do you have any idea what kind of engagement phone calls have?

> I can't think of any other service with that kind of engagement.

SMS ?

I'd pay $19B for SMS.

~$40/user. Skype, second time, sold for ~$15/user. Time Warner just sold for ~$4/user.

Good thing for FB bank account that "OTT messaging" is just a fad while the carriers get their acts together ; )

This purchase is large enough that the carriers might notice it but they will be completely unable to follow through on doing anything about it.

Is it even possible to monetize the app to such extent? I tried to use it a few times but never managed to see any hard money potential inside.

You "monetize an app like that" by selling it to FB or the stock market.

Aka bubble

Here’s what will change for you, our users: nothing.

Here's what will change for us: http://i.imgur.com/3Px9d9K.jpg

That's what I don't get. If nothing will change for the users, then why did Facebook acquire them? Why did they bother? Just so that they can run statistics and include WhatsApps numbers in there as well because they now belong to the same organisation?

Diversification. Aquire as many relevant products as you can to stay, well, relevant. If Facebook.com is losing users then it makes sense for them to use the money they have now to buy a company that's gaining users.

Then why WhatsApp over thousands of other companies they could have acquired? No, there has to be another reason and there is no way WhatsApp is not going to change because of this. Their saying it won't change is like the like a corporate VP stepping down "to spend more time with his family".

Viber has 200M users as of May 7, 2013. Rakuten purchased them for $900M on Feb. 14, 2014.

Very similar apps. Although WhatsApp does ask for $0.99 after 1 year usage. Not sure that is worth the $18.1B difference in price?

WhatsApp is dominant player, and so they can leverage a higher ask. Not sure it's going to save Facebook in the end though.

"Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us.

Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission."

Should be followed with this then:

"This is why we are not going to keep any money to ourselves and invest in our infrastructure and employees."

Hate CEO bullshit, just be frank.

So much about not selling ads and collecting personal data then I suppose? I actually thought they meant it. [1]

Now I'm really excited about heml.is.

[1] http://blog.whatsapp.com/index.php/2012/06/why-we-dont-sell-...

Assuming this is an acquisition, it's a poor one. Facebook undoubtedly paid too much for this.

Aand there goes my 3 years advance payment for service to waste.. Just Deleted WhatsApp account

"Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us."

That's probably a lie. That wasn't the first thing they thought before starting WhatsApp.

This blog post is pure bullshit. They built a new version of ICQ, luckly people joined and network effects made them big -- not their competence or the quality of the product. They shouldn't be proud of their work.

Ah yes, this reminds me of that old joke...

> Why did Facebook buy WhatsApp?

Because Snapchat isn't for sale.

Or because the daily messaging volume through Facebook-owned services now surpasses global SMS volume.

Was WhatsApp really that successful? I can't imagine it caught on with many young adults or older who have no trouble paying for SMS given the convenience. Is their demographic comprised of kids?

Not in US, but it's absolutely big in Asia.

http://gigaom.com/2013/11/26/study-facebook-messenger-still-...

Looking at Whatsapp's legal info some notable info, nothing too surprising:

* "You expressly acknowledge and agree that in order to provide the Service, WhatsApp may periodically access your contact list and/or address book on your mobile device [...] You hereby give your express consent to WhatsApp to access your contact list and/or address book for mobile phone numbers in order to provide and use the Service. We do not collect names, addresses or email addresses, just mobile phone numbers."

* Section 3C concerning not hacking them and giving a list of tools you definitely can't use under the agreement.

* "If you are under 16 years of age, you are not permitted to use the WhatsApp Service."

* "If another user has your mobile phone number stored in their mobile phone address book or contact list, they will be able see your status information unless you have chosen to block such user."

* "The WhatsApp Site and Service are hosted in the United States and are intended for and directed to users in the United States. If you are a user accessing the WhatsApp Site and Service from the European Union, Asia, or any other region [...] you are transferring your personal information to the United States and you expressly consent to that transfer and consent to be governed by California law for these purposes."

* "In the event that WhatsApp is acquired by or merged with a third party entity, we reserve the right to transfer or assign the information we have collected from our users as part of such merger, acquisition, sale, or other change of control." [they go on to say that they may not be able to control use of information in cases which include "reorganization"]

http://www.whatsapp.com/legal/

Reading between the lines it seems you can hack them with fiddler (or the like) and that the legal info is saying "your info is definitely being monitored by USA governmental groups"?

What could be the purpose of this aquisition if nothing changes? I suspect WhatsApp won't change immediately but after some time they do small changes towards a facebook integration.

19bn, 16bn of which is inflated Facebook stock. Zuckerberg knows what he is doing, he's playing the AOL tactic, better use that stock to make some acquisitions before it tanks.

Glad to see nothing will change, I hope that will be true on the long run.

Is it ever true, though, in these situations?

Instagram is pretty much the same.

Except for any promise of privacy.

Today I started using Threema. Secure, group chat, picture stuff, and privacy seems alright.

If you really want secure , TextSecure is the best in that regard - according to crypto guys.

Telegam FTW!!!

After this message they raise their glasses and make a toast

That's splendid news!

I firmly believe that it is consumer apps, and consumer apps alone, that can give blazing home runs like this one.

Despite the risk, numerous deaths, blood and corpses all over the place. Somehow valley since last September had been running after enterprise junk but that's not where the gems lie (My opinion of course!). There is money in enterprise but no home run possible over there.

Edit: I like the way the edited title of this thread: Facebook (whatsapp.com).

It depends what you consider a 'home run'. I consider building a sustainable business that will generate revenue and create products for the next 10/20/30 years a home run. I would consider building an app, having no business model (admittedly Whatsapp app was generating revenue although I doubt it was much), and being lucky enough to get acquired by a company willing to pay stupid amounts of money to kill a competitor and keep you away from other competitors the furthest thing from a home run.

"the furthest"? :) Really, that's "the furthest thing" from a home run that you could think of?

Agreed. But a home run for most VCs would likely be 10X+ return stories than a revenue generating machine that would mature up in 10+ years.

> admittedly Whatsapp app was generating revenue although I doubt it was much

I imagine they made ~$100m last year (400m active users, I'm guessing 100m of which using for more than a year), which is almost guaranteed to go up. For a company with ~50 employees how is that not sustainable?

> It depends what you consider a 'home run'. I consider building a sustainable business that will generate revenue and create products for the next 10/20/30 years a home run.

10/20/30 years? Look those aren't the days of Henry Ford or J.D.Rockefeller.. tech is changing ever-faster at an exponential rate. You wanna create products for 30 years, none of which will live on their own much longer than 3-4 years (if lucky/successful in their market) because everything is constantly changing? I agree: flipping a messenger toy to FB is a "lottery win", but "a sustainable business that will generate revenue" for 30 years, what is that supposed to be in today's environment? That's a bit of a pipe dream too, just the "nobler" one.

Thats unfortunate.

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