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Comment by josh2600 | Hacker News Reader

For everyone saying this is a waste of money, consider the commentary around Instagram at $1B. Basically the world said that this was a horrible acquisition at the time, but in retrospect, buying Instagram was quite cheap. Buying your closest competitor for less than 15% of your market cap is usually a good idea.

Fast forward to today. What'sapp is the dominant messaging application across the world. Carriers hate it but they can't do anything to stop it. Facebook hates it and no matter how much they improve facebook messenger, they keep falling behind.

This represents a massive existential threat to Facebook's business: engagement. To kill their closest competitor for, again, less than 15% of the company, is a rational decision.

Since Viber and What'sapp have both exited the market, I think it's time for someone to build a new messaging app. There's a lot of room in a once incredibly crowded space.

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Your argument makes perfect sense when you're talking about real companies, with R&D, marketing, technology and all that. GM buying Tesla for 15% of its worth might make sense. But in the social space, companies are entirely seasonal, the barriers to entry are none, there's no way to predict user traction or behavior.

I understand this is how Facebook intends to keep itself at the top of the social heap, but with recent valuations (starting at Instagram), it'll be incredibly difficult to maintain this for long.

Facebook and Twitter are seasonal?

Where the seasons extend over a few years - yes. MySpace, Friendster, Slashdot, Hotmail etc. were the same.

Cyclical

Cyclical means they'll come back up. Somehow I doubt that's the case with MySpace, bebo etc.

Yeah but seasonal implies a (yearly) cycle too.

Plants that die completelyaway at the end of each growing season are called 'Annuals' (vs. perennials), but I think that term would be too confusing to be useful ;)

Yea like search. See altavista, goto.com, inktomi, google...

I am very happy with your argument. I will use this argument in the future.

Slashdot? Was this because of Digg?

Usage fluctuates. The value is in the users not necessarily the company or the tech. When users start bailing to another platform what's left?

Couldn't agree more. I guess most of us remember the MSN messenger. Back then me and my teenage friends thought it would stick around forever - up until skype came along.

Exactly. So what will they buy next? Snapchat for 50 Billion?

I'm not sure that sort of relativism makes sense. Making a really bad purchase doesn't make your earlier merely bad purchases less bad.

Don't worry, when they pay $25B for Snapchat this will also seem cheap!

You really think Instagram was a bad purchase.

In so much as none of this handy-wavey social business models have ever proven to have sustainable profitability, yes.

No one can tell, really. Arguably, Instagram was bought for what it could have been, not for what it was.

Has it made any revenue at all? Let alone 1B?

Are they even getting more users?

What is the analysis that concludes that buying Instagram for that price was cheap?

The only thing that Facebook does not have today (post acquisition) is a good Video Conferencing app. That's the only reason why I use Google Plus - for Google Hangouts. A Google Hangouts competitor that has it's features (multi-party unlike Skype) would be worth building.

Skype has that. Yes, it's paid, but so is Whatsapp.

It also tells the next Whatsapp that they can hold out for $20B.

How much time is left on the party clock? I have no idea, but typically when things are getting really crazy like they are now, the clock is almost out.

> I think it's time for someone to build a new messaging app

And that it precisely what I am helping to do!

We have built a Whatsapp-style messenger, with the added benefit of being able to make free calls to US, Canadian and UK numbers. We also launched a data-SIM plan last week for $15/month. Check it out: http://upptalk.com and http://uppwireless.com

Plus, if FB sold Instagram to someone else (like the public) today, they'd make a massive return on 1 billion dollars. Massive.

It could also be intentionally high to price others out of the market. If this is the new going rate for users, there's not many companies out there that can make acquisitions like this.

why ? viber and whatsapp are still there and will be in the future, i dont see new room for a messaging app.

Some years ago the dominant messaging apps were icq and aol messenger and msn messenger. I think almost every new generation just uses their own messenger.

I think the number of active users is what makes this comparison invalid. At the time of AOL's acquisition of ICQ it had 20 million active users¹. WhatsApp has 430 million. In order to eclipse WhatsApp, a competitor would have to get substantially more than 10% of the entire global population.

ICQ was dominant in its heyday, but the game wasn't won yet, so it was theirs to lose. In some sense that's still true: we have another 4 billion people yet to join the game. But we're nearing the endgame and as we get closer to the "everyone already has a good messaging solution" line it's going to get harder and harder for an upstart to come in and eat everyone's lunch.

¹ http://ec.europa.eu/competition/mergers/cases/decisions/m184...

I agree, but there are still a few things Whatsapp lacks, in particular convenient end-to-end encryption that might not be feature for the mass market, but is probably interesting for enterprises.

>In some sense that's still true: we have another 4 billion people yet to join the game.

and tens of billions of various sensors, smart toasters/cars/milk cartons ... after that

Except the number of active users reinforces his point, it doesn't make it invalid.

>At the time of AOL's acquisition of ICQ it had 20 million active users¹

Or 40% of the internet using population of the world.

>WhatsApp has 430 million

Or 16% of the internet using population of the world.

40% is clearly closer to "won" than 16% is.

> 40% is clearly closer to "won" than 16% is.

No, because the internet was expanding rapidly, so it wasn't won at all. That's like saying a basketball game is won because one of the teams got 100% of the points awarded in the first minute.

My point is that as "number of happy messaging users" approaches "number of humans" things will get harder and harder for a messaging upstart. Whoever I was responding to was suggesting that there will just be a long chain of succession forever and ever. I'm saying I think surpassing the encumbants was easy five years ago, is still doable today, but will be quite hard in 20 years.

Presumably IPv6 will be a major change - that will allow every person to have an IP address for every device they have and retain that perpetually. Then we can have true direct messaging and use open protocols (XMPP?) each person choosing a client to manage their end; like how email works now.

If you can send from Whatsapp to FB messenger, Viber, Skype and whatever - and vice versa - that's surely going to democratise messaging?

>that will allow every person to have an IP address for every device they have and retain that perpetually.

Wait... what? has someone implemented IP address portability while I wasn't looking? I mean, there was lots of talk a few years back, but my understanding is that the facts on the ground are such that when you switch ISPs, well, you are switching your IPv6 address (unless you are large enough to speak BGP)

OK, yes, "retain continuity of addressability for every device" then - you'll need something at your end to push a signed notification out indicating your IP address change but there's no reason that can't be seamless like texting your contacts a new phone number but without any interaction needed.

>OK, yes, "retain continuity of addressability for every device" then - you'll need something at your end to push a signed notification out indicating your IP address change but there's no reason that can't be seamless like texting your contacts a new phone number but without any interaction needed.

so, you mean like dynamic updates to DNS? tsig-signed nsupdate? It's old technology, and would do what you describe (well, after dns caches empty. Yes, you get to set the TTL, but even with a short ttl, I wouldn't count on a dns update percolating down in less than two hours.)

Of course, there are problems with the end-to-end model you describe, where every device is publicly accessible. (Don't get me wrong, there are strong advantages to the model, too... but there are problems) I think I'd feel a little weird, a little naked without a statefull firewall in front of my consumer devices.

>percolating down in less than two hours //

How often are you planning on changing your domestic ISP?

If changing ISPs is your only use case, it works fine. But if you expect to keep the same name when you walk down to the coffee shop? Yeah, you're firing up the VPN.

I mean, nsupdate is great; I use it all the time, but it doesn't really solve the problem that the 'IP portability' folks were going or.

I harken another commenters words when I observe that this attitude would've prevented the formation of Viber and What'sApp had they simply accepted the status quo of the time. The same could be said of Google competing with Alta vista and Yahoo.

When a large organization acquires a small one, the small organization gains scale and loses the ability to turn on a dime and to compete in the market with agility. It will take 2-4 years to spin up a real What'sapp competitor, at which time the market should be ripe for disruption.

Just my $.02.

Source: I am absurdly deep in the messaging/telecom world.

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