I don't know if WhatsApp is a good buy for Facebook or not. But I do remember when people cried "bubble" at Google for purchasing YouTube (after all: it was too much, it was only valuable because of illegally copied content, there are hundreds of video sites, TV companies can do the same thing), and now they look pretty silly.<p>$16B ($1B) for a hardly profitable mobile app (video sharing site) seems stupid. $16B ($1B) for the future of telecoms (TV) world wide seems a bargain.
Long time lurker, first time poster here. There are tons of factors to this deal, but here's a simplistic take.<p>If:<p>(Google acquires WhatsApp and builds from its existing social network of 450m active users to form a mobile version of Google+ on steroids)<p>And:<p>($19Bn FB investment) minus (Actualized FB profit from WhatsApp over 10 years) is greater than (Potential lost profit to Google+WhatsApp in the social networking space)<p>Then: Buy WhatsApp<p>I also think its been largely undiscussed that WhatsApp was a company desperately wanted by both Google (for a, finally, serious attempt at competing in social networking) and FB (for a bunch of reasons, as well as defending against a potential Google acquisition) really helped to significantly propel this deal valuation.
Facebook is doing the right thing by diversifying their portfolio. They've seen how quickly a social network can dry up and are wisely using their capital to avoid ending up like myspace.<p>If you really think about it there's not much more they can do with their original platform without upsetting some of their users. It makes much more sense for them to overpay for a product with traction than to try and spin something off of their original brand (last time they tried it with the Facebook phone it was a total flop).
I don't see much analysis of the obvious underlying motive: destroying the bargaining power (SMS) of the phone carriers, who are currently extracting vast sums of money from (mobile) Facebook users.
We are, but I find it distasteful how people are reacting to this deal. I think a lot of people really don't understand exactly how popular this thing is. Who cares if people in India use it, I haven't seen it in my personal little bubble so it must be pure hype.<p>People are taking out their feelings about other aspects of the industry and the economy on this deal. If you're one of the people bitching about how startups focus too much on the problems of rich young men, what's not to like about this? What is more broadly useful than a messaging system?
WhatsApp revenue is $1/user/year for all users who have used the service > 12 months. So, revenue is somewhere south of $450 million, but certainly a 9 figure number. That's real revenue.<p>What would be interesting is to know the gross and net margins, plus growth rates. With these numbers you could back your way into a valuation using various traditional valuation models.<p>That said, my opinion is this deal is a mix of traditional business plus Zuckerberg's vision. The first and only time I got to hear Zuckerberg in person was at Startup School in 2013.<p>Zuckerberg made some very interesting comments at Startup School. Basically, it was something along the lines of FB already has almost everyone who can afford a smartphone (i.e. developed markets) as a user. The next big idea is to help connect the next 6 billion people to the Internet...and then he went on to say this is an exciting idea but may not be good business. Make of that comment what you will.
Bubble 1.0 was greed without the knowledge on how to value digital companies properly. This phase is greed even after knowing how to value digital companies properly.<p>You will come off looking really silly if an attempt is made to make sense of all these on actuals and fundamentals.
No. Things can only be wrong if they're in the past. In the present, they're anointed by the status quo effect: if it is the status quo, then it is the best of all possible worlds by reason of many armchair economics-based arguments.