1. From Sarah Lacey.
Facebook has grown into such a huge thing that we forget what the core always was: Photos. This was the reason Instagram was such a threat to its dominance. It was the next social network where the primary organizing and viral mechanism was photos. That’s why Facebook had to own it.
Read the whole thing. She points out that WhatsApp was valued at 10 percent of Facebook, which is a much higher share of the acquiring company that YouTube was relative to Google, for example.
2. From Peter Schiff.
It’s very easy to get customers when you don’t charge them, it’s much harder to keep them when you do.
Thanks to a commenter for the pointer.
I look at it this way. I would value WhatsApp at about $200 million. Like Schiff, I believe that it will start to bleed users rapidly as (a) it attempts to monetize them and (b) as competitors take them.
If $200 million is 10 percent of Facebook, then Facebook is worth $2 billion. Have a nice day.
If Facebook is so vulnerable to replacement then it isn’t worth much, but if it is a great moat then they can pay a lot to buy anyone they see carrying a shovel. It’s a conundrum!
Uh, yea, except Facebook earned $2b in 2013 alone.
@Effem So then Facebook paid nearly ten times it’s own earnings for an additional 10% of value?
Keep in mind they mostly paid in stock.
Where did you get the $200 MM estimate?
Here’s an interesting writeup from a Silicon Valley guy regarding the purchase:
http://chrisyeh.blogspot.com/2014/02/what-entrepreneurs-should-learn-from.html
Google tends to make buy or build decisions and ends up building more often, but that doesn’t make anyone use it. Theirs is more of a long term accretion model.
Facebook bought users but isn’t going to monetize by charging though. It will focus more on Facebook everywhere and ads. It seems you only have to wait a decade before every old idea becomes new again, this being the heir of the instant messengers.