
Facebook Buying WhatsApp for $16B in Cash and Stock Plus $3B in RSUs - vassvdm
http://techcrunch.com/2014/02/19/facebook-buying-whatsapp-for-16b-in-cash-and-stock-plus-3b-in-rsus/
======
nwh

        400,000,000 active users [0]
        16,000,000,000 USD
        ----
        $40 per user
    

That's an incredible cost. We can assume Facebook is paying for the userbase,
the app itself and it's infrastructure would basically run itself. It's less
appealing when you realise that there's probably a miniscule fraction of
WhatsApp users that don't have a Facebook account.

> _WhatsApp will remain autonomous and operate independently. You can continue
> to enjoy the service for a nominal fee_

Now it makes even less sense.

[0]: [http://blog.whatsapp.com/index.php/2013/12/400-million-
stori...](http://blog.whatsapp.com/index.php/2013/12/400-million-stories/)

~~~
pitchups
Pretty amazing that this is precisely what Microsoft paid for Hotmail in 1998
: $400 million for 10 million users = $40 / User. [1] The parallels are
striking : Whatsapp is to messaging today what Hotmail was to messaging in the
late '90s.

[1]
[http://news.cnet.com/2100-1033-206717.html](http://news.cnet.com/2100-1033-206717.html)

~~~
ams6110
I'll admit to a distinct feeling, that I've started to lose touch with pop
technology. I've never heard of WhatsApp. Though I had most definitely heard
of Hotmail in 1998.

~~~
nullspace
It's not really "pop" technology. Surprisingly, it's not used much in the
United States, but in India it's basically a replacement for text messaging.
Everyone from a 13 year old child to my grand mom uses it to keep in touch
with friends and family members across the globe.

IMHO, they were able to get to such widespread everyday usage because they
such awesome and reliable technology. Much better than what Google have been
able to provide with their hangouts app, for instance. Messages are always
delivered instantaneously if you are online. If you are offline it stores it
locally, and delivers it the moment you are online without messing up the
order.

Never had any issues with them. They are really awesome. Congrats to them -
IMO it's a great acquisition by Facebook.

~~~
zanny
I'll shake my first and one day see people using open standards protocols
rather than this morass of proprietary dribble.

Until then, I'm marginally lonely on my xmpp clients, though the facebook
integration really helps.

~~~
bsder
The messaging part isn't the problem.

The value in Skype, WhatsApp, etc. is the vast amount of work and codebase
that goes into punching holes in routers/gateways/NATs to make the internet
actually work like it was originally designed.

~~~
kayoone
WhatsApp is not p2p, they maintain a constant server connection which is not a
problem for routers/gateways/NATs because its initiated from the client side.

------
tomblomfield
Sequoia just landed a 5x return on their fund with this one deal.

At a rough guess, they put in $8m for 15% of the company in 2011, valuing it
at around $53m.

A $16B sale is a 300x increase in value, so Sequoia's stake is worth $2.4bn.
Their standard fund size is around $500m.

[http://www.reuters.com/article/2013/08/16/us-sequoia-
funds-i...](http://www.reuters.com/article/2013/08/16/us-sequoia-funds-
idUSBRE97F0WW20130816)

~~~
jacoblyles
I hope those guys do something interesting with their billions. But so far the
only billionaires that realize the power of a billion dollars in personal
capital seem to be Elon Musk and Peter Thiel.

~~~
munificent
Don't forget Bill Gates.

~~~
rodgerd
Soros, Buffet. But overall, yes, the improverished imagination of billionaires
never ceases to amaze me.

~~~
lifeformed
Wayne.

~~~
anExcitedBeast
Stark.

------
primitivesuave
My uncle in India runs a construction company, and literally every single
aspect of company communication is done over WhatsApp. Each construction site
has to constantly post pictures on WhatsApp, and basically all management and
payroll decisions are made through WhatsApp discussions. Apparently this is
not an uncommon practice, as businesses that were once administered by pen and
paper are now using WhatsApp to improve efficiency and reach new customers.

~~~
anigbrowl
What's special about Whatsapp that made them choose this platform rather than
(say) email, any other chap app, or even Facebook itself?

~~~
statictype
It's simple. It's instant. Not everyone (especially in Asia) has a Facebook
account or even wants on. SMS was already what was powering communications in
Asia. Whatsapp took SMS , added images, group chat and removed the cost.

Also, it was free and works on Android (Very important in South Asia).

Many older people get smartphones _just_ to use whatsapp to communicate with
others. I'm not joking. I upgraded my mom to a smartphone against her will so
that she can use whatsapp to communicate with friends and family more easily.

~~~
anigbrowl
I guess I'm confused because there are lots of messaging apps, eg
[http://personalweb.about.com/od/mobile-
messaging/tp/8-Mobile...](http://personalweb.about.com/od/mobile-
messaging/tp/8-Mobile-Messaging-Apps.htm) and indeed Android's built-in
messaging. I'm not trying to dismiss whatsapp, just having a hard time seeing
what makes it distinctive.

~~~
jey
Supposedly they have a huge install base in many (non-US) markets. The idea is
probably that network effects will make it so that they'll continue to be the
dominant player for a long time.

------
staunch
Damn, Zuck is _far_ more paranoid than I thought. He's going to have to come
up with a better strategy than buying every company that presents a potential
existential threat though. Especially at these prices!

I actually think it wasn't such a bad idea to buy Instagram. He paid 1% for
something that _really_ could have killed him. But paying $16 billion here is
pretty much surrender as far as I'm concerned.

~~~
adventured
Zuck should probably be fired (gracefully step-aside, courtesy of shareholder
activist pressure, given his voting control) when Facebook is forced to do a
$16 billion write-down on this. WhatsApp won't even be worth the cash they're
paying for it when the music stops. They just bought today's version of ICQ
for $19 billion. This acquisition leads me to believe Facebook is most similar
to Yahoo at the peak of the dotcom bubble (the acquisition strategy, the
massive overvaluation, the weak advertising platform). Yahoo was a portal,
Facebook is the same premise but in social networking (the all-in-one champ).
There will probably be pieces that spin out of the social networking scene
that end up producing the next Google, while FB languishes as the new Yahoo.

~~~
smackfu
Heh, AOL bought ICQ for $287 million, and it had 12 million users. $24 per
user.

Now AOL was really good at destroying companies though...

~~~
leggo2m
AOL also bought Bebo for $850M and then sold it back to the founders for $1M a
few years later.

------
josh2600
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.

~~~
flyinglizard
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.

~~~
frandroid
Facebook and Twitter are seasonal?

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

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

~~~
Sivart13
I am very happy with your argument. I will use this argument in the future.

------
bedhead
When these bubbles really get crazy, you start questioning your sanity and
wondering whether maybe you're just plain wrong. You actually start wondering
if the valuations are justified after all, whether it be a house, stock
certificate of a tech company, the mineral rights to some acres in the
Haynesville shale, or some land on the Vegas Strip. My head hurts.

~~~
nilkn
To be fair, WhatsApp has an incredible number of very active users. It's not
like the companies in 1998/99 which had no revenue, no users, but spent
millions on Super Bowl ads.

That said, this is a staggering amount to pay. I'm not familiar with
Facebook's financials, but I'm surprised they could even afford this. I'd
chalk this up to Zuckerberg's paranoia about no longer being #1 and less to a
bubble.

~~~
gutnor
You would hope that from one bubble to the other people learn something.

The last bubble, people thought than making stuff available online was enough
(Do X but on the internet). The first crisis taught us you need to have an
actual business model and a way to acquire client.

But then, Google happened. Big user base can be monetized. So we have a second
bubble where acquisition of user is the main driver, with the assumption than
like google they will find a way to milk their users. At some point that
bubble will explode too.

~~~
tostitos1979
Big user base monetization = ads. Are mobile ad cpi's really that high?

~~~
kunaalarya
Yes. $2-3 for games for quality users, and going up significantly once there's
a mobile payments solution that works.

------
notlisted
I know What's Up. Facebook just bought the world's largest (and unlisted)
mobile phone number directory:

WhatsApp's convenient 'matching by phone number' feature uploads of all of
your phone contacts to their servers. Though positioned as one of the good
guys, they too had their price.

With this acquisition, FB bought the ultimate data set of users and leads, and
with it secured access to the last remnants of your privacy.

Your fake name/profile on FB will no longer protect you. Your friend's contact
list spilled the beans months ago...

Uninstalling WhatsApp now, though I realize that after several lovely years
might just be too late already.

Cat, bag, out of. Such wow. Much sad.

~~~
lucb1e
Exactly my thoughts. Any idea how to get out of Facebook's database? I'd be
willing to pay but then they have my full name instead of just a fake and my
phone number.

~~~
junto
I'm in the same position. I deleted my Facebook account last year and now it
feels like they have rejoined me without asking me. Damn it.

------
argumentum
To everyone calling this symptomatic of a "bubble", remember that WhatsApp was
_not_ hyped like SnapChat or Instagram. It wasn't associated with "sexting" or
plugged by Celebrities. A few years ago, my cousin arrived from India to start
undergrad here .. when picking out her new smartphone, here was only one
requirement: it _had to_ run WhatsApp. She didn't care whether it was an
iPhone, android or blackberry (back when bb's were a thing). She didn't care
about the camera or processor speed. Her decision was based on a measly little
app that I'd never heard of. WhatsApp just made something people wanted,
_badly_.

It's even profitable, for crying out loud.

Whether this is a good decision and price for Facebook is to be determined.
Many thought Google overpaid for Youtube and FB overpaid for Instagram, and
look how those turned out. In addition Zuckerberg likely thought that much
like losing image sharing, losing messaging would pose an existential threat
to Facebook.

Zuck's strategic track record has been stellar, all the way back to the
beginnings of Facebook. The one "mistake" he admitted to (HTML5 vs native) was
corrected promptly and thoroughly. I'm willing to bet he's got a much better
handle on these things than given credit for. I'm long on FB and buying on any
dips.

~~~
cylinder
None of the things you mention matter, frankly. Nobody is claiming whatsapp is
worthless. It's the valuation. Just because your users are passionate doesn't
mean you deserve a high valuation. And something missed here is that Indian,
SE Asian users, et al aren't that valuable in terms of how much money you can
make displaying mobile ads to them.

~~~
argumentum
> _Just because your users are passionate doesn 't mean you deserve a high
> valuation_

No one "deserves" any particular valuation: those numbers come from how much
people are willing to pay, and how little you're willing to sell.

Due to the post acquisition success of Instagram, companies like SnapChat and
WhatsApp have more _leverage_ than their predecessors in these negotiations.
Thus, they command higher valuations.

WhatsApp, though of course a Valley company, seemed to have been "discovered"
overseas. It _famously_ doesn't have ads and instead charges $1/year (which
its users are willing to pay). In the short term, yes, India/SE Asia are less
lucrative markets per person, but in the long term they have greater potential
for growth. With the numbers as they are, looks like Zuckerberg intends this
as a long term play.

------
huskyr
Facebook suddenly acquired the world's (if we exclude the US and China) most
popular messaging service. I communicate with this app with all my friends,
and share stuff that i have no intention of ever putting on Facebook.
Everything that once seemed 'private' is now in the hands of a website that
forces it users to share as much as possible with marketeers and advertising
companies. It's gonna be one tough mission for FB to convince WhatsApp users
they're not gonna be playing around with their data.

If there's one moment to launch an email-like distributed protocol and app for
instant messaging (and somehow convince all my friends to use it), i guess
it's now.

~~~
gedrap
>>> It's gonna be one tough mission for FB to convince WhatsApp users they're
not gonna be playing around with their data.

It's much less relevant if you step outside the HN.

~~~
dinkumthinkum
I don't know if that's true. How do you explain the success of WhatsApp when
FB exists?

~~~
gedrap
Well, do you really think a regular person will care a lot about storing data?
Ok, maybe after Snowden's leaks they will give a second thought about sharing
intimate pictures but other than that... For us, HNers, it's hard to
understand 'a regular person' because we are far from.

Speaking of reasons, I would say doing one thing and doing it well.

After FB has invested all that money, their messenger app is still behind.
Sync issue was a big one. Up until recently, FB messages wouldn't reach my
phone or they would reach hours after being sent. And I don't live in a forest
in Africa.

Second, I find the UX poor. It's hard to point out but using e.g. WhatsApp
just feels more... natural. Don't know why.

Also, I think the fact that your phone book is the first class citizen is a
big one. You don't need to add, confirm anything. It's just already there. And
that makes a perfect sense. If you have a phone book with all the contacts,
why would you need a new list of contacts.

Basically, WhatsApp is just SMS on steroids. Taking a proven technology and
improving it. That's also innovation.

~~~
dinkumthinkum
I think people care more about it than you think and the long term is they
will care more. It's not just needs that talk about "FB stalking" or think
LinkedIn is creepy.

------
jljljl
[http://blog.whatsapp.com/index.php/2012/06/why-we-dont-
sell-...](http://blog.whatsapp.com/index.php/2012/06/why-we-dont-sell-ads/)

~~~
varenc
according the WhatsApp blog, its going to be staying ad-free.
[http://blog.whatsapp.com/index.php/2014/02/facebook/](http://blog.whatsapp.com/index.php/2014/02/facebook/)

~~~
dictum
In the usual _the current iteration of our product will stay ad-free, but we
'll release a new version later and everyone will have to switch to it_ way.

------
dhoulb
I just can't get my head around that valuation. For something that's basically
a feature, when they already have that functionality baked in, built out to a
similar scale?

It's not an acquisition for talent, or technology, so what is it? It's an
acquisition for investors probably. To argue back against the people who say
the kids are leaving FB. Well guess what, we BOUGHT the thing the kids are
using. And it's 'mobile first'.

They can probably continue to buy the 'cool app of the week' for the rest of
their existence. Probably not at THIS scale, but certainly the $1-2b range.
The rest of their user base is pretty solid. As long as they can show their
advertisers that they're appealing to young people too, it's probably a strong
plan.

They just really screwed up on messaging, and let these guys grow too big
before deciding or being in a position to buy them. Doubt they'll let it
happen again! They'll have their eyes open and will snap up ANY new apps that
show strong user growth in younger markets.

Tech people have a major bee in their bonnet about Facebook. We kinda assume
the kids are flocking away for the same reason we are: privacy. But it's not.
Kids just get bored easily so they like to try new things. Young people aren't
'leaving' Facebook, they're just using other stuff alongside it. Facebook just
has to provide one or two interesting buzzy distraction apps to last until the
kids turn into adults, get jobs, and use Facebook exclusively again because
it's where everyone is, and they don't have time for 15 separate apps any
more.

~~~
nly
> It's not an acquisition for talent, or technology, so what is it?

[http://i.imgur.com/yzo9kc1.jpg](http://i.imgur.com/yzo9kc1.jpg)

~~~
paramsingh
This isn't reddit.

------
pisarzp
This is just ridiculous. As per their latest financial statement, $16B is $B
more then they have in the bank. Part of that is stock, but still...

On top of that, it's 8 times more then their 2013 net income!

People say it's defensive play, but to me it looks like overly aggressive play
with huge risk and very little potential. Facebook already has huge market
share with their messaging platform, and they really don't need this that
badly.

~~~
notahacker
$12bn of it is stock (as is the employee grant) so in fairness they're paying
prices inflated by optimism about retaining and monetizing social network
users mainly with currency inflated by optimism about retaining and monetizing
social network users.

~~~
atmosx
The entire operation is incredibly inflated on both sides.

------
NDizzle
$16B for something I've never even heard of. I feel like I'm living under a
pile of rocks.

~~~
gms
Don't feel bad; no one really uses them in the US (except us foreigners to
communicate with friends and family abroad).

They are the de-facto messaging service in the rest of the world (except for
China).

~~~
kayoone
im curious, what do americans use instead?

~~~
dba7dba
same old texting.

~~~
kayoone
interesting, i suppose its free? because it isn't here in germany which is why
whatsapp is massively popular.

~~~
jcdavis
Yep. Most of the new plans the carriers in the US have rolled out recently
have unlimited minutes + texting as standard, and then charge extra based on
data limits. Not exactly cheap mind you, but that's how its structured. Even
my cheapo $30/mo T-mobile prepaid includes unlimited texting.

------
gamegoblin
That is a LOT of money.

That being said, I use WhatsApp every day to chat with my friends around the
world and it's really excellent. I know it's used a lot in other parts of the
world even more, so I doubt this purchase is focused on US markets. It seems
that every one of my Arab friends uses WhatsApp to talk to their families back
home (and they use it at home, too). I don't know about other regions.

~~~
jpablo
WhassApp is the standard in Mexico. It replaced Windows Live (MSN) Messenger
after they killed it by trying to make everybody switching to Skype and the
interest of the people shifted to mobile.

~~~
MichaelGG
MSN had 350 million active users a few years ago. And they just pissed it into
oblivion. MSN had Skype feature set before Skype, but did nothing to publicize
it.

And also, think - MSN had everyone's friends info, as well as frequency of
contact and so on. It would have been a perfect way to launch a real social
network. MSN fumbled that too.

A comedy of errors.

------
falsestprophet
Some interesting numbers:

WhatsApp raised only $8 million (from Sequoia in 2011
[http://www.crunchbase.com/company/whatsapp](http://www.crunchbase.com/company/whatsapp)).

19B sale price is about 10% of Facebook's 173B valuation.

At 400 million, WhatsApp has more users than, _the world 's third most
populous country_, the United States has residents.

~~~
chrislloyd
Assuming Sequoia took that for 20% of the company (fairly standard), they just
made $3.2bn. For every $1 they invested in WhatsApp, they made $400 back.
</napkinmath>

However people feel about the VC game, 400x IRR are why so many people play.

~~~
ojbyrne
Minor quibble: IRR is usually an annualized measure. I come up with a number
just over 7x (assuming 3 years, cube root of 400-1). Not that it makes it any
less insane.

~~~
rahimnathwani
Another minor quibble: IRR is usually expressed as a percentage (e.g. 700% per
year rather than 7x).

------
shortsightedsid
This highlights another of Yahoo's screwups, IMHO. Whatsapp is built by 2 ex-
Yahoo employees. Guess what everyone used in the late 90's for messaging?
Yahoo Messenger. That's right - I used Y! Messenger all the time to keep in
touch with friends before Social Networking was the norm and I'm pretty sure
everyone else did too.

There is one more company that had the lead in messaging and screwed up -
Blackberry. They released their app across platforms, 5 years too late. Had
they hit the iPhone/Android apps stores 5 years back, they would have been in
a better place than Whatsapp. The funny thing is that their co-founder even
wanted to do that and not go after BB10 but he got pushed out.

I remember reading that whatsapp's servers basically run using Erlang. Erlang
scales massively, and is a beautiful language for messages/telecom etc..
Hopefully, this will trigger some more interest in Erlang.

------
higherpurpose
Such a waste. Most Whatsapp users already use Facebook in parallel. Facebook
will _never_ see a ROI on this acquisition. Not even close.

~~~
minimaxir
I wouldn't think of this from a ROI perspective. Facebook might be trying to
go for the monopoly on mobile messaging. And once Facebook controls that, they
can do anything.

~~~
nilkn
Buying WhatsApp isn't going to help too much there. SnapChat is still gaining
steam and it won't be long until there's another serious competitor on top of
that.

The market has shown time and time again that in the messaging world it's
extremely hard for one force to stay dominant for too long. Unless this
pattern suddenly breaks today, Facebook will continue having to shell out many
billions to keep buying these companies. I'm not convinced Facebook's profit
is enough to keep that up.

------
pbreit
I usually don't poo-poo acquisitions but this one surprises me for a) the
valuation (Facebook really couldn't convince them to exit for 5 or 10
billion?) and b) Facebook really needs to demonstrate that it can get into
these markets itself.

With all the supposed ingenuity, developer talent, money and existing users,
why can't Facebook build anything besides a news feed?

~~~
mcintyre1994
I personally think Facebook Messenger is better than Whatsapp, and you can
easily upgrade to a private group when appropriate. Whatsapp seemed to miss
the ball on tablets/everywhere by focusing only on phones and requiring a
phone number, which obviously worked for them but I think Facebook's product
is better.

------
antirez
If you have teenager offsprings like me (I've a 13 years old son) you can
understand that better maybe. I heard the sentence "We don't need Facebook
since there is Whatsapp" an endless number of times from him and his friends.
From my point of view at first this didn't made a lot of sense, I considered
Whatsapp a no-cost SMS replacement. The reality is that Groups are a killer
feature: my son's school class has a group where they share what are the
homework for tomorrow, or just send messages that are much alike what you
would write on Facebook as status messages. Then I realized that I also
created a group for my friends, like, in one group there is me, my wife, and
one couple of friends of us where we plan what to do together. In another
group there is our family where we share pictures of my daughter. We are using
Whatsapp like Facebook as well... Under this point of view this move makes a
lot more sense, I believe Whatsapp is eating Facebook traffic.

~~~
fastest963
Are the groups better than what you'd be able make/do on Google Hangouts?

~~~
fab13n
A network's value is correlated to the number of (potential) friends reachable
through it, and how easily you can.

There are many almost-non-technical reasons why Hangout isn't an adequate
replacement for Whatsapp:

\- not intuitive enough to create and keep hangout groups. I can probably use
G+ circles, but that's cumbersome.

\- I believe that you need a GMail account. There are people without a GMail
account I want to reach in group chats, and expecting them to create a new
mail account for that feels like too much asking.

\- the big amorphous G+ blob is so shapeless that we can't think of it

It's _possible_ to use Hangouts, possibly with other bits of G+, as a Whatsapp
replacement, but it's not easier nor more obvious. Google didn't envision it
that way, they wanted you to produce more durable (and searchable) stuff as G+
posts, and to manage access through a circle system that appeals the 5% of the
population with an engineering degree. They don't care about technologically-
illiterate people, nor those without a GMail account, let alone without a
smartphone.

But we shouldn't care about why G+ isn't an adequate Whatsapp killer, as
Google didn't buy them. What's interesting is, why FB couldn't build it?

------
simplekoala
It looks like Brian Acton, Whatsapp's founder was turned down by Facebook in
2009. What a comeback! This must be even sweeter!

[https://twitter.com/brianacton/status/3109544383](https://twitter.com/brianacton/status/3109544383)

------
antr
I used WhatsApp to stay away from FB's chat app. Telegram is picking up
popularity within my circles... I'll default to that

~~~
carlozt03
How'd you get your friends to move over to Telegram? I'm trying to get that
ball moving with my circle of friends.

~~~
malandrew
Better yet, how do we get people to move to something distributed so that
Facebook (or Google or anyone else) cannot acquire the service.

If we just move to another decentralized messaging service, that service will
eventually get gobbled up as well, and we'll have to rinse and repeat.

~~~
qq66
There's no such thing as a decentralized conmunications tool. Even email
requires the centralization provided by ICANN.

~~~
pbhjpbhj
You can send email without using DNS.

I'm not sure I'd call IP addresses centralised, if perhaps you were thinking
of ICANN's running of IANA?

If you consider the internet inherently "centralised" then surely you'd still
find CB radio or similar to be decentralised. Or do you also consider the
allocation of wavebands to be "centralised"?

~~~
michaelmior
Depends on how far you want to push the definition of decentralized. The
routing infrastructure of the Internet is still fairly centralized as is the
allocation of IP addresses.

------
superuser2
A lot of people on HN talk about how Facebook is pointless and on its way out.
And it's true, Facebook probably doesn't make a lot of sense to people who are
steeped in an email culture.

Young adults are _not_. Facebook is far and away the dominant messaging
platform. Email in high school was for spam, communicating with teachers, and
passing attachments ONLY. Short, synchorous messages that you didn't mind
typing with your thumbs would go via SMS, but more verbose synchronous
conversations and email-like async conversations were invariably Facebook
Messenger.

I can find _anyone_ from my real life that I'm likely to want to talk to on
Facebook just by knowing their real name and identifying their face in search
results. It's entirely frictionless - no exchanging identifiers or mucking
around with pseudonyms. And I can have a conversation synchronously or
asynchronously, transitioning seamlessly between devices and modes of
communication, with conversation history, read receipts, and delivery
confirmation always available.

Messaging is a more important part of Facebook than I think much of HN
realizes. It makes sense that Facebook would neutralize WhatsApp's threat to
its hold on messaging.

~~~
_delirium
Among my circle of friends, that _used_ to be the case, but it's increasingly
rare that I find anyone actually signed in to FB chat, so now it's only usable
for asynchronous messaging. A bunch of people seem to have moved to either
Skype, Hangouts, or iMessage for synchronous chat. I don't have any great
insight into which demographics that might be happening in, though.

------
jackgavigan
Social networking is all about network effects. The biggest threat to
Facebook's position at the top of the pile is that another social network will
come along, start to gain traction (most likely initially with users that
_aren 't_ current Facebook users - e.g. early teens) until it reaches a
tipping point where current Facebook users start migrating to the new social
network because that's where the people they want to interact with are hanging
out.

Once that tipping point is reached, the migration is likely to happen rapidly
and irreversibly. By acquiring companies like Instagram and Whatsapp, Facebook
is not only preventing them from usurping its social networking crown but
bolstering its own position against future emerging competitors.

$19bn might sound like a lot but it's cheap when you consider that the risk of
_not_ buying Whatsapp is that it eventually obliterates Facebook in the same
way that Facebook obliterated Myspace and the original Bebo.

~~~
chiari-show
so you think that the goal was to not have any competitors in the smartphone
messaging? because Instagram and Whatsapp are not Social Networks.

------
billyjobob
Maybe I'm not down with the kids, but I'm not understanding what _any_ of
these message apps offer over plain old fashioned email. It alerts me on my
phone, it works on my computer, it sends to groups, everyone already has it,
it sends photos, it stores a history of all my past communications in one
place accessible from anywhere. It's not completely secure but at least you
don't have to trust any foreign corporation (Facebook, WhatsApp, etc) with
your private messages and can run your own server if you like.

Also what if Facebook lock your account because they don't like your name, or
WhatsApp go bust and shut down in a few years time? Then you've lost
everything, because it was locked into their proprietary little system. I
don't understand how anyone would chose one of these as their primary method
of communication.

Especially as they are all newcomers, and email was well established as what
the world used to communicate before they arrived. No-one buys a phone and
then decides 'Hmm shall I install email or WhatsApp'; no, you buy a phone, you
set-up the email account that you've already had for 20 years, and then after
that you maybe decide to install another app. This app offers nothing over
email, yet you and all your friends abandon email and use the new app instead?
That is some powerful marketing they must have done.

~~~
pjc50
Email isn't "instant", and you either have to go with a large provider or
fight the spam hydra yourself. I used to run my own mail server and stopped
because it was just not worth it.

Whatsapp acquired a whole number of users who didn't have computers, didn't
have email addresses, and wanted the simplest possible setup that worked.

------
cangencer
Interesting to see that they use Erlang. [http://www.erlang-
factory.com/conference/SFBay2012/speakers/...](http://www.erlang-
factory.com/conference/SFBay2012/speakers/RickReed)

I wonder if this is still valid?

~~~
emaste
Yes, here's a quote from the FreeBSD Foundation's July 2013 newsletter:

    
    
      At WhatsApp we leverage FreeBSD and Erlang to provide
      industry record uptime. The ability to scale linearly
      on commodity hardware has allowed WhatsApp to keep our
      serving costs low. These days we run anywhere between
      2 million and 3 million concurrent TCP connections on
      a single FreeBSD server...

[https://www.freebsdfoundation.org/press/2013Jul-
newsletter#w...](https://www.freebsdfoundation.org/press/2013Jul-
newsletter#whatsapp)

~~~
tostitos1979
Wow! 2-3 million concurrent TCP connections? I just discovered C10K last year
:( Is this a fundamental difference between thread based networking and
evented network IO? What am I missing?

~~~
strmpnk
Not exactly. While there are ways to conflate a connection with a thread,
these are not always fixed pairs. Generally, it depends on the kind of
connection activity and a bit on which operating system. Event based IO is
simply pushing information that kernel schedulers already use into user space.
The trade-offs really depend on where you need control the most.

Many kernels can do a pretty good job at general purpose networking but at
this scale you tend to care about the details and so more of these systems
tend to push the decision making to the program using APIs like epoll & kqueue
(Linux and *BSD respectively). Keeping this information transfer cheap for
millions of sockets is not as trivial as just using the API but it's a
necessary step to control overhead.

Whether your user space code uses threads in places to get work done is often
misunderstood as well since thread doesn't always mean a single logical thread
in a program. Erlang, in SMP mode, uses threads to run it's own process
schedulers (much like an operating system). The operation of these schedulers
is handled in such a way that IO can efficiently block a process and the
scheduler can move onto other things in queue. So, in many ways, it's the same
ideas we had on the bare OS but with more specific implementation governed by
Erlang's philosophy.

------
Karunamon
Welp. There's another app that I won't be accepting any updates for from now
on...

~~~
diminoten
I'm glad people are finally realizing what they're giving up for convenience.

I personally don't mind having no privacy if everything becomes super
convenient, but at least people are cognizant of the tradeoff now.

~~~
dinkumthinkum
That is just sad.

------
samolang
This seems insane. I love WhatsApp, but I recently switched to Google Hangouts
because it also supports SMS and I don't really miss it. I don't understand
how it can be worth this much when Google has already released a direct
competitor to its product that is (and likely always will be) free.

~~~
smackfu
Network effects. When everyone has to switch to a platform, it's hard. And
Whatsapp is free for the first year, which is enough to get people stuck on
it.

------
stfu
Love whatsapp, hate Facebook. As soon as they are trying to integrate whatsapp
with Facebook I'm deleting that thing.

------
flyinglizard
Clearly this is an anti competitive move. Both functionality and users overlap
with FB's own products.

So, for how long can FB pay billions a year to keep competition out of the
market, when the barriers to entry are so low (as Snapchat and Instagram both
demonstrated)?

------
minimaxir
Suddenly Snapchat at $3B doesn't seem so ridiculous.

~~~
psbp
They both seem ridiculous.

~~~
asselinpaul
no, I can see how Snapchat is unique and fresh. WhatsApp brings nothing new to
the table.

~~~
midas007
ARPU vs CTLV doesn't compute.

This is like déjà vu, circa 2000 when I was watching the {{decent}}.corp
ticker hitting $60/share after 3 splits.

If anything I don't feel that Justin Frankel and "Mr. Wonderful" made out like
bandits as much now.

ProTip to new startup people: now is not the time for your magic mobile IM
app. Most potential acquirers' demand is likely sated, making the value of the
remaining players in the space effectively zilch, apart from lower cost
acquihires and fodder for opening pitch jokes.

~~~
wpietri
I want to underline that last point. Doing something that is fashionable is a
bad idea. Doing something that _was_ fashionable and whose big players are now
getting snapped up is a terrible idea.

------
adventured
This acquisition is not YouTube or Instagram. This is a peak of the bubble
purchase, that will be massively marked down for accounting purposes a few
years from now.

Smart to buy them? Sure. For $19 billion? Nope.

------
MichaelTieso
Personally I prefer Voxer. The requirement of having a phone number on
WhatsApp doesn't work for me. I'm constantly traveling and and using different
SIM cards in different countries. I'd rather have a single sign-on that
doesn't require having to use any phone number.

------
dredmorbius
Interesting to note that WhatsApp had started circulating some overly broad
and ill-formed "DMCA takedown" notices a few days back:
[https://github.com/github/dmca/blob/master/2014-02-12-WhatsA...](https://github.com/github/dmca/blob/master/2014-02-12-WhatsApp.md)

 _By this email, please accept this formal notice and takedown request for the
following content on the GitHub site. I am starting with these requests to
ensure you will take action on our request. We will have follow-on requests,
as the list of infringing content below is not exhaustive._

 _Specifically:_

 _The following URLs use of the WhatsApp name and logo, use of other WhatsApp
content, unauthorized use of WhatsApp APIs, software, and /or services, and
provision of software and services related to WhatsApp infringes on WhatsApp's
copyrights and trademarks, including those related to WhatsApp's name and
logo. WhatsApp's trademarks are registered in the United States and countries
throughout the world._

Note that:

• Trademarks aren't subject to the DMCA.

• APIs aren't copyrightable.

• TOU violations aren't subject to the DMCA.

Given that the letter isn't clearly formatted as a DMCA takedown (though it
uses some sample language) the effect is ... curious.

------
pcocko
It's a bubble. I don't beleive it can sustained over time. So simple apps sold
for huge quantity of money

~~~
abc_lisper
I can't believe it either.

Few miles from FB and Whatsapp is Tesla, people consider it massively
overvalued at 25Billion. It is almost laughable.

When you are a compulsive liar, people catch up to it, and you will all live
in a lie world. This is very close to how Ponzi schemes work.

Billion is a lot of money. Since FB lied through their teeth, considered
themselves demigods and levied idiot tax on poor investors, it is their time
to turn around and take it in the rear.

Come on guys. 16B$?

~~~
frandroid
What lies are you talking about?

~~~
abc_lisper
I view FB as a very dishonest company. Here are my reasons.

1) Hiding stuff from users, stuff that is personal to users and putting it for
sale. It is not like they make it easy to change options either.

2) Mark said on more than one occasion that he wants to make the world a open
place. His actions don't reflect it. Remember, the one time somebody hacked
into his FB account(or somehow got access to pics) and posted his personal
pics, and FB was not too pleased about it. There was even a press release
about respecting his privacy(!!).

3) Not too long ago, FB made ties with Republican faction for H-1B visas. Not
too wrong with it(I am on H-1B myself), but they supported a Republican bill
that has to do with environmental protection(went against it), to gather
support for H-1B visas. It's almost like they would go to any lengths to get
their stuff done. I find it hard to believe they(FB) have idealistic goals.

------
ezrameanshelp
Zuckerberg just announced via Facebook profile:
[https://www.facebook.com/zuck/posts/10101272463589561?stream...](https://www.facebook.com/zuck/posts/10101272463589561?stream_ref=1)

------
riveralabs
It's official. Facebook is the new Yahoo. Buying a lot of companies at
ridiculously extreme premiums.

------
curiousDog
In comparison, the Airbus A380 cost $11bn to develop. Is this really wise
capital allocation by the street? Imagine what valuable technology could be
built with this money. I for one, sold my stock in facebook just now.

~~~
adventured
No it's not wise (regarding the cash), but then a large portion of the value
isn't real and will never be real; it's bid-up paper trading at 100 times
earnings. Swapping one piece of overvalued paper for another, is most of the
deal (I'd take the FB paper personally, it at least has some earnings behind
it). And keep in mind, this isn't capital allocation by the street, it's
capital allocation by Zuckerberg, he controls Facebook. This crashes and
burns, it's solely on his head.

------
dba7dba
Found tumblr posts from sequoia on why Whatapp is great.
[http://sequoiacapital.tumblr.com/post/77211282835/four-
numbe...](http://sequoiacapital.tumblr.com/post/77211282835/four-numbers-that-
explain-why-facebook-acquired)

This is confusing for me though.

1\. WhatsApp prides on: No ads No games No gimmicks

And WhatsApp doesn't collect personal data.

Facebook is OPPOSITE of those attributes of WhatsApp.

------
chaz
Just 50 employees. [http://blog.whatsapp.com/index.php/2013/12/400-million-
stori...](http://blog.whatsapp.com/index.php/2013/12/400-million-stories/)

~~~
smackfu
Selling ads takes a lot of staff. So not selling ads...

------
k-mcgrady
Even though at the time it seemed ridiculous I could understand paying $1bn
for Instagram. Photos is Facebook's most used product and Instagram was
stealing users photos on mobile.

$16bn for WhatsApp I just can't understand. Facebook has a brilliant messaging
app. Lots of people use it - even people who use WhatsApp continue to use
Facebook Messenger.

~~~
matznerd
1 million new users a day and most likely in countries where Facebook is not
growing as quickly...

~~~
k-mcgrady
Is that really worth $16 BILLION though? Think of the marketing they could
have done to get those users in those countries with 10% of that money.

~~~
ulfw
Plus it's not like they will 'convert' those non-Facebook users and make them
use Facebook suddenly. So then the question comes up on how to monetize this
thing to earn back the $19,000,000,000

------
continuations
How did WhatsApp gain traction? Presumably most of their users already use
facebook, which offers the same messaging functionality as WhatsApp.

So why do people use WhatsApp instead of Facebook for messaging?

~~~
greenpresident
It's phone number based, so it's disconnected from your social media presence.
You don't have to add anyone or allow them access to whatever you might share
with your circle of friends. In my experience it also handles group chats
better than Facebook and grew popular before the advent of the Facebook
messenger app.

~~~
pbhjpbhj
> _allow them access to whatever you might share with your circle of friends_
> //

I only know about it from being recommended it and having read it's legal info
today but ... the legal info says that anyone with your phone number listed in
their contacts can access your messages unless you block them. That seems
different to what you're saying. (Like I said, I've not used it).

------
tomkarlo
The fact that FB chose to pay $12BN in stock for this tells you something
about what they think of their current valuation.

~~~
tomkarlo
That's a lot of money for an app with relatively little lock-in and a $0.70
(maximum) ARPU.

~~~
mschuster91
The lock-in is the network effect, and well, if you're aiming for 1-1.5B users
(which can be served with virtually no employment and hosting costs) you're
looking at 1B $ yearly _profit_.

~~~
tomkarlo
Not sure how you're figuring that. At best - 1.5Bn users locked in - you're at
less than $1bn _revenue_ (after you net-out the 30% that goes to Apple or
Google for an in-app transaction) and much lower net profits (presumably, it
costs some fraction of a dollar in ops, bandwidth and cpu to support a paying
user for a year.)

Also, even at $1bn in revenue, this is 16X sales... that's usually the kind of
price you'd see for a company that can still grow a lot. When you have 1/12 of
the world's population as users, and you're capped at $1 per year per user,
there's not a lot of places to grow. Clearly FB valued this based on strategic
value to their broader platform.

~~~
antrix
> and you're capped at $1 per year per user

Why would that be the case? There are always other revenue streams to be
explored using the same user base.

~~~
tomkarlo
Maybe, but they're also entirely speculative. We can only evaluate the price
based on the business they have, not imaginary alternate revenue streams.

~~~
howeyc
> We can only evaluate the price based on the business they have, not
> imaginary alternate revenue streams.

I would really like to agree, but given recent valuations that doesn't seem to
be the case does it?

~~~
tomkarlo
Regardless of how insane deals may seem, you can still only evaluate them
based on available facts. If you're going to start speculating about fictional
future revenue streams, there's no point to even bothering to contemplate if
the price makes sense.

------
nkuttler
Good for them!

Now on to uninstalling it :-(

~~~
taternuts
As someone who installed it to see how it works and rarely uses it, this is
the first thought that crossed my mind

------
zt
Of all the companies founded since 2000, these are the following companies
that are worth more than $10B: Facebook, LinkedIn, Twitter, WorkDay, and ...
WhatsApp.

~~~
statictype
For what it's worth, I've never heard of WorkDay. I created a LinkedIn account
and since then my only interaction with is archiving their spam mails.

I use WhatsApp more than I use Facebook or Twitter (and this is true of a lot
of people outside U.S). In general, it may not be as active as Facebook or
Twitter but its pretty damn high. Also - no ads or privacy issues or BS
marketing.

------
koevet
The WhatsApp platform is based on Erlang. I really hope that putting the
application under the spotlight will also benefit Erlang and its adoption.

------
ulfw
$19,000,000,000. Just making clear. 19 Thousand Million Dollars. 19 Billion.
For a mobile app.

~~~
pyrrhotech
over 10% of FB total inflated market cap. short with me! When this thing
implodes, it's going back to the teens ironically

------
pearjuice
Am I the only one upset with this? I don't use Facebook - haven't and never
will - because I hate how I and all my data will become their product on
registration. Sure, Whatsapp has its quirks being proprietary and all, but
now, I am basically doomed. Whatsapp says they will stick to their core and
stay independent, but I have 16 billion reasons to believe otherwise. The sad
part is that due to Whatsapp, I can't escape my doom because EVERYONE I
contact daily uses Whatsapp. I would basically kill myself socially if I were
to delete Whatsapp. I really, really hope Whatsapp stays Whatsapp but knowing
Facebook we are f __ked either way.

~~~
RandallBrown
Just curious. Why couldn't you use text messages to contact the same people?

~~~
espitia
In my case, for example, most of my friends are not born americans but rather
people that lived in south america that moved to the US or still live in south
america. In Colombia/Vzla EVERYONE uses whatsapp. At first it was because SMS
has charges per text sent so a free, better way to communicate (whatsapp)
quickly became the norm. Network effects pushed through boundaries and now I
use it more than anything else to communicate with friends and family. I have
groups with my immediate family and with friends across borders. Mind you,
I've lived in the US most of my life so I use iMessage with all americans and
whatsapp with the rest.

I think it comes as a surprise to most people in the USA because here we never
had to deal with SMS charges (plans were for the most part unlimited). In
other parts of the world, the opposite is true, which is where whatsapp gained
it foundation. Add to that cross platform, free, awesome ux, network effects
and the fact that IT WORKS PERFECTLY and boom, 19B. Cheers.

------
wllchng
This is definitely a defensive move against Tencent, who is using Wechat as
their weapon for global penetration. Tencent must be seen as a threat, given
their ability to monetize their userbase drastically better than Facebook or
Twitter. There are rumors that Tencent is also a covert investor in Snapchat
as well.

GGV Partner and China VC Hans Tung makes the argument that Tencent's market
cap will overtake Facebook's in 3-5 years.
[http://www.bloomberg.com/video/could-chinese-competition-
bea...](http://www.bloomberg.com/video/could-chinese-competition-beat-out-
facebook-VFrr1lqDQqSfZeo27dvnvw.html)

------
pdknsk
It's madness. Are the people involved aware that 16B is a number with 11
digits? It's a serious question.

------
wslh
How this negotiation evolves until the point of reaching this sum?

Is it like bargaining in the suoq
([http://en.wikipedia.org/wiki/Souq](http://en.wikipedia.org/wiki/Souq)) ?

------
shmerl
I hope they'll convert this abomination into a proper XMPP service. On the
other hand Facebook doesn't federate with others anyway, so it's one selfish
beast buying another.

------
yawz
$40/user - $345m/employee

Truly amazing! If you remember the days when JBoss was acquired by Red Hat,
this is the same "value" as one JBoss per Whatsapp employee. Incredible!

~~~
dba7dba
haha, and where is JBoss now and what has it done for Red Hat?

------
newscracker
For those who're disturbed by this and would like to get away from WhatsApp,
the least you can do is delete your WhatsApp account, followed by deleting the
app itself. [This does not protect you from WhatsApp transferring all your
data to Facebook]

Follow the instructions for your device to delete your WhatsApp account:

iPhone -
[http://www.whatsapp.com/faq/iphone/21325453](http://www.whatsapp.com/faq/iphone/21325453)

Android -
[http://www.whatsapp.com/faq/en/android/21119703](http://www.whatsapp.com/faq/en/android/21119703)

BB10 -
[http://www.whatsapp.com/faq/en/bb10/28020005](http://www.whatsapp.com/faq/en/bb10/28020005)

Windows Phone -
[http://www.whatsapp.com/faq/en/wp/21335316](http://www.whatsapp.com/faq/en/wp/21335316)

Nokia -
[http://www.whatsapp.com/faq/en/nokia/21477616](http://www.whatsapp.com/faq/en/nokia/21477616)

Blackberry -
[http://www.whatsapp.com/faq/en/bb/21306771](http://www.whatsapp.com/faq/en/bb/21306771)

\---

Also, Telegram is wicked fast in my personal experience. I see a trickle of
people joining Telegram over a period of time (well before this acquisition).

------
blazespin
The simple issue is that Facebook is the one that is overvalued, not WhatsApp.
I'm sure it was mostly paid for in stock.

If you don't think Facebook is overvalued, that's fine, but you can't complain
about WhatsApp then.

Also, I doubt this reduced Mark's control of Facebook. Just his common share
equity. He still has the special class of voting shares that I'm sure all he
really cares about.

------
bagels
I read all the comments, the whole time thinking about how crazy this number
is.

I read why people use it, because it is cheaper (free?) than the ridiculous
pricing of SMS.

So, I looked up the revenues generated by SMS, and it is estimated to be,
according to a very cursory search:

150 Billion USD per year

This is the number that Facebook is using to compare their offer against. It
is not crazy if they can capture even a few percent of that money.

~~~
rokhayakebe
Most useful comment in this thread and everything else I've read on Pando,
Forbes, Techcrunch, and every where else on the topic.

------
goatslacker
Just to put numbers into perspective:

NASA's 2014 budget is 17.7b

------
tuxguy
A well-written article which traces the lives of Jan Koum & Brian Acton in
some detail

[http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-...](http://www.forbes.com/sites/parmyolson/2014/02/19/exclusive-
inside-story-how-jan-koum-built-whatsapp-into-facebooks-new-19-billion-baby/)

Koum : “I want to do one thing, and do it well.”

------
calcsam
This deal isn't so that Facebook can sell ads. This deal is so that Facebook
can protect its flank and simultaneously assault Google.

------
yeukhon
16B? That's a B, people. While there are a lot of whatsapp users (and people
have to pay to use it), wow, that's still a lot of money! How can they justify
revenue that way? How can any company ever consider such acquisition? I don't
even think Google can even make 16B like this.

See this discussion: [http://www.quora.com/WhatsApp-Messenger/How-much-
revenue-is-...](http://www.quora.com/WhatsApp-Messenger/How-much-revenue-is-
WhatsApp-generating)

$20M net revenue, at most, right? With future expansion and side commercial
services, I make $1B per year, fine. But that's after tax. So WhatsApp must
make A LOT more than $1B. I really don't see anything else. But that's only
when WhatsApp can continue to grow and actually gain that much of commercial
income. Someone who have dealt with acquisition tells me how 16B is the right
number. I would pay $5B just because WhatsApp is well-established.

~~~
discardorama
Whatsapp charges $1/year IIRC. So, with 400MM users, you can expect
~$400MM/year revenue?

~~~
pyrrhotech
AFAIK that's only the plan. right now they have very little if any revenue.
People use Whatsapp because they are too poor to afford text messaging. My
guess is that lots will leave even at 1 USD per year

~~~
paraboul
Too poor? No. User experience, group messaging, fast picture upload.

------
adamt
This is Sequoia's blog post. It was enough to make me slightly overcome my
complete shock at the valuation ...
[http://sequoiacapital.tumblr.com/post/77211282835/four-
numbe...](http://sequoiacapital.tumblr.com/post/77211282835/four-numbers-that-
explain-why-facebook-acquired)

------
mmcclellan
For perspective, this is about Sony's market cap. LinkedIn's market cap is
~$24B and Twitter ~$30B.

------
batuhanicoz
From the press release[0]:

    
    
      "... and WhatsApp’s core messaging product and Facebook’s existing   Messenger app will continue to operate as standalone applications."
    

Why is that, I wonder. I was really excited when I heard the news since
WhatsApp is the most used app and Facebook Messenger is the second, they
becoming one would have been nice.

And chatting my friends on WhatsApp using Facebook Messenger [on the web]
would be a killer feature for me, I feel the need for a web interface/desktop
app every time I receive a message on WhatsApp and my phone is away.

[0] [http://newsroom.fb.com/News/805/Facebook-to-Acquire-
WhatsApp](http://newsroom.fb.com/News/805/Facebook-to-Acquire-WhatsApp)

~~~
yeukhon
Trust me. They will change. A year or two later they will add some integration
with FB. I am sure they have a bigger plan for the future (instagram,
whatsapp, fb) in one platform.

------
ThomPete
I am speechless....

Even if I apply all my knowledge about valuation, product market fit,
historical knowledge and add a glass is half full attitude to this acquisition
I can't fathom that evaluation.

Then I think about instagram selling for "only" 1B and it kind of make sense.
Kind of...

~~~
apa-sl
And after that think about Flickr selling to Yahoo for like $20m?

------
sschueller
So, now can we get someone to make an open source, distributed, and NSA secure
chat client?

~~~
patrickk
[http://mashable.com/2013/07/10/hemlis/](http://mashable.com/2013/07/10/hemlis/)

NSA proof messaging app from the co-founder of the pirate bay. The website
says they will open source it, however it only runs on their infrastructure.

~~~
balladeer
They said they will open source parts of it. And as long as there's not an
alternative that you can install it yourself along with their main server
installation - like XMPP - the risk will always be there. So, as now Viber
seems to be a better alternative than Helmis.

------
x0054
Could someone explain to me why WhatsApp is more popular then say Skype or any
of the numerous competitors. I looked at it for the first time today. I find
the design of the app to be a bit poor, at least on iOS6. Overall it's a good
app that functions well, from what I can see. But so does Skype, for instance.
Also, the lack of a PC/MAC client is kind of a letdown.

I know it's silly to argue with facts, clearly people really like this app.
But could someone explain to me why? I mean, how is it better than Fring, or
Skype, or Viber? Or is it just luck? I am curious because if they did
something right, I would love know what it was, so I can do it too :)

~~~
zyx321
In a word: Convenience. WhatsApp has a total overhead of about one minute per
year. Registration requires you to enter your phone number. Once. Afterwards
you don't have to worry about anything ever again. Maintaining your contact
list is a sunk cost, since it runs off phone numbers. It just works.

------
matthewhelm
"$4 billion in cash and approximately $12 billion worth of Facebook shares"

------
reubenswartz
Like many people, I found the price staggering. However, given that WhatsApp
is growing and may pass FB in active users in the next 2-3 years AND WA has a
great monetization strategy... It's not crazy to think that in a few years 1B
people would be paying $1 per year. Want to double revenues? How 'bout
$2/year. $5? $20 in US and other first world markets, $2 in developing
countries? Why not? In addition to the defensive move, this is about
disrupting a multi hundred billion dollar wireless industry. I wouldn't have
had the guts to do it, but I don't think Zuck is stupid.

~~~
keeptrying
$50 bucks for life plan ... :)

------
locusm
They recently did 54B messages in a 24 hr period
[https://twitter.com/WhatsApp/status/420373902980689920](https://twitter.com/WhatsApp/status/420373902980689920)

------
blackaspen
Damn.

I know Whatsapp is a big deal -- when I was in HKG a few weeks back every
advertisement was Phone Number and Whatsapp number (We're talking on-bench
advertising) and on TV as well. Still, crazy.

~~~
snogglethorpe
It seems _very_ country-specific... In east asia generally, China (ex HK),
Taiwan, Japan, Korea, etc, whatsapp doesn't seem to have much presence
compared to LINE / kakaotalk / wechat...

------
weixiyen
It's a crazy amount to pay, but in mobile software only 2 things really matter
- Photos and Messaging. These are the only 2 things that are universal to
every single person on this planet who owns a mobile device and if you want to
be #1 overall in the mobile space, you need to win in these 2 things.

If this guarantees FB winning the messaging war, then it's worth it. I still
think that Facebook needs to buy SnapChat, Line and WeChat to close the deal
and fulfill their dream of connecting the world.

------
shin_lao
Mark Zuckerberg is most certainly very intelligent and I'm pretty certain his
board is highly capable.

If they are ready to pay $ 16B for WhatsApp it means that it's worth, for
them, $ 16B.

For me the take away is that Facebook struggles to grow in "underdeveloped"
countries and will pay whatever it takes to make sure these zones are easy to
conquer.

Those markets are the growth of tomorrow and Facebook is certainly plateauing
at home.

In the long run, I think Facebook will become some sort of shell company for
"anything social".

------
danhopwood
As I tweeted this morning:
[https://twitter.com/dan_hopwood/status/436411010212454400](https://twitter.com/dan_hopwood/status/436411010212454400)

WhatsApp is to messaging what PayPal is to payments. Right product, right
time. Slow design iteration & little innovation over time. But as we've seen,
it hasn't mattered. Stripe, Line, WeChatApp know all too well that moving off
_such_ established players is tough.. but not impossible.

------
wudf
At least we'll still have viber

~~~
MichaelGG
Viber was just bought last Friday for $900M by Rakuten.

~~~
pbhjpbhj
>"Rakuten, Inc. is a Japanese electronic commerce and Internet company based
in Tokyo, Japan. Its B2B2C e-commerce platform Rakuten Ichiba is the largest
e-commerce site in Japan and among the world’s largest by sales." [Wikipedia]
//

------
berzniz
I wish they didn't sell. Love the product, FB will ruin it.

~~~
asselinpaul
Why do you love it? I'm honestly curious as to what it does that SMS,
Messenger or other messaging apps don't do.

~~~
ebrenes
I get charged a fee per SMS, but I just need an internet connection with
WhatsApp. Even when I'm abroad and I switch my SIM card to a different
provider contacts can still reach me.

I can have group chats in WhatsApp and send video, images and sound. Plus I
like how it lets me know if messages have been delivered. It's also fast and
doesn't drain my battery mercilessly. The times I've tried Skype on my mobile
device I can see my battery meter go down as I type.

But mostly I use it because all of the people I generally interact with in
real life are on it. All of my family, friends and acquaintances use it.

~~~
mverwijs
"But mostly I use it because all of the people I generally interact with in
real life are on it. All of my family, friends and acquaintances use it."

I like how you nailed the reason for Facebook buying WhatsApp.

------
jimzvz
Now facebook will access to my contact list :( It is really difficult to
remove Whatsapp as it the primary communication tool for most of my network.
Really sad news.

------
mudil
Disney is valued at $103B. That includes ESPN, parks, cruises, Star wars,
movies, merchandise, etc etc etc. So how's What's app is 1/5th of it?

~~~
adventured
Alcoa is worth $12 billion. Deere is worth $31 billion (2.4% dividend, $37b
sales, $3.5b profit). Caterpillar is worth $61 billion (WhatsApp is worth 1/3
CAT? lol). Or there's Sony, $17b market cap, $72b in sales.

The truth is WhatsApp is only worth ~11% of _Facebook_ , it's not actually
worth $19 billion free-standing, because Facebook's value is mostly in paper
that could never be sold for what it's trading at. Nobody is going to step in
and pay $19 billion in cash for WhatsApp, and you won't catch an industrial
titan like Exxon or Ford swapping its shares for nearly worthless instant-
messenger users. Google also wouldn't be so stupid as to do that in my
opinion.

------
kenshiro_o
Can anyone put in numbers what the benefit is for FBK in paying so much for
whatsapp? I just don't understand how a messaging company can be "worth" so
much, even after extrapolating the expansion in user base.

Don't get me wrong - WhatsApp is a great product and very easy to use on top
of that (using phone number as id is a great idea to onboard users in a very
intuitive way). But I fail to see where this valuation is coming from.

~~~
wellboy
It's pretty much fear in my opinion. The main platform Facebook is already not
cool anymore, so they have to buy cool things to stay cool.

Only problem is, if you're not cool and you acquire cool things, these things
automatically become not cool. But we'll see.

~~~
JetSpiegel
That's why they keep them separated.

Kids won't read the small print, and if you read the small print then you
don't see ads anyway, you're just a cost to them.

------
robot
Erlang anyone?

[http://shop.oreilly.com/product/0636920021452.do](http://shop.oreilly.com/product/0636920021452.do)

~~~
gulbrandr
What do you mean?

------
idleworx
And goodbye WhatsApp. It was time to move on anyway.

------
AznHisoka
Can someone enlighten me why WhatsApp is popular, and <INSERT ANY MOBILE
CHAT/IM APP> is not? Why not Google Talk? Why not AIM?

------
hoi
Makes perfect sense if you put it into the context of what is happening to
other messaging apps. Wrote this a few days ago before Viber and now this
acquisition. [http://www.hoista.net/post/76404923258/the-rise-of-trojan-
ho...](http://www.hoista.net/post/76404923258/the-rise-of-trojan-horse-
platforms-kakaotalk-wechat)

------
adventured
Anyone else think the "users" obsession smells an awful lot like the
"eyeballs" obsession?

Oh but these companies have revenue? WhatsApp and Snapchat have no meaningful
revenue in comparison to their valuations. And the companies with revenue, are
being valued at insane multiples (infinity for Twitter, 85 to 100 times for
Facebook, 800 or so times for LinkedIn).

------
prosperva
This was sorely done to retain users but I predict users are going to leave
both services and join Viber. Will Facebook also buy Viber?

------
CmonDev
Is it even real money that those companies are exchanging? I can't believe
it's same stuff I use to buy bread.

------
siliconbeach
[http://d.pr/i/2LPx](http://d.pr/i/2LPx) Mark's post about it.

------
domydeal
In order to keep up FB's stock valuation the need to show continued growth
which slowing at a vary rapid rate. WhatsApp is adding 1 million new users per
day. That's what zuck bought. And the ROI? Will be the market applauding FBs
growth and driving the stock price to $100.

------
napoleond
How many active users does WhatsApp have? I'm trying to put this in
perspective with the Instagram purchase and the Snapchat offer... finding it
very difficult to understand the math behind this acquisition, although it is
obviously linked to the recent plays with Messenger.

~~~
dandroid17
400 million [http://blog.whatsapp.com/index.php/2013/12/400-million-
stori...](http://blog.whatsapp.com/index.php/2013/12/400-million-stories/)

~~~
smackfu
A month later: [http://techcrunch.com/2014/01/20/whatsapp-
dld/](http://techcrunch.com/2014/01/20/whatsapp-dld/)

------
tulga
Facebook going to mobile operator business. They have very good relationship
with Microsoft. Microsoft has mobile platform and Nokia and Skype. I think FB
+ MS will create something to change whole telecommunication platform. Many
mobile operator companies afraid that.

------
paulrademacher
I think I will nominate myself to be the single person on Hacker News, who
after an announcement of a huge mega-acquisition, will skip all the high-
minded analysis and discussion of business models and ROI, and simply say:

Wow, I wish I had a $19B acquisition -- I'm jealous :-)

~~~
MatthiasP
I would already be satisfied with a $19M acquisition.

~~~
AznHisoka
Hell, I'd take a 1.9M acquihire, with 10 year golden handcuffs :P

------
andrewfelix
Serious question: What is so compelling about whatsapp? There are so many IM
protocols out there.

~~~
MichaelGG
From what I can tell: You just lay it on your phone and it "just works". That
is, you use phone numbers and it sorta places SMS. No accounts to create or
sign into, no contacts to add, etc.

------
peteridah
WhatsApp has become the defacto medium of communication with my friends and
family in Africa, emerging way ahead of phone numbers, sms, facebook et al. I
am not thrilled by the service, but if you want to stay in the loop, you have
to join the bandwagon.

------
matan_a
$3B in RSUs for employees. Assume 50 employees and equal share - that's $60M
each. Wow.

------
3apo
Relevant: Why we don't sell ads : Whatsapp (2012)
[http://blog.whatsapp.com/index.php/2012/06/why-we-dont-
sell-...](http://blog.whatsapp.com/index.php/2012/06/why-we-dont-sell-ads/)

------
rokhayakebe
Instead of stating the obvious, or hating, and congratulating, it would be
nice to hear your thoughts on the value of this deal, what FB will gain, where
do you see the IM space heading, could this be a Youtube like acquisition,
etc...

------
vladgur
Wow, thats an incredible return on a $8m sequoia investment

[http://techcrunch.com/2011/04/08/sequoia-whatsapp-
funding/](http://techcrunch.com/2011/04/08/sequoia-whatsapp-funding/)

------
booruguru
Facebook is barely 10 years old and they're already the new
Microsoft...maintaining dominance by acquiring every major competitor that
poses a threat. And I'm not necessarily saying that's a bad thing.

------
tomkin
This tech bubble is different.

[http://www.businessweek.com/magazine/content/11_17/b42250609...](http://www.businessweek.com/magazine/content/11_17/b4225060960537.htm)

------
fidotron
The question here is where do FB see the value? Is it a pure defensive play
about messaging or are they after the social graph you could extract (along
with a lot of other juicy data) from the WhatsApp DB?

------
techaddict009
Google placed bid of 1 billion $ and mark just multiplied it with 16 ! lol!!

~~~
pbhjpbhj
Maybe they got an extra 0 (zero) in there by accident?!

------
vmavalankar
You know we all know and feel the same: [http://vmavalankar.svbtle.com/why-
facebook-bought-whatsapp](http://vmavalankar.svbtle.com/why-facebook-bought-
whatsapp)

------
jebblue
What is WhatsApp? I saw the name somewhere before, maybe on HN, but who are
they that they can command a price in the billions? Isn't it a messaging app?
Why isn't Pidgin worth $16 Billion?

------
Kiro
[http://tctechcrunch2011.files.wordpress.com/2014/02/messagin...](http://tctechcrunch2011.files.wordpress.com/2014/02/messaging-
international.jpg)

Understandable.

------
rottyguy
A few thoughts..

I'm sure like many, I'm blown away at that price tag consider Motorola went
for 12B and the recent TWC/Comcast is valued at 45B with both having hard
assets. But after some reflections, I can see some positives that grounds my
disbeliefs a bit.

1) As someone has already calculated $40/user is really not that bad (though
how many overlap with fb already?)

2) You have trusted groups with WA, something you don't really have with FB
(facilities are there but I doubt many use it).

3) With trusted groups, you tend to be a bit more open about your dialog so fb
could gleen yet more, arguably better, information about you.

The other question in my mind are what other features are of value to WA?
Video (facetime-esq) seems like a no brainer...

------
awkwit
It'll be interesting to see if we still have as many Whatsapp-type apps in
future. It seems like there's already quite a few... WhatsApp... WeChat...
Line... Kakaotalk...Viber...

------
kolev
Desperation shadows reason. I personally think Kik was a better buy.

------
RandallBrown
What does WhatsApp offer that regular old text messages don't?

Is it just a price thing?

I can group chat, send images, and send video with everyone, even people with
dumbphones just fine using text messages (MMS).

~~~
Rizz
Price. I only just got my first contract with unlimited sms, before that it
was € 0,09 (12¢) after using the few hundred that come with your plan. MMS is
not included in plans and still is € 0,50 (69¢). So everything that's an image
or goes to a group goes on whatsapp.

------
tuxguy
[http://www.quora.com/WhatsApp-Messenger/How-did-WhatsApp-
gro...](http://www.quora.com/WhatsApp-Messenger/How-did-WhatsApp-grow-so-big)

------
vmavalankar
Here's why .. [http://vmavalankar.svbtle.com/why-facebook-bought-
whatsapp](http://vmavalankar.svbtle.com/why-facebook-bought-whatsapp)

------
vmavalankar
Here's Why .. [http://vmavalankar.svbtle.com/why-facebook-bought-
whatsapp](http://vmavalankar.svbtle.com/why-facebook-bought-whatsapp)

------
mnl
Aaand WhatsApp is down... on Saturday night (GMT+1). Chaos looms over Spain as
we can't remember when was the last time we used anything else to send plans
for tonight.

------
idleworx
One can only wonder how many services or products that provide true value and
innovation around the world could have been created with that much money
instead...

------
ksoti
Stupid question but will "existing" whatsapp users have to use their/create a
new facebook account to use whatsapp starting in a few months?

------
jokoon
what makes whatsapp so attractive already ?

I don't understand how it really avoid the SMS cost... I mean you can't have a
data plan across the entire world...

~~~
neves
Free wifi.

------
techaddict009
Seems like Mark Zuckerberg is turning crazy day by day!!

------
Nux
[http://www.whatsapp.com/faq/android/21119703](http://www.whatsapp.com/faq/android/21119703)

------
meric
They might as well go ahead and buy WeChat as well.

~~~
Cookingboy
Buying Tencent? That's gonna cost them a bit more than this...

~~~
mindotus
Looking at the market cap, it's around $128 Billion USD.

------
TomGullen
If I was a FB holder think I'd rather take a 10% dividend:

$19000000000 (purchase price)/2547000000 (number of shares) = ~$7.50 per share

------
dannyrosen
It's about the user's contact graphs and making the connections stronger.
They're buying user's phone books.

------
ulfw
Blackberry should have sold BBM to Facebook and shut it's doors. Their whole
market cap is about a quarter of that.

------
downandout
$3 billion in employee RSUs/~50 employees=~$60 million each. There are some
very happy WhatsApp engineers today.

------
sirji
Whatsapp was popular just because of its simplicity. Are this people going to
screw whatsapp? Hope they don't

------
kayoone
they dont buy the users or the app or the team. What they buy is massive
mobile usage. Lately i always thought that Whatsapp was becoming the next
facebook as event planning, foto sharing and of course messaging transitioned
from fb to whatsapp. Looks like fb thinks the same, they feared whatsapp.

------
tool
Great, the only way I was able to stay in contact with people without using
facebook is gone. Cancer.

------
vassvdm
This is fascinating. To think I was trying to convince people that MySMS was
better than Whatsapp...

------
adamio
Spend $19billion here in the hopes of segmenting the market with more startups
hoping to cash in?

------
karthikeleven
Now, you can finally say: It is OK to be a social startup and not be based out
of San Francisco.

------
hatred
Today , I feel I am really bad at maths counting return percentages. _Sigh_
$8m -> $16b.

~~~
Cookingboy
I did it this way: 100x return is 800M, 200x return is 1.6B, so 16B is 2000X
return, which is 200,000% return in initial investment.

I think it's less than that though, since obviously Sequoia didn't get 100% of
the company for their 8M, I think they walked away with 2.4B after this deal?

~~~
vassvdm
Whatsapp raised another 50m from Sequoia after those initial 8m

------
pyrrhotech
crazy to think WhatsApp is worth almost as much as Netflix or Tsla. I think
they overpaid. Will short the stock at open tomorrow. I was long $25 to $55,
but this kind of recklessness with a young management team is destroying
shareholder value.

------
bobowzki
Congrats to the whatsapp people!!

------
yoodenvranx
Can somebody explain me who gets this money and how it is distributed to the
owners?

~~~
vassvdm
One of the co-founders, Jan Koum, had 45% of the company at the time of the
purchase, which makes him worth about 6.8 billion.

------
tzury
This will be the largest Israeli Startup Exit of all times I think.

~~~
prostoalex
Isn't WhatsApp in Mountain View, CA?

~~~
smackfu
Founded by ex-Yahoo people too.

------
KevinAtHome
Strange no one is mentioning threema, getting popular in germany.

------
pinkskip
OMG. Next step Facebook messenger and whatsapp are merged?

------
samsquire
Does anyone know any alternatives (with group chat)?

~~~
danabramov
Where I live, a lot of people use Telegram. It has less cluttered interface
and is also much faster than WhatsApp on unreliable connections.

------
kdot
Facebook just purchased 400,000,000 phone numbers.

~~~
ozim
Exactly my thought at first, they are asking for it all the time, but I'm not
giving it. Now I uninstalled whatsapp from phone because I don't want facebook
having my number.

------
31reasons
New business model: Become a thread to Facebook.

------
te0006
This is just sick. Does at least some tax apply to such transactions in the
US?

Or think what the Gates Founation woul dbe able to do with just, say, a
quarter of this money.

~~~
MichaelGG
From reading Gates' annual letter, it doesn't sound like a whole lot would
change with that bit of extra money. The things they want to do, like
vaccinate multiple continents, take orders of magnitude more money than they
have.

Not saying it wouldn't be good or nice, but I don't think we'd see a
noticeable difference. After all, they could always step up their spending
from, what, $4BN a year?

------
KaoruAoiShiho
This is a much better buy than snapchat I think. But why is FB once again the
only one taking social seriously? Hello Google what are you doing...

~~~
psbp
Social isn't serious. It really shouldn't be.

~~~
KaoruAoiShiho
Obviously the best way to communicate is via carrier pigeons.

~~~
psbp
I'm saying this isn't needed and serious innovation. It's a popularity and
standards game. We definitely didn't use carrier pigeons before Whatsapp. IM
clients have been ubiquitous for years.

~~~
KaoruAoiShiho
On desktop, not on mobile. This is the first big mobile IM service and the
network effects are tremendous. Every other IM service is crappy (Skype) or
late (Voxer) or crappy and late (Hangouts).

------
return0
Is that a record price or something?

~~~
vassvdm
It's the current record for the acquisition of a venture-backed startup

------
dylanjha
How much revenue does WhatsApp have?

------
dodyg
The biggest question is off course when they will finally migrate from their
Erlang backend to JavaScript.

------
throwaway5752
Are you fucking kidding me?

------
imarihantnahata
And now, WhatsApp is down!

------
vdhus
does this mean Viber should feel ripped off at $900m?

------
steven2012
In one fell swoop, Snapchat went from fools to geniuses. Unbelievable.

~~~
omarchowdhury
No they are still fools because, other than Facebook, who else is going to pay
them $3 billion?

------
Srinivas_Tamada
Very height price

------
hrish2006
This sucks.

------
mrwnmonm
why should we care about this more than other things in our lifes?

~~~
fletchowns
Who said you should? Why would you even leave a comment like this?

------
hasenj
Am I the only one who thinks this is beyond crazy?

Youtube was acquired for less than $2B (and not even in cash!)

------
happyscrappy
Maybe part of it is for the data on WhatsApp users.

* "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/](http://www.whatsapp.com/legal/)

Still seems ridiculously expensive.

------
notastartup
I think this one will be the turning point for Facebook, remember that M & A
in the corporate world have history of senseless and expensive moves that end
up bankrupting the company who buy it, $40 per user is an extremely risky bet
when Facebook themselves can't even monetize it's own userbase. This appears
to be a road to become as big as possible so that you can't possibly appear to
fail when faced with companies like Microsoft, Google, Yahoo who are after
profitability aligned with their own products.

------
mknits
Facebook is now like American Kingfisher! Users from India will understand.

------
almosnow
Damn, from any viewpoint you want to see it, just damn.

------
gailees
HOLY SHIT!

------
gailees
Email is dead.

