For those that have been living under a rock the last week, Facebook bought WhatsApp for $19Bn.
So obviously this happens the same day I write a post about how Facebook's "Paper" wasn't really doing it for me - just when I thought they were failing, they go and do something like this...and TOTALLY REDEEM THEMSELVES.
Undoubtedly you've read a bunch of opinions already, but here are my three favorite parts of the deal:
- Cofounder Jan Koum, originally from Ukraine (shout-out to former Soviet block), is now worth an estimated $6.8Bn - no biggie. But seriously, what a great success story.
- Side note - I wonder how the offer was given. I picture them both sitting at a table across from one another, Zuck smoking a cigar and Jan just sweating. Zuck writes down $19Bn on a piece of paper and ever so gently slides it across. Jan can't control his emotions and jumps with joy. Zuck laughs at him and goes "haha silly boy, only $4Bn is in cash." (maybe it actually didn't happen like that, who knows really)
- Sequoia, the sole institutional investor in WhatsApp, absolutely CLEANED UP (and I mean CLEAAAAAAANED UP)
- Nobody knows for sure yet (well, I guess Sequoia does...and maybe a few others), but it has been reported that Sequoia invested a total of ~$60mm into WhatsApp over the course of multiple funding rounds. Depending on what kind of percentage they own (my personal guess is around 25%-30% of the company), Sequoia's share of the deal would be around $5Bn - not a bad little payday I guess if you're into that kind of thing. Well played Sequoia, well played.
- Lots of people are balking at the price tag - On a per user basis (~$40/user), that's actually not terrible...Let's look at some other deals and how users were valued:
- When Facebook went public, they were valuing themselves at ~$125/user
- When Facebook bought Instagram, they paid ~$28/user
- Yahoo paid ~$830 for each user of Geocities
- Ebay paid ~$240 for each user of Skype
- Google paid ~$50 for each user of YouTube
All in all not a terrible price to pay in my opinion, it's just a high number because they have a lot of users...
I'm interested in what happens in the aftermath of this deal:
- How will Facebook treat this new acquisition and how does it plan to monetize WhatsApp users?
- What will happen with other messaging apps now? Are they officially on the block? (I'm talking to you Blackberry, Snapchat, Kik)
- Does this open the floodgates for some other big social deals in the near future?
At the end of the day, Facebook came to play - they showed up to the Catalina Wine Mixer, and they just crushed it (drops mic).
