News broke late last night about Facebook buying WhatsApp for $19 billion is cash and stock, a gigantic deal that dwarfs even the extremely high prices that other tech start-ups have received lately in buy outs.
But WhatsApp aren’t your every day tech start-up, in fact they are an outstanding organisation who have stuck by their morals despite the odds being stacked against them. Let me explain more;
From the off the two founders of WhatsApp Jan Koum and Brian Acton had a simple rule: No Ads! No Games! No Gimmicks! – instead of using these tools too boost their popularity and revenue as their competitors had done they concentrated on staying true to their goal, which was to build the best, cleanest and fastest mobile messaging app.
They definitely achieved that, in fact statistics show that WhatsApp handles more messages today than traditional SMS. This high amount of use supported their business model which was to remain free for the first year and then simply charge $1 per annum thereafter. When you consider the cost of SMS in the UK that $1 is money very well spent.
So SMS is old hat I hear you cry.. Well what about versus Twitter? WhatsApp has more than 400million users of which 200million are active users, which is more than Twitter. On top of this their $19 billion price tag puts them roughly at half the value of Twitter – that is impressive!
What makes this even more impressive is that around a year ago Microsoft paid $8.5 billion for Skype and a couple of years back Instagram was a snip for Facebook at $1 billion.
WhatsApp, as well as being very successful only employed 55 people. And not a single one of those 55 was a marketing executive, they simply didn’t spend money or time on marketing, preferring to let their technology do the talking – and it worked.
Facebook have attempted to create their own mobile messaging app by utilising their instant messaging platform which has been successful, but not on the level of WhatsApp. It is very likely the case that Facebook valued the brains behind WhatsApp just as highly as the platform and its users. But at a cost of $19 billion Facebook are paying $345 million for each employee.
Incredible stuff! Well done WhatsApp.