Facebook has a huge wallet and Zuckerberg likes spending money from it. The biggest news from today is that Facebook bought WhatsApp. The news has blown up, almost everyone knows about this now. It is not because of the acquisition, but the price. A lot of eyebrows were raised back when Facebook bought Instagram for a Billion Dollars.Well, what do you expect the internet to do when Facebook buys WhatsApp for $16 Billion with a ‘B’.
WhatsApp was founded by Koum and Brian Acton back in 2009. WhatsApp is a Cross Platform Instant messaging software which has a client for almost every mobile. Both Koum and Acton were Yahoo Employees before they came up with the brilliant idea. They left Yahoo in 2009 and were in search for a job. In fact, Brian Acton was rejected by both Facebook and Twitter. Things changed when Apple launched the App Store. They wanted to build an App which would let people communicate a lot easier. It was not the messaging. It was an app where people could update their status and others could see it. It was pretty slow and they almost gave up and gained momentum when Apple added push notifications for Apps. Later, the app evolved to let people message on it. People loved it. The App let them send messages across countries for free which otherwise had steep prices. They charged a one time fee of $1 to download the app. But, this was not enough. Soon, they were running out of money. So, they raised $8 Million and $250,000 as seed money from Jim Goetz who has been their only investor till now. This let them expand the App.
- 450 Million people use WhatsApp each month.
- The service adds a minimum of 1 Million users each day
- Three times more active users than Twitter.
- 600 Million photos are being sent each day
- 200 Million voice messages are sent each day
- 100 Million Video Messages are sent each day
Whatsapp was bought by Facebook for a total of $16 Billion. $4 Billion was given in cash and the remaining in Stocks. Also, an additional $3 Billion in restricted stock units that will go to WhatsApp’s employees; those will vest over a period of four years after the acquisition is finalised.
This is way more than Motorola or Blackberry is valued at. This makes the company 200th largest American Company by Market Cap. Facebook spent as much as NASA’s 2014 Budget, or the price of two Nuclear Submarines!
Both the founders will get $5 Billion each. The only investor Jim Goetz who invested just $8 Million will get $3.2 Billion
Here is the complete version of Mark Zuckerberg’s statement on the acquisition:
I’m excited to announce that we’ve agreed to acquire WhatsApp and that their entire team will be joining us at Facebook.
Our mission is to make the world more open and connected. We do this by building services that help people share any type of content with any group of people they want. WhatsApp will help us do this by continuing to develop a service that people around the world love to use every day.
WhatsApp is a simple, fast and reliable mobile messaging service that is used by over 450 million people on every major mobile platform. More than 1 million people sign up for WhatsApp every day and it is on its way to connecting one billion people. More and more people rely on WhatsApp to communicate with all of their contacts every day.
WhatsApp will continue to operate independently within Facebook. The product roadmap will remain unchanged and the team is going to stay in Mountain View. Over the next few years, we’re going to work hard to help WhatsApp grow and connect the whole world. We also expect that WhatsApp will add to our efforts for Internet.org, our partnership to make basic internet services affordable for everyone.
WhatsApp will complement our existing chat and messaging services to provide new tools for our community. Facebook Messenger is widely used for chatting with your Facebook friends, and WhatsApp for communicating with all of your contacts and small groups of people. Since WhatsApp and Messenger serve such different and important uses, we will continue investing in both and making them each great products for everyone.
WhatsApp had every option in the world, so I’m thrilled that they chose to work with us. I’m looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting.
I’ve also known Jan [Jan Koum, WhatsApp founder and CEO] for a long time, and I know that we both share the vision of making the world more open and connected. I’m particularly happy that Jan has agreed to join the Facebook board and partner with me to shape Facebook’s future as well as WhatsApp’s.
Jan and the WhatsApp team have done some amazing work to connect almost half a billion people. I can’t wait for them to join Facebook and help us connect the rest of the world.
This is probably worth the purchase for Facebook, a companies which relies on it’s users. The users complete a social network. It lets them stay in the race. Instead of trying to compete in a race where the other is a clear winner, Facebook decided to buy them out. After the acquisition, the 450 Million users will be using Facebook’s WhatsApp.
But, one thing to be not here is that WhatsApp is not huge as you think. It does not connect everyone in the World. In face, not many know of WhatsApp in the country which has most mobile phones – China. Everyone uses WeChat there, a service which has seen exponential growth. In countries like US and Australia, iMessage prevails. WhatsApp’s biggest market are the developing countries like India, Brazil and South Africa.
Mark’s assurance that the service will still remain is an assurance for the users. But, is the price tag of $16 Billion for the App justified? Let us know in the comments section below.