You just thought the Flabby Bird clones were everywhere. Now, everyone will be making messaging apps, as if they were not already. Whatsapp is the newest rags to riches story on Wall Street after Facebook agreed to acquire them in a $19 billion cash and stock deal. Of course, we hear the platitudes of the service will remain autonomous and the user experience will remain the same.
Sure, and I have $19 billion worth of bridges to sell to you. If this service looks the same in a year, Facebook is going to answer Wall Street. Sorry Whatsapp, you’re in a whole new world now. Your users have been replaced by earnings reports. The deal comes with a seat on the board for CEO Jan Koum.
Breaking down the numbers for WhatsApp, Facebook is paying roughly $45 per user in the transaction. One piece of good news in the astronomical figure? At least they know the users are real. Now good luck in monetizing a group that is wholly ad blind and is not afraid to take flight to newest messaging service.
The company prides itself on its anti-ad philosophy, something that’s a hit with users, but isn’t going to go over well with Wall Street come Q1, Q2, Q3 and Q4. Coming in at a dollar a year sounds great, but Wall Street is going to want Facebook to start experimenting at some point, much like they are with ads on Instagram. It has its foothold into Europe and emerging markets, now comes the question of when and how do you use it?
Follow the Images?
Facebook processes around 350 million a day along with Instagrams 55 million. WhatsApp? 500 million. The text messaging service is the biggest image sharer around, and that’s not even its primary service. In comparison, Snapchat processes 400 million images a day. Instagram was bought by Facebook for $1 billion. People thought that purchase price was outsized.
Then again, it is easier to see the monetization strategy working on Instagram. It seems Facebook wants to ensure that it dominates the social image landscape. Somewhere, Flickr is dying inside.
Private Market Bubble?
The 90s saw the rise of the dot-com bubble with IPO after IPO. Now companies are barely getting to multiple rounds of venture funding before being scooped up for ever-increasing prices. Instagram, Nest, Viber, WhatsApp etc. I think Apple at this point is glad that Elon Musk is saying that a Tesla acquisition is unlikely. What would the price be?
Oh, and before Blackberry shareholders get excited over this deal, you’re the wrong demographic. It is probably best you stick to raging against the T-Mobile CEO for the time being. Then again, who knows in this new normal.