7 ms·
Most people weren't actually paying. Apparently, the vast majority of users were granted free lifetime memberships (see comments here [1] and article here [2])
by downandout 9y ago
Most people weren't actually paying. Apparently, the vast majority of users were granted free lifetime memberships (see comments here [1] and article here [2]). When Facebook acquired it, it only had $10 million in annual revenue [3] against 450 million users. Clearly, most users were jumping on board during times when it was made available for free.
[1] http://www.idownloadblog.com/2013/07/16/whatsapp-goes-free/ http://www.idownloadblog.com/2013/07/16/whatsapp-goes-free/
[2] http://www.iphoneincanada.ca/recommendations/whatsapp-messenger-is-currently-free-in-the-app-store/ http://www.iphoneincanada.ca/recommendations/whatsapp-messen...
[3] https://www.recode.net/2014/10/28/11632404/facebook-paid-19-billion-for-whatsapp-which-lost-138-million-last-year https://www.recode.net/2014/10/28/11632404/facebook-paid-19-...
- fasj82 9y agoDo you need more than $10M/year for 450M users? As I've said in another comment they barely stored anything server-side and it's known they have a very optimised stack
- downandout 9y agoYou do if you’ve been acquired for $19 billion. The founders couldn’t have been naive enough to think that Facebook and its shareholders didn’t have a need to monetize such an enormous investment. Facebook is not a charity, it’s a business.
- DSingularity 9y agoFacebook monetizes Whatsapp by limiting its growth. You can easily think of all the “social” functionality Whatsapp could have added in competition with FB and Messenger.
- kerng 9y agoFacebook paid 19 billion to buy up competition, as WhatsApp was a threat to the Facebook ecosystem.
- unlimit 9y agoThat is what I am seeing now here in India, folks in my circle barely post anything to facebook now, all pictures, status messages are on WhatsApp now.
- BurningFrog 9y agoIf FB pays $19B for every messenger competitor that gets traction, that's a huge incentive to make more of them.
- bryanrasmussen 9y agoyeah but now you have to compete with WhatsApp to get that traction, so maybe a hard slog.
- sjclemmy 9y agoAnd if FB shut down WhatsApp, users will be looking to go elsewhere, and probably not FB Messenger.
- ksaxena 9y agoThere are network effects at play; so once a messenger has locked-in most users, it's extremely hard for newcomers to gain sustainable traction.
- paxy 9y agoHosting is pretty far down in the list of operating costs for a business. Employee salary, benefits, marketing etc. is where most of the money goes.
- fasj82 9y agoWhatsApp had 55 employees and I'd say it had no marketing to speak of.
- sanderjd 9y ago55 * $100,000 is already $5.5 million. Revenue of $10M/year seems pretty tight to me, for a 55 person company.
- paxy 9y agoReal costs per employee are 2-3x the salary anyways.
- kbenson 9y agoI find that hard to swallow for a small company size, such as being discussed here. Do you have a reference or some reasoning to support this? I'm interested to know where it comes from.
- ghaff 9y agoBenefits, office space, equipment, T&E, employment taxes, etc. This is an old article but it suggests about 2.7x. [1] I agree that it might be less for a startup assuming a frugal startup but it's probably at least 2x salary on average. [1] http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-... (This is old but nothing really substantial has changed except.)
- michaelt 9y ago
- hinkley 9y agoLet’s say you figure out how to run a company with 100M customers with only five employees. What stops me from getting together a few friends and stealing your business model? At some point you have to add value just to keep the wolves at bay.
- neuland 9y agoNetwork effects?
- EGreg 9y agoRed Queen effect
- salawat 9y ago...So you'd try to solve the same problem with a different sticker to score quick cash? I'd like you to read this and contemplate. http://www.catb.org/esr/writings/unix-koans/ten-thousand.html http://www.catb.org/esr/writings/unix-koans/ten-thousand.htm... If you didn't bother reading and contemplating, here's the gist: There is no wolf to fear. We are all finite beings with finite time and resources. You 'stealing' his hypothetical business model doesn't really accomplish anything except tie up your resources retracing his steps. You would be the fool reimplementing the pipe. Now if you are the type of person who reduces life down to only pursuing the almighty dollar rather than trying to solve difficult extant problems... Well... Maybe that would be worth it to you. Even then though, he has already captured his audience, and he'll likely have a reputation advantage over your copy. Anywho. Food for thought.
- dvt 9y ago> Let’s say you figure out how to run a company with 100M customers with only five employees. That's not how it works. I'm pretty sure you and I could write a Snapchat clone in a weekend. This doesn't imply we'll ever reach 100M users.
- ggg9990 9y agoYou could write a Snapchat “clone” but not with anything close to its performance. Snapchat has to be the most performant app I have ever seen.
- ghazak 9y agoThey did a great job avoiding taking too much funding though!
- reitanqild 9y agoI started paying before they were bought, I might even have paid twice and I loved it. Would happily paid for a few famuly members as well. Also there should be a huge possibility to increase revenue by selling API access (think appointment reminders etc as well as the whole bot ecosystem). When Telegram started they talked about price and I think I remember being unconvinced. I wanted to pay. As we (used to) say here on HN: if you're not paying you are the product. (Of course now we have learned that some companies charge us and still sell our (meta)data and advertise to us.)