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Right, I'm sure that the WhatsApp founders thought that Facebook paid $19 billion for a company just to keep charging $1 per year with no ads and no data collec
by ggg9990 8y ago
Right, I'm sure that the WhatsApp founders thought that Facebook paid $19 billion for a company just to keep charging $1 per year with no ads and no data collection.
- jimmywanger 8y agoAs long as Facebook paid, their money was good, and there was a contract signed, it does not matter. This is wrong. Who cares what somebody else thinks when you get billions of dollars? Not your problem anymore. They should have really held Zuckerberg's feet to the fire and enforced the contract by suing. It seems like a slam dunk. (IANAL)
- duxup 8y ago"enforced the contract by suing" What did the contract say? The only contract I saw in the original story noted that if adds were forced on them some people could leave with more stock..... that wouldn't have prevented anything.
- jimmywanger 8y agoNo, but they could have bled Facebook further with more stock, which is fairly freely convertible. "You own the company. If you put ads on the product we sell, give us more money." You don't have to prevent anything, you just have to make them think about things.
- deleted 8y ago[deleted]
- sunstone 8y agoI'm assuming here that your comment is sarcasm. But in fact it's not entirely wrong headed. At the time of the purchase WhatsApp had clear momentum with 500m users paying $1 per year, say. The standard business assessment is that a business is worth 10x earnings so 5bn. But that's assuming WhatsApp was static in users but it, in fact, was on a growth curve. So $5bn was the low end of valuation, the top end would include all 7bn humans on earth. That would be stretch at $70bn for WhatsApp. $22bn in the end was pretty reasonable given the circumstances.
- ggg9990 8y agoYour analysis assumes that WhatsApp cost $0 to maintain and grow and that 2-day old infants are using WhatsApp, and ignores the fact that the vast majority of WhatsApp users at the time of acquisition had not even paid the $1.
- sunstone 8y agoTrue enough. But the factors you mention are round off errors and "not material" as a steely eyed accountant would say. At the time of the buyout the "conversion ratio" of those that paid the $1 after a year would have been well established.
- ggg9990 8y agoIt's more than that -- in many of their biggest markets (e.g. India) they waived the $1 fee entirely so all of their users there were free. So you can't really figure out the conversion ratio because it was never tried.