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WhatsApp was making decent money and not burning VC money at all when we sold to FB. this was in 2014. There is no such thing as clearly economically unsustaina

WhatsApp was making decent money and not burning VC money at all when we sold to FB. this was in 2014. There is no such thing as clearly economically unsustainable. It is just harder.

throwaway9041 4y ago
WhatsApp was operating at a loss when Facebook bought it in 2014 and this is when it had 600 million users. Now it has over 2 billion. Source: https://techcrunch.com/2014/10/28/whatsapp-revenue/amp/ https://techcrunch.com/2014/10/28/whatsapp-revenue/amp/
- aroraneeraj 4y ago
  yeah read the story. " Its net cash used in operating expenses during the first half of 2014 was $13.5 million, which sounds much more reasonable."
  - aahan5 4y ago
    Would the WhatsApp business model of 2014 be able to afford the vital features nowadays of voice calls, video calls, large files, etc? Do you really believe that WhatsApp would have been able to get that 1 dollar from emerging markets as well, which have a tougher time performing online transactions?
  - skinnymuch 4y ago
    Does that mean Whatsapp did not burn 7+ figures a year from 2012 to 2014?
k1rd 4y ago
The way WhatsApp used to make money was through a subscription model. It cost $1 to download and then $1 a year going forward. Facebook eventually removed the $1 fee and made WhatsApp a free service, I paid that Dollar!
- aroraneeraj 4y ago
  right. Many around the world paid that 1$.
  - Calvin02 4y ago
  - skinnymuch 4y ago
    WhatsApp had 600M users. A dozen million people paying the $1 per year is many people. In the multiple threads about WhatsApp and the $1 charge, most people never paid anything. Looking at the revenue and everything, doesn’t seem like enough were paying.
- umeshunni 4y ago
  Yeah, I think former head of business at Whatsapp, who you're replying to, knows that.
- gunapologist99 4y ago
  I thought it was free to install and didn't charge $1 until the following year? EDIT: looks like it was $1 on IOS and free everywhere else: https://venturebeat.com/2012/12/03/facebook-whatsapp-talks/ https://venturebeat.com/2012/12/03/facebook-whatsapp-talks/
  - DocTomoe 4y ago
    Knowing Apple, I expect that one dollar installation fee being pushed into their coffers, either directly (because the App Store is pay to play) or indirectly (because they force you to use Apple hardware to develop and push stuff onto the App Store)
est31 4y ago
The problem really starts when you take in venture capital, not when a possible exit is on the table. Whatsapp was making money, but was that enough for the VCs? Even if it was not burning currently, it might have burned it in the past, so if the VCs trigger the clauses to ask their money back, you might not be able to give the money to them, ending up bankrupt. Plus, VCs might have a majority on the board. They see nothing but money, so they will push for the option that results in the highest payout for them, even if it is immoral, and even if that means using their powers to kick out the founders. VCs look for businesses that 10x their investment in a very short time frame, and use that money to finance their many more failed ones. What might be a solid business in the wild is something they cull.
- gen220 4y ago
  What you're saying applies to the majority of VC-backed companies, but none of your concerns applied to WhatsApp's situation. WhatsApp was (is?) famously lean. They essentially never needed to spend a cent of VC money, even though they took on two rounds. I think the story goes that when they took on a Series B, one of the cofounders sent a screenshot to Sequoia (repeat, sole investor) of the untouched bank account containing their Series A. Or maybe it was a screenshot of the Series B heading into the acquisition, I forget which.
  - keypusher 4y ago
    Why take vc money you don't need?
    - deleted 4y ago
      [deleted]
    - ISL 4y ago
      To have a war chest/insurance in case you need it.
      - michaelchisari 4y ago
dvt 4y ago
Not sure why you would be dishonest about this when it's easily verifiable to be false[1]. Even ignoring the meager revenues with 600M(!) users, WhatsApp had no way to realistically meet their equity obligations without a fat exit. And then, FB wanted to make their money back (duh). [1] https://techcrunch.com/2014/10/28/whatsapp-revenue/ https://techcrunch.com/2014/10/28/whatsapp-revenue/
skinnymuch 4y ago
I’m not sure how this meme got started. I think it was something like WhatsApp may have been profitable in its first year when it was barely started but that doesn’t appear to be true either. Whatsapp was always a money pit, even if that meant losing 7 or 8 figures a year vs some startups burning 9 figures a year (there would have been less of this 8 years ago too, before the tech stock explosion).

WhatsApp was making decent money and not burning VC money at all when we sold to FB. this was in 2014. There is no such thing as clearly economically unsustainable. It is just harder.

throwaway9041 4y ago

WhatsApp was operating at a loss when Facebook bought it in 2014 and this is when it had 600 million users. Now it has over 2 billion. Source: https://techcrunch.com/2014/10/28/whatsapp-revenue/amp/ https://techcrunch.com/2014/10/28/whatsapp-revenue/amp/

aroraneeraj 4y ago
yeah read the story. " Its net cash used in operating expenses during the first half of 2014 was $13.5 million, which sounds much more reasonable."
- aahan5 4y ago
  Would the WhatsApp business model of 2014 be able to afford the vital features nowadays of voice calls, video calls, large files, etc? Do you really believe that WhatsApp would have been able to get that 1 dollar from emerging markets as well, which have a tougher time performing online transactions?
- skinnymuch 4y ago
  Does that mean Whatsapp did not burn 7+ figures a year from 2012 to 2014?

k1rd 4y ago

The way WhatsApp used to make money was through a subscription model. It cost $1 to download and then $1 a year going forward. Facebook eventually removed the $1 fee and made WhatsApp a free service, I paid that Dollar!

aroraneeraj 4y ago
right. Many around the world paid that 1$.
- Calvin02 4y ago
- skinnymuch 4y ago
  WhatsApp had 600M users. A dozen million people paying the $1 per year is many people. In the multiple threads about WhatsApp and the $1 charge, most people never paid anything. Looking at the revenue and everything, doesn’t seem like enough were paying.
umeshunni 4y ago
Yeah, I think former head of business at Whatsapp, who you're replying to, knows that.
gunapologist99 4y ago
I thought it was free to install and didn't charge $1 until the following year? EDIT: looks like it was $1 on IOS and free everywhere else: https://venturebeat.com/2012/12/03/facebook-whatsapp-talks/ https://venturebeat.com/2012/12/03/facebook-whatsapp-talks/
- DocTomoe 4y ago
  Knowing Apple, I expect that one dollar installation fee being pushed into their coffers, either directly (because the App Store is pay to play) or indirectly (because they force you to use Apple hardware to develop and push stuff onto the App Store)

est31 4y ago

The problem really starts when you take in venture capital, not when a possible exit is on the table. Whatsapp was making money, but was that enough for the VCs? Even if it was not burning currently, it might have burned it in the past, so if the VCs trigger the clauses to ask their money back, you might not be able to give the money to them, ending up bankrupt. Plus, VCs might have a majority on the board. They see nothing but money, so they will push for the option that results in the highest payout for them, even if it is immoral, and even if that means using their powers to kick out the founders. VCs look for businesses that 10x their investment in a very short time frame, and use that money to finance their many more failed ones. What might be a solid business in the wild is something they cull.

gen220 4y ago
What you're saying applies to the majority of VC-backed companies, but none of your concerns applied to WhatsApp's situation. WhatsApp was (is?) famously lean. They essentially never needed to spend a cent of VC money, even though they took on two rounds. I think the story goes that when they took on a Series B, one of the cofounders sent a screenshot to Sequoia (repeat, sole investor) of the untouched bank account containing their Series A. Or maybe it was a screenshot of the Series B heading into the acquisition, I forget which.
- keypusher 4y ago
  Why take vc money you don't need?
  - deleted 4y ago
    [deleted]
  - ISL 4y ago
    To have a war chest/insurance in case you need it.
    - michaelchisari 4y ago

dvt 4y ago

Not sure why you would be dishonest about this when it's easily verifiable to be false[1]. Even ignoring the meager revenues with 600M(!) users, WhatsApp had no way to realistically meet their equity obligations without a fat exit. And then, FB wanted to make their money back (duh). [1] https://techcrunch.com/2014/10/28/whatsapp-revenue/ https://techcrunch.com/2014/10/28/whatsapp-revenue/

skinnymuch 4y ago

I’m not sure how this meme got started. I think it was something like WhatsApp may have been profitable in its first year when it was barely started but that doesn’t appear to be true either. Whatsapp was always a money pit, even if that meant losing 7 or 8 figures a year vs some startups burning 9 figures a year (there would have been less of this 8 years ago too, before the tech stock explosion).