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We are, but I find it distasteful how people are reacting to this deal. I think a lot of people really don't understand exactly how popular this thing is. Who c

We are, but I find it distasteful how people are reacting to this deal. I think a lot of people really don't understand exactly how popular this thing is. Who cares if people in India use it, I haven't seen it in my personal little bubble so it must be pure hype. People are taking out their feelings about other aspects of the industry and the economy on this deal. If you're one of the people bitching about how startups focus too much on the problems of rich young men, what's not to like about this? What is more broadly useful than a messaging system?

deleted 13y ago
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objclxt 13y ago
Just because something is popular doesn't make it inherently valuable, because popularity is often fleeting. Over the past fifteen years nearly all messaging platforms have had bell-curves of popularity. MSN, ICQ, AIM, BBM. What stops users of WhatsApp from moving onto another platform? Nothing. Personally I think the deal is bad for Facebook because they've spent $16+ billion acquiring users that are ephemeral. They are not buying technology. They are not buying talent. It is purely a user buy.
001sky 13y ago
This is a point well made, but ~marketable demographics are relevant to a biz based on ad revenue like FB. So it is a legit concern if new customers are dilutive from this perspective. But...and this is the big but...the what's app M&A deal seems to be purposefully orthogonal to "ad based eyeballs" both from a product and a strategic perspective. Comms svcs are actually inherently valuable in their own right (point 1) and often this value is ruined by advertising (point 2); as a result things like mobile telco is paid for by services fees rather than intrusive and manipulative advertising. Now, with those two counter-balancing points being made, the valuation question for any company (pre-IPO) with a $19B purchase price at something like 40x Revenues (assuming ~$500m/yr) is still open to legitimate "interpretation" (er, questioning). I don't think pure math questions can be dismissed out of hand on that. The one explanation that does likely have some grain of truth to it, is whether or not we are in a 'bubble'...FB is protecting its valuation. That is to say, the damage done by <in>action is likely to cost FB more than $19B if they get leap-frogged by the next major evolution in the market. So, in other words, it seems there is some logic that backs this deal with or without the bubble question really being relevant. At least to FB.

deleted 13y ago

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objclxt 13y ago

Just because something is popular doesn't make it inherently valuable, because popularity is often fleeting. Over the past fifteen years nearly all messaging platforms have had bell-curves of popularity. MSN, ICQ, AIM, BBM. What stops users of WhatsApp from moving onto another platform? Nothing. Personally I think the deal is bad for Facebook because they've spent $16+ billion acquiring users that are ephemeral. They are not buying technology. They are not buying talent. It is purely a user buy.

001sky 13y ago

This is a point well made, but ~marketable demographics are relevant to a biz based on ad revenue like FB. So it is a legit concern if new customers are dilutive from this perspective. But...and this is the big but...the what's app M&A deal seems to be purposefully orthogonal to "ad based eyeballs" both from a product and a strategic perspective. Comms svcs are actually inherently valuable in their own right (point 1) and often this value is ruined by advertising (point 2); as a result things like mobile telco is paid for by services fees rather than intrusive and manipulative advertising. Now, with those two counter-balancing points being made, the valuation question for any company (pre-IPO) with a $19B purchase price at something like 40x Revenues (assuming ~$500m/yr) is still open to legitimate "interpretation" (er, questioning). I don't think pure math questions can be dismissed out of hand on that. The one explanation that does likely have some grain of truth to it, is whether or not we are in a 'bubble'...FB is protecting its valuation. That is to say, the damage done by <in>action is likely to cost FB more than $19B if they get leap-frogged by the next major evolution in the market. So, in other words, it seems there is some logic that backs this deal with or without the bubble question really being relevant. At least to FB.