So, everyone is discussing the $19B Facebook / Whatsapp deal, discussing it on every media. And Zuck says it was actually a bargain.
Yeah right. A bargain. Read CNN’s 10 other things Facebook could have bought with $19 billion.
We at Data Geekery are more down to earth, selling actual value to our own customers. So we take the opportunity to issue this friendly reminder about what happens when you and your shareholders believe that a primitive chat service is worth $19B because of its oh-so-many users:
- 1998: America Online to Buy Internet Chat Service for $287 Million
- 1999: Some random event
- 2010: AOL Sells Instant Messaging Service for $187.5 Million
- 2014: Some other random event
So, should our own business not work out, we can still make tons of money this year through PUT warrants on FB. Because the above is not the only issue with Facebook. Check out this video:
Facebook is willing to sacrifice ridiculous amounts of money for conquering the Mobile market. This article is really interesting (http://highscalability.com/blog/2014/2/26/the-whatsapp-architecture-facebook-bought-for-19-billion.html). WhatsApp has 32 engineers only supporting it’s IT infrastructure. Those are the real heroes of this business transaction.
Yeah, it’s crazy. I have a tremendous amount of respect for these startups that scale up to the whole globe, even if it’s just a ridiculous set of functionality. But still. We’re talking about $19B. If this isn’t the social media bubble, then we’re heading right into a USD hyper-inflation.
I’m sure they didn’t go for profit on this one. I can’t imagine how is WhatsApp going to return the 19B investment. It’s not the application that they bought. It’s a market opportunity that may offer them a strategic advantage over Google. It’s like a Kasparov-Karpov game, it’s hard to understand the moves before the game ends.
The game will end in 2014. Google has been profitable from the beginning and helps businesses convert their advertising investments. Facebook, on the other hand has been a disappointment so far. But nice comparison with a chess game :-)