By now you’ve probably heard the news. Facebook has gobbled up WhatsApp for $19 Billion dollars. It would seem in the aftermath of failing to buy SnapChat, FB is betting even bigger on messaging. Gotta respect that chutzpah, I love seeing a player at the table double down.
The pundits and analysts are having a field day with predictions and “inside scoops”. I think it’s funny that many are simply looking at numbers and technology.
“If SnapChat continues to add users at the rate it currently is, this could advantageous for Facebook paradigm shifting synergy shareholders proactive engagement with target demographics and influencers blah blah blah…”
On a quick tangent, why do analysts always try and predict the market as if it were to stay exactly the way it is today with no evolution or change? I digress.
Now here’s the fun part. I can’t claim to understand why FB valued this start up so highly. It can’t be the technology. The FB messenger and Skype integration work well. WhatsApp really doesn’t bring much to the table here.
There’s a psychology behind this purchase which makes some sense. I think people are starting to guard and filter more of what they’ll say publicly on FB. Chat is more intimate, and FB will have access to the juicer communications users engage in. WhatsApp is a terrific replacement for text messaging, and often the service is used for that kind of personal messaging. As FB is a service which exists to profit off of user data, the more access it gets, the more effective it can be in that mission.
Also, the age of an audience for WhatsApp makes it desirable. Facebook is getting older. It only makes sense that at some point Zuckerberg would want to diversify. Beginning with Instagram, and moving into future services I’m sure, building a mini empire of apps NOT called Facebook helps take some of the pressure off of the flagship product, keep it from getting bogged down trying to compete with every fad that hits the ecosystem.
But is that worth $19 Billion?
And here’s where I get stumped again. That’s a LOT of green to make up a return on your investment. So I’ll ask you all, where do you think FB makes money on this deal? Where do you see this investment paying off? I’m not impressed with the analysts on this one, I think you’ll be more fun.