Why Facebook had to pay $19 billion for #WhatsApp
Two years after buying Instagram for $1 billion, Facebook dropped a bomb Wednesday in the whole startup world. Immediately, a bunch of related questions to this incredible amount popped up on Twitter. With the very first one being :
Is WhatsApp worth $19 billion?
Mark Zuckerberg explained that “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable”. $19 billion for 1 billion people, let @TechCrunch put this number in context for you.
The consequences of such deal could be as much good for the app industry as it could provoke a big shift in the behavior of entrepreneurs, investors and speculators. As Daniel Rafill, founder of mobile app Snapguide, explains it : “That kind of enthusiasm is both a curse and blessing for the industry”. So why spending so much if it’s threatening for innovation in the app world? Or if you take that question from another angle:
Why Facebook needed WhatsApp so bad?
For several reason. First, let’s take a look (again) at the numbers. Whatsapp in a nutshell:
450 million people using the service each month
…70% of whom are active on any given day
More than a million registered users every day
20 billion messages a day
These numbers are pretty impressive but maybe not that impressive to spend $19 billion for.
One reason is that Facebook is getting old, and teens start to turn to other services like instant-messaging ones that “connects people more immediately and intimately than Facebook”*. Facebook also needed to go mobile, because people tend to be more often on their smartphones than on a computer and its attempts were not very successful, even though Paper seems pretty promising.
Second one is that young people are looking for more privacy too or even anonymity. On this side, Facebook has never been an example of transparency. Social media users are getting more concerned about their private informations and don’t necessary want to share everything about their lives just to be able to have a conversation with someone else.
Last reason but not least, is because of the international market and especially the Asian one. In India and in a lot of Asian countries, the mobile is – just like it’s the case for young people – more and more used than computers. The necessity for Facebook to penetrate the Asian mobile market is tightly linked to the opportunity to finally take a bigger step in these foreign markets.
Anyway, this incredible story confirm one more time that the future on social media will be on our mobile phones.