“The most important thing to understand about WhatsApp is just how terrifying it is to a company like Facebook. It can compete with Facebook on its most valuable turf — users’ smartphones and text conversations — without exhibiting aggressive business ambition.”
Facebook will acquire WhatsApp for over $16 billion, according to the company. This is an objectively enormous amount of money, and far more than Facebook offered for Snapchat. But WhatsApp is — or was — arguably the largest known threat to Facebook. It was one of the only services that could plausibly claim to be cannibalizing Facebook on a large scale, and one of a small few that pose to it an existential threat.
The $19 billion deal to sell WhatsApp Inc. to Facebook Inc. (FB) started at Yahoo! Inc. more than five years ago, when Jan Koum became disillusioned at the way Internet companies were fixated on advertising.
He left Yahoo in 2007 with one of the company’s other engineers, Brian Acton, and started a company by 2009 that shuns advertising altogether. The strategy allowed them to concentrate on creating an easy-to-use messaging product instead of developing new ways to glean customer information for their marketing pitches, Koum said in a 2012 blog post.
“No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they’ll see tomorrow,” Koum said in the post. A hand-written note on the his desk reads: “No Ads! No Games! No Gimmicks!”
Facebook just announced it’s buying WhatsApp, a global messaging platform with 450 million MAUs, for approximately $19 billion. It’s one of the biggest tech acquisitions since HP bought Compaq for $25 billion in 2001.
It means that WhatsApp, which raised a comparatively measly $8 million since its 2011 launch, is now worth nearly $20 billion.
Remember the good old days, when we all raised our eyebrows at the $1 billion Instagram acquisition? Or Lenovo purchasing Motorola Mobility for $2.9 billion?
Simpler times.Since $19 billion is a ridiculously large amount of money to wrap our heads around, we decided to compare that to other ridiculously valuable things, companies and people.
$19 billion is…
- 4x the market cap of BlackBerry
- Approximately one-third the market cap of Ford
- 2.8x the market cap of GroupOn
- Effectively equal to the market cap of The Gap
- Slightly more than Sony’s market cap around 10 percent
- Around three-fourths the market cap of Delta
- 7.5 Mark Cubans
- Almost precisely one-third of HP’s market cap
- 2 nuclear submarines
- 62 percent of Twitter’s market cap
- 76,000 trips to space on Virgin Galactic
- Almost 60 percent of Sprint’s market cap
- 25 Instagram acquisitions