Messaging app WhatsApp was bought by Facebook today! And when you’re facing the prospect of a 5 year old company being acquired for $19 billion, can you really blame founders Brian Acton and Jan Koum? Probably not.
The thing is that it’s just insane the amount of money being tabled for a messaging app. And can Facebook recoup their investment in WhatsApp? The social media giant announced they will keep it independent, and with no advertisements scheduled to appear. Yet, the question of the day is: Where’s the money going to come from?
WhatsApp is available on a host of mobile operating systems, which includes iOS, Android, Windows Phone, Blackberry, Nokia S40 and Nokia S60 – making it very popular among users in emerging markets which appears to be Facebook’s play here. In fact TechCrunch cited a survey today by Jana Mobile that says people were 12X to 64X more likely to say WhatsApp is their most used messaging app, compared to Facebook.
However it’s no secret that the social network has seen a flood of teens abandoning Facebook for simpler social networks. A study found they’re heading to messaging and photo sharing apps like WeChat, Snapchat and Instagram. Meaning Facebook’s latest move into mobile could be to strengthen its presence amongst teens. After all Facebook’s business model is advertising and collecting data on its users for advertisers, and key insights on a younger audience could to be a gold mine for Facebook by improving its ad offering
Nevertheless let’s take a look at some key facts about WhatsApp I gathered today, some of which might shed some light into why Facebook decided it was worth $19 billion.
17 Facts About WhatsApp
- WhatsApp founded in 2009 by former Yahoo! employees Brian Acton and Jan Koum
- Sequoia Capital invested $8 million in 2011
- 70% of users are active on a daily basis
- WhatsApp says they are adding 1 million users everyday.
- They currently employ 50 people
- 32 engineers working on WhatsApp, i.e. one engineer is responsible for 14 million active users!!
- 400 million active users in December
- Rising to 450 million active users according to Facebook’s press release
- The app is the 5th most downloaded app on Android
- WhatsApp doesn’t sell ads and zero have appeared on the app
- Twitter and Facebook had the chance to hire founder Brian Acton but didn’t!
- The total value of the deal: $19 Billion ($4 billion in cash, $12 billion in stock, and $3 billion in restricted stock)
- $1 Billion Break-up fee should the deal not go through.
- Jan Koum keeps a note from Brian taped to his desk that reads “No Ads! No Games! No Gimmicks!” To keep them focused on building a pure messaging experience.
- WhatsApp spent ZERO cash on marketing, PR and user acquisition
- WhatsApp’s messaging volume is approaching the entire global telecom SMS volume
- On Dec 31st 2013 users sent a total 54 billion messages during the day (3x increase from 2012)
How it became so popular?
Looking at those numbers reads like a fairy tale and is an inspiration to aspiring entrepreneurs. But what exactly made WhatsApp so popular? Here’s a short list that contributed to its increasing usage since 2009:
- All you need to sign up is your phone number
- WhatsApp tapped into your contact list to display friends already using the app.
- 2G & 3G data plans paved the way for affordable messaging across borders (all you need for WhatsApp is an internet connection)
- Free for a year and $0.99 a year for unlimited messages
- MMS was rarely used due to its cost, WhatsApp made it affordable with its photo sharing feature
- Cross platform compatibility (still includes Symbian!!) saw users in emerging marketing jump on the bandwagon
WhatsApp got a lot things right in the beginning and its growth rate is reportedly faster than Facebook’s. With Mark Zuckerberg even saying “WhatsApp is on a path to connect 1 billion people.” But with such a huge amount of money on the table – one has to wonder what $19 billion could’ve been used for instead?
What do you think of the recent news? Let us know in the comments section below.