Facebook Buying Whatsapp

FB-buys-WhatsApp

It’s a popular service that lets millions of people share text, photos and videos on their smartphones.  But it isn’t Facebook – and that’s one of the main reasons Facebook has snatched up WhatsApp.

The price-tag is an astounding $19 billion.  Facebook will pay $12 billion in stock, $4 billion in cash, and $3 billion in stock grants.  The deal is bigger than any acquisition by Google, Microsoft or Apple.  And certainly gives new evidence that apps specializing in mobile messaging are hot commodities.

Mobile messaging apps are a cost effective alternative for pricey text messages.  As a result, WhatsApp has some 450 million monthly users.

The founders Jan Koum and Brian Acton started WhatsApp in 2009, two years after they left their jobs at Yahoo Inc.

The Ukraine-born Koum moved to the U.S. when he was 16.  Acton was born in Michigan.

“We’re the most atypical Silicon Valley company you’ll come across,” Acton told Wired in a December interview that the magazine will publish next month in its U.K edition. “We were founded by thirtysomethings; we focused on business sustainability and revenue rather than getting big fast; we’ve been incognito almost all the time; we’re mobile first; and we’re global first.”

WhatsApp’s founders shun ads. But unlike Facebook, which now relies on advertisements for the bulk of its revenue, WhatsApp remains ad-free.

Users who download WhatsApp on their phones are greeted with a link that reads “Why we don’t sell ads.” The link leads to a quote from Tyler Durden, the anti-establishment character from the 1996 novel “Fight Club.”

Facebook’s Mark Zuckerberg said quote, “Whatsapp is on the path to connect one billion people.  The services that reach that milestone are all incredibly valuable.”

 

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