rogermunibond Posted February 20, 2014 Share Posted February 20, 2014 http://timesofindia.indiatimes.com/tech/tech-news/software-services/How-Asian-messaging-apps-LINE-and-WeChat-are-threatening-Google-Apple-and-Facebook/articleshow/30682063.cms Link to comment Share on other sites More sharing options...
Grenville Posted February 20, 2014 Share Posted February 20, 2014 In the event of termination of the Merger Agreement under certain circumstances principally related to a failure to obtain required regulatory approvals, the Merger Agreement provides for Facebook to pay WhatsApp a fee of $1 billion in cash and to issue to WhatsApp a number of shares of Facebook's Class A common stock equal to $1 billion based on the average closing price of the ten trading days preceding such termination date. Link to comment Share on other sites More sharing options...
Nnejad Posted February 20, 2014 Share Posted February 20, 2014 In the event of termination of the Merger Agreement under certain circumstances principally related to a failure to obtain required regulatory approvals, the Merger Agreement provides for Facebook to pay WhatsApp a fee of $1 billion in cash and to issue to WhatsApp a number of shares of Facebook's Class A common stock equal to $1 billion based on the average closing price of the ten trading days preceding such termination date. Lol. Link to comment Share on other sites More sharing options...
DoddDisciple Posted February 20, 2014 Share Posted February 20, 2014 Yay, Facebook : where a good portion of the profiles are fake and the bought ad traffic is suspicious :) Link to comment Share on other sites More sharing options...
JBird Posted February 20, 2014 Share Posted February 20, 2014 Four years ago, Brian Acton was looking for a job. Twitter and Facebook said no. So he and Jan Koum, a colleague from Yahoo, set out to do their own thing. Today, they sold that thing to Facebook for 19 billion dollars. http://techcrunch.com/2014/02/19/how-things-change/?utm_campaign=fb&ncid=fb Link to comment Share on other sites More sharing options...
Myth465 Posted February 20, 2014 Share Posted February 20, 2014 Facebook is trading users valued at $170 for users valued at $40. This is a good deal as long as it's with Facebook's highly overvalued stock. I think Zuckerberg is a smart capital allocator and knows FB's primary income stream is built on a house of cards -- if he can trade a piece of this for growing, disruptive companies it's a great deal for FB. Mark may be the only one who realizes that FB doesn't have as big as a moat as everything things and can be threatened by the flavor of the month messaging app. I bet Blockbuster wises they just paid 50 times earnings for netflix early on. Link to comment Share on other sites More sharing options...
Ham Hockers Posted February 20, 2014 Share Posted February 20, 2014 Crap, I hope they don't start charging. I've been using Whatsapp free for years. Link to comment Share on other sites More sharing options...
APG12 Posted February 20, 2014 Share Posted February 20, 2014 Does anyone have an idea of what it would cost to create another WhatsApp? In my experience, apps are usually worth $1-5 a user. How can you start monetizing a product that someone else can come along and replicate for little cost? That's the beauty of the tech industry- low capital intensity. Management said explicitly that monetizing the service is not going to be a priority. Has anyone else noticed that "thinking long-term" has become a euphemism for, "it's OK that we aren't making any money and don't have a clear plan to do so"? Think Amazon, Twitter, Facebook, WhatsApp, SnapChat, Tesla. All we have to do, we're told, is think long-term. Well I've been thinkin and I don't like what I'm concluding. Link to comment Share on other sites More sharing options...
hyten1 Posted February 20, 2014 Share Posted February 20, 2014 well creating app is not the biggest issue (i am sure their app is nice and the infrastucture costs some money) its the users. the app is useless if your friends and family don't have it. also i think some of the articles have mention, they don't necessary have to charge for the message per se, but they can use the app to launch many other products and service which will then be charge. (there was a bunch of example in china, think payment, dating etc etc. prob tons of others, the reason this is more feesable is the engagement of the app, i believe whatsapp has one of the highest engagement, something like 70%+ use it daily) also correct me if i am wrong, i think whatsapp is profitable (they only have 60 so employee, if they charge $0.99 per year per user that is easily $400mil approx) hy EDIT: i am not a user, but from what i have read, whatsapp has the largest user base out of all the msg apps. i think other big ones are around 200mil. whatsapp must be doing something right to come out on top within the sea of msg apps. Does anyone have an idea of what it would cost to create another WhatsApp? In my experience, apps are usually worth $1-5 a user. How can you start monetizing a product that someone else can come along and replicate for little cost? That's the beauty of the tech industry- low capital intensity. Management said explicitly that monetizing the service is not going to be a priority. Has anyone else noticed that "thinking long-term" has become a euphemism for, "it's OK that we aren't making any money and don't have a clear plan to do so"? Think Amazon, Twitter, Facebook, WhatsApp, SnapChat, Tesla. All we have to do, we're told, is think long-term. Well I've been thinkin and I don't like what I'm concluding. Link to comment Share on other sites More sharing options...
DCG Posted February 20, 2014 Share Posted February 20, 2014 Crap, I hope they don't start charging. I've been using Whatsapp free for years. It sounds like they're going to charge $0.99 per year, which seems more than reasonable. With 450 million users (not sure how many people would resist paying a dollar a year if they like the service), that can give you a quick half a billion in annual revenue. The question (as mentioned earlier in this thread) is that it seems like another company could easily replicate this technology and steal business away from them). Link to comment Share on other sites More sharing options...
Palantir Posted February 20, 2014 Share Posted February 20, 2014 Perhaps TSLA at 23B is not so expensive! Link to comment Share on other sites More sharing options...
yadayada Posted February 20, 2014 Share Posted February 20, 2014 It doesn't seem like it has much of a moat tho. You can easily tell your friends to get some other free app that probably works the same. Just as easy. You all tell each other to download it, without much hassle at all. Usually you only use it with 10 people at most I guess. It is not like facebook, which is more complex and where you have more people and foto's and other data. Link to comment Share on other sites More sharing options...
hyten1 Posted February 20, 2014 Share Posted February 20, 2014 hmm i hear ya, but consider this, tsla is no yet profitable on GAAP bases, biz is more capital intensive, its possible tsla has a bigger moat? whatsapp only 60 or even at 100 employee, if they charge $0.99 per user they are immensely profitable, also other service they can start. hmm, which one would you rather own? (for coolness TSLA, but purely on above i am leaning towards whatsapp, also facebook instantly makes whatsapp more valueable due to the distrubution/profit potential). i was thinking of the moat issue as well, but remember there are ALREADY TONS of free msg apps, TONS, why whatsapp at 450 mil users? jmho hy Perhaps TSLA at 23B is not so expensive! Link to comment Share on other sites More sharing options...
Valuebo Posted February 20, 2014 Share Posted February 20, 2014 If making profits is irrelevant anyway for these kind of apps; could google or someone else make an app that actually rewards users extremely for using the app / letting friends join? Say a buck / active friend or a saving program for free android apps? Network effect sounds nice and all but this isn't exactly microsoft office. In the end, these things are fads, no matter how many people use them. On what whatsapp is doing right: many do things right but just a few get really lucky as well. Not much of a magic formula for the most part imo. Link to comment Share on other sites More sharing options...
hyten1 Posted February 20, 2014 Share Posted February 20, 2014 tombgrt, i hear ya but i was thinking, free msg app has been around for a LONG LONG time on mobile. and there are already TONS of free msg apps. now unless someone all of sudden due to this deal can create one that somehow competes better (which all this time they haven't been able to) EDIT: google has there free msg app already, rumor they try to buy whatsapp for 10bil hy If making profits is irrelevant anyway for these kind of apps; could google or someone else make an app that actually rewards users extremely for using the app / letting friends join? Say a buck / active friend or a saving program for free android apps? Network effect sounds nice and all but this isn't exactly microsoft office. In the end, these things are fads, no matter how many people use them. On what whatsapp is doing right: many do things right but just a few get really lucky as well. Not much of a magic formula for the most part imo. Link to comment Share on other sites More sharing options...
gary17 Posted February 20, 2014 Share Posted February 20, 2014 If making profits is irrelevant anyway for these kind of apps; could google or someone else make an app that actually rewards users extremely for using the app / letting friends join? Say a buck / active friend or a saving program for free android apps? Network effect sounds nice and all but this isn't exactly microsoft office. In the end, these things are fads, no matter how many people use them. On what whatsapp is doing right: many do things right but just a few get really lucky as well. Not much of a magic formula for the most part imo. i believe i read somewhere, maybe on bloomberg, that whatsapp do not ask for personal info - just verification of phone numbers - so there is that uniqueness. LINE is really popular - especially amongst Asians because of these crazy emoticons you can download and purchase Link to comment Share on other sites More sharing options...
hyten1 Posted February 20, 2014 Share Posted February 20, 2014 i do have to say as a value investor, i have a hard time understand/swallow business that eventually will produce tons of money (or potential) i guess its just in my nature, and i can relate to others in this. that is why i don't make a good VC (venture capitalist), just not in my nature. Link to comment Share on other sites More sharing options...
jschembs Posted February 20, 2014 Share Posted February 20, 2014 What's scary to me right now is how many are beginning to use relative valuation to justify current transactions/stock prices. Link to comment Share on other sites More sharing options...
Valuebo Posted February 20, 2014 Share Posted February 20, 2014 Or google tried to up the price for fb... why make it easy on your competitors? Link to comment Share on other sites More sharing options...
hyten1 Posted February 20, 2014 Share Posted February 20, 2014 also in regards to no profit now but profit later i do have to say, its not in my nature to think like that or put it another ways sometimes, maybe sometimes certain business need to built a base before profit, i know we value investors don't like that. i guess FB is a good example of that, would FB be FB if they started to charge/ads right from the start? maybe. i am not saying or do i invest in biz with potential like fb or whatsapp. i am just pointing out that sometimes "no profit now but profit later" is the right way. now i have no idea when that is, nor are the odds great in my opinion, or do i invest like that. Link to comment Share on other sites More sharing options...
Ham Hockers Posted February 20, 2014 Share Posted February 20, 2014 what ever happened to ICQ or AIM? Link to comment Share on other sites More sharing options...
Guest wellmont Posted February 20, 2014 Share Posted February 20, 2014 what ever happened to ICQ or AIM? this is the problem. they were both the "hot" messaging platforms at one point. now they are nothing. messaging is so reliant on a fickle audience and is subject to rapidly changing technologies. this whatsapp deal is one of the crazier things I've seen even by dot com bubble standards. it's actually a $19b deal. because fb had to give whatsapp employees $3b incentive to stay. Link to comment Share on other sites More sharing options...
savant Posted February 20, 2014 Share Posted February 20, 2014 what ever happened to ICQ or AIM? Thanks for bringing this up. Im based out of India. Used to be a big ICQ user back as a teenager. One day everybody moved to another program to chat and I remember even as a child back then - being amazed at how quickly people can switch from one social app to another. I have recently moved to Whatsapp but that is only because it is cheaper than SMSing. At some point, the mobile cos will either make messaging free or an app like blackberry messenger will come out as a free product for all cellphones. Isn;t there already a product called Viber that is better than Whatsapp? Link to comment Share on other sites More sharing options...
Ham Hockers Posted February 20, 2014 Share Posted February 20, 2014 this is the problem. they were both the "hot" messaging platforms at one point. now they are nothing. messaging is so reliant on a fickle audience and is subject to rapidly changing technologies. this whatsapp deal is one of the crazier things I've seen even by dot com bubble standards. it's actually a $19b deal. because fb had to give whatsapp employees $3b incentive to stay. I have the same gut reaction, but just to play devil's advocate, how many Whatsapp users are non-FB users currently, and how many will become FB users after the acquisition? That's worth something. Link to comment Share on other sites More sharing options...
Aberhound Posted February 20, 2014 Share Posted February 20, 2014 Just as an aside, the only outside investor, Sequoia, made out like bandits on this deal: April 2011 investment: $8M Rough estimate of their stake now (assuming conservative 15% ownership): $2.4B 300x return in under 3 years. Sequoia deserves every penny of that 300x because moving from 1 city to 150 takes many different skills, which needs to be put together. I have a good candidate of which I have a small piece which is now one of the top downloads locally and it would take $10m to roll out to the 150 top cities in North America. During roll out you get the same customers in multiple cities so it's get easier as you roll out. So far only vulture capitalists. Where are the fair and friendly investors to be found? Apps can be designed to create incredible leverage and zero marginal costs so once created you offer incredible value to the customer. The value then creates a first user network advantage so long as you build your moat and keep your price and terms easy and attractive. Hoot suite is an excellent example of this. At $10 per month and steady improvements few are going to switch. The apps look easy to duplicate but it takes a lot of skills to make them so they are user friendly, enjoy strong magnetic draw to get users to sign up and offer ease of use and good economics for the customer who should be in a niche so it is possible to roll out economically. I chose the app because in the dot com boom the guy created a a web app which caused a company to go up 100 fold when it was bought by one of the old guard who then killed the project to protect their business only to be destroyed by google instead. I also chose the guy because he was willing to listen to apply the building business moat lessons I learned from this great board and from reading Buffett and the like. It is very rewarding to see the lessons you learn reading work in the real world. Link to comment Share on other sites More sharing options...
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