The social juggernaut Facebook has entered an agreement to purchase massively popular instant messaging service WhatsApp. The $16 billion acquisition churns to $4 billion cash and $12 billion worth of Facebook’s stocks. In addition, Facebook is offering $3 billion in restricted stock units which will be granted to WhatsApp employees and founders.
Used by over 450 million users across the globe, the
whopping 16 billion dollar valuation has left many people in shock, but
it fits Facebook’s roadmap to “make the world more open and connected”.
Interestingly this is about twice the price Microsoft paid for Skype
three years ago. And this is by far the biggest investment Facebook has
made till date.
What does this deal mean?
So what happens now? Do your WhatsApp friends start appearing on your Facebook too? Or will it be other way around? Or are we looking at one application that will offer to handle both Facebook messenger and WhatsApp? Well, none really, at least for now. Facebook says WhatsApp will work independently, with the same team and same leaders. But, it definitely wants to see some integration in the future.“WhatsApp will complement our existing chat and messaging services to provide new tools for our community. Facebook Messenger is widely used for chatting with your Facebook friends, and WhatsApp for communicating with all of your contacts and small groups of people. Since WhatsApp and Messenger serve such different and important uses, we will continue investing in both and making them each great products for everyone.”, said Mark Zuckerberg on his Facebook page. Mobile is the next computing platform, and Facebook has laid its cards straight. Last year, the social network giant was keen on to buy Snapchat, another popular photo and video sharing service. And a year before, it bought the popular photo social network Instagram for $1 billion.
While company’s own Facebook Messenger is stack, it has failed to create a direct messaging service. Of about 450 million users who use WhatsApp, 70 percent people fire up the app everyday. Facebook notes that WhatsApp is close to surpassing the SMS volume by all the telecom companies.
In short, this is how Facebook sees the deal,
Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. WhatsApp’s brand will be maintained; its headquarters will remain in Mountain View, CA; Jan Koum will join Facebook’s Board of Directors; and WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.And Jan Koum, CEO of WhatsApp explains how this is not really going to affect you.
WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.Founded back in 2009 by Mr. Koum and Brian Acton, two former Yahoo executives, WhatsApp is available across all popular mobile platforms. Just two years after its launch, the service received about $10 million funding. It has grown strong and has become the most popular instant messaging service by miles of difference.
Did you know that each WhatsApp employee stands to get around $54 million on an average post acquisition? This and many other crazy numbers to digest.
Let’s sit back and take note of these crazy numbers.
450 million active users – WhatsApp has more than 450 million active users, and if you consider the registered user base, that would be much higher. In comparison, Facebook has around 945 million active users. Considering WhatsApp is less than 5 years old, that’s a staggering number.
55 employees – WhatsApp supposedly has just 55 employees working for them, with 32 of them being the engineers. Now that translates to over 14 million active users per engineer/developer. Read that again – 14,000,000 active users per developer.
$35 per current user – The $16 billion deal values WhatsApp users at $35 each. This is pretty close to what Google had paid to YouTube. In comparison, Rakuten recently bought Viber (with around 300 million active users) for about $3 per user.
$3 billion for Employees – Usually, the employees of company getting acquired are hired with some bonus at best, but Facebook has agreed to give $3Bn in RSUs (Restricted Stock Units) which equates to approximately $54 million for each employee.
50 billion messages – Approximately 50 billion messages are exchanged on WhatsApp every day.
500 million images – WhatsApp processes 500,000,000 images every day, which is more than SnapChat’s 400 million and Facebook’s 350 million figures.
44% – That’s the percentage share of WhatsApp amongst social messaging apps which people use on a weekly basis. In comparison, Facebook messenger is at 35% and WeChat is at 28%.
70% – That’s the percentage of the active user base on WhatsApp who are active on a given day.
1 million new users per day – According to WhatsApp, the company is adding over 1,000,000 new users every day. That’s a huge growth rate for any service.
0 ads – This possibly defines what WhatsApp is all about. The company has been committed to keep the popular messaging platform ad-free. Though the creators promised that it remains autonomous even after Facebook acquisition, we should wait and what Facebook does after an year or so.
7 trillion – According to Facebook, WhatsApp’s volume is approaching the entire global telecom SMS volume, which is close to 7 trillion messages per year. That’s 7,000,000,000,000 messages!
$2 billion – Break-up fee to be given by Facebook to WhatsApp should the deal not go through. $1bn cash and $1bn shares.
100,000,000 – 500,000,000 – That’s the number of times WhatsApp is installed on Android alone. We don’t know the actual number of installs yet.
$60 million – That’s how much Sequoia supposedly invested in WhatsApp over three rounds of financing. Important thing to note here is that Sequoia is the sole venture capital firm who currently holds shares in WhatsApp. They stand to make approximately $3.4 billion out of this deal.
