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Facebook Is Dead, Long Live Facebook

Feb 20 2014, 8:36am CST | by

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Facebook Is Dead, Long Live Facebook

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Facebook Is Dead, Long Live Facebook

The word you hear over and over discussing this $19 billion acquisition of WhatsApp by Facebook is: ballsy.

As in: “I can’t believe Mark Zuckerberg is being so ballsy” or “wow, this is ballsy… he’s really going for broke.”

A couple of years ago here in Forbes, I wrote that Facebook would be “dead” in 8 years.  Not bankrupt dead, but MySpace-dead (meaning MySpace is really around but effectively it’s irrelevant).

So what’s Zuckerberg done since then?  He’s taken mobile revenues from zero to more than half Facebook’s revenues and he’s bought two of the biggest external threats to Facebook’s perch at the top of the social landscape.

If you can’t beat ‘em, ingest ‘em.

Instagram is now off the market for a billion (in cash and stock) or 1% of Facebook’s market cap at the time.  WhatsApp is now off the market for $19 billion in mostly stock (I’m not saying if it’s inflated or not – I’m just pointing out that Zuck is making good use of all the assets the market has chosen to bestow on him at the moment).

Zuckerberg is a student of history apparently.  He seems to have taken Andy Grove’s mantra of “only the paranoid survive” to heart.  He’s also cleverly watched Yahoo pass on opportunities a decade ago to buy first Google and later Facebook itself.  He’s consciously decided to not go down that path.

If there’s any up and coming service that shows promise, the trick is to take it off the market now before these promising companies become market behemoths.

It’s brilliant – really.

Does it show desperation? I don’t think so.  But it shows that Zuck is acutely aware of the ephemeral nature of Facebook’s current leadership.  That self-awareness is a strength, not a weakness.

Is the deal destined to work out?  It’s not clear yet.

The rationale is clearly that WhatsApp is going to continue to grow like a weed and – within a couple of years – will be at over a billion monthly active users.

It doesn’t matter one bit that they made $20 million last year.  What matters is how there are numerous ways to monetize a service with greater than a billion users.

But I saw someone tweet yesterday that Facebook had won the messaging battle if not the war (Jessica Guynn of the LA Times, I believe).  I don’t agree at all and I’m sure Zuck wouldn’t agree.

WeChat is dominant in China, Line is dominant in Japan and many other countries, and Kik is doing great among North American youth.  Although WhatsApp is popular, it’s actually far less innovative in layering additional services on top of their core messaging platform than the others.

But Zuck can change that it he wants.

And, don’t believe for a second that Zuck’s mega-deals are done after this.  As long as he has currency to deploy, it’s clear he won’t be shy to use it.

The old Facebook is dead. Long live Facebook.

[Long YHOO]

Source: Forbes


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