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Mark Zuckerberg: WhatsApp Was Worth Even More, Doesn't Need To Make Money

Feb 24 2014, 12:46pm CST | by

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Mark Zuckerberg: WhatsApp Was Worth Even More, Doesn't Need To Make Money

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Mark Zuckerberg: WhatsApp Was Worth Even More, Doesn't Need To Make Money

If Mark Zuckerberg was willing to pay $19 billion for WhatsApp — valuing it at around a tenth the size of Facebook itself — he must have a pretty good plan for recouping the cost of all that capital in fairly short order, right?

Nope. In a keynote interview at Mobile World Congress in Barcelona, Zuckerberg suggested that the mobile messenging app will enjoy a long grace period before it’s expected to start kicking in its fair share of the rent. In negotiations with WhatsApp cofounders Jan Koum and Brian Acton, he said, a key selling point was the proposition that “they can focus for the next five years or so purely on connecting more people.”

Five years! Compare that with Instagram, which introduced ads to its users’ streams less than 18 months after Facebook acquired it. And Instagram, at $715 million, was a relative bargain-bin pickup.

Or was it? Zuckerberg seems to think Facebook made out quite well in the transaction.

“I actually think that by itself it’s worth more than $19 billion, although it’s hard to make that case today because they have so little revenue compared to that number,” Zuckerberg said.

Well, yes.

His math is based not on how much WhatsApp is making now (although it is profitable from subscription fees alone) or on any existing plans to monetize it but strictly on how few services there are with the potential to attract 1 billion users, a goal it’s already nearly halfway to achieving.

There’s a chance that this is the one service that gets to 1 billion people but is not that valuable,” Zuckerberg said, but it’s not very likely. “Even just independently, I think it’s a pretty good bet.”

Zuckerberg promised that WhatsApp will be allowed to operate independently, and that the service is “absolutely not going to change.” Presumably he didn’t mean it won’t change at all, since just this morning the company announced plans to add voice calls to its offerings in the next few months.

Zuckerberg was also asked by an audience member whether the WhatsApp deal means Facebook is still a potential suitor for Snapchat, which it tried to acquire for $3 billion in November. Zuckerberg suggested it was no longer on the table: “After buying a company for $16 billion, you’re probably done for a while.”

Source: Forbes


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