Published: February 24, 2014
There has been a lot of halo since Facebook bought Whatsapp for the price of 1 US warship carrier (+ pocket change of 3 Instagrams), ergo quite a few billion dollars. Yes, what Facebook was worth a few years ago, they just bought a company worth (true, mostly in their own stock, but still).
There is a lot on the internet to read about why they bought it, the analysis of buying it, its potential, etc. There were also many people talking about the business model, I am a firm believer, if you have good users, money comes. But noone really talked about the core use-case – I will do that.
Messaging apps like Whatsapp, WeChat, and Telegram are often mistaken for social networks. But these apps have nothing in common to social networks, and probably can’t even ever be migrated (I can be wrong) to being more of a social network without alienating their user base. Unlike what some journalist often think, using apps like Whatsapp is not a replacement of social networking, but a replacement of texting. Yes, just traditional original SMS (Short Messaging Service, remember? :)), texting. And texting is being replaced with these data services and apps like Whatsapp.
So what did Facebook buy? They bought $20M of revenue (for 800x revenue, I believe a new record), they bought almost 500M users. But the real question is, with the current APIs of iOS / Android to help scale and build mobile applications, with the connection to address book and social channels like Facebook or Twitter, it becomes much easier to launch apps and scale them. Are we sure today, that these users are really that valuable? Applications like Telegram grew 5 million users when Whatsapp was down for a bit. I guess its sort of a “wait and see” thing.
Well, point is, I am really not convinced about the value of the “messaging” users, and I am sure you can’t value them as much as you can value social networking users with a built up network, but maybe there is a master plan that I am not seeing (and I am sure there is), and I am looking forward to seeing it unveiled. After all, Mark Zuckerberg has proven to be one step ahead of others when it comes to thinking about the future of products, so I am led to believe this is one of those cases.
I am not building on the philosophy of how Facebook will monetize, how will they grow, etc. – I am merely commenting it from a product use-case, and I believe the use-case is that if people don’t have iPhone+iPhone and can’t use iMessage, they will use Whatsapp or other types of communication. There is just one purpose of these apps, not more.