Make us your home page
Instagram

Facebook gets what it wants at any cost

Facebook just made its boldest business move ever, buying the mobile messaging service WhatsApp in a deal worth some $19 billion in cash and stock. That's six times what Google paid for Nest in January, and 19 times what Facebook paid for Instagram two years ago. It's so much money that people found themselves reaching beyond the business realm for context. Development expert Charles Kenny compared the purchase price to the total annual lending of the World Bank.

The immediate reaction from the tech and business world was incredulity. "Do they also get the state of Florida?" one jokester asked.

As far as I can tell, Facebook does not get the state of Florida in the deal. What it does get is a 5-year-old Mountain View, Calif., startup that has become one of the world's most popular communication services in just the past year. WhatsApp was founded in 2009 by a pair of ex-Yahoo-ers who set out to build a better alternative to standard, SMS-based text messaging. It allows you to chat and shoot texts, pictures and videos back and forth with friends over the Internet, like Apple's iMessage, Microsoft's Skype, BBM or Facebook Messenger. Not only does WhatsApp have more features than SMS, it's far cheaper — free for the first year, and just $1 a year after that. It's particularly useful as a way to chat with friends and family overseas without running up big charges.

The downside is that you're limited to talking to other people who have downloaded the app. The upside is that, unlike iMessage, it's also available on Android, so you're not limited to fellow iPhone owners.

For Facebook, part of Whats­App's luster is that it has emerged as the most popular of a cadre of similar mobile messaging apps, including Japan-based Line, China's WeChat, Korea's KakaoTalk and Canada's Kik. Facebook likely sees it as the strongest bet to end up on top when the global mobile messaging market eventually shakes out due to network effects.

The speed of WhatsApp's rise so far has been stunning. Last April, it had 200 million users. Since then, it has been adding some 25 million every month, and now boasts upward of 430 million.

Within the United States, it's particularly popular among teens, a demographic that has famously soured on Facebook as a way to stay in touch. Teens clearly feel they can share things on Whats­App, unlike Facebook, without their parents finding out about it. But the app's appeal is hardly limited to young people. In a December blog post, WhatsApp co-founder, CEO and soon-to-be-household-name Jan Koum boasted about some of the app's more TED-talk-worthy uses: "Doctors in India are using Whats­App to instantly send electrocardiogram pictures of patients who've suffered heart attacks, saving valuable time and potentially lives," he said.

So, sure, WhatsApp is a very promising and valuable startup. But is it really worth $19 billion? To most people in the world, no way. But if you happen to be running a company that's valued at $173 billion and is terrified of losing its core business to mobile-messaging services, then you might start to think it's worth just about whatever you have to pay.

Facebook gets what it wants at any cost 02/20/14 [Last modified: Thursday, February 20, 2014 9:58pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Last steel beam marks construction milestone for Tom and Mary James' museum

    Growth

    ST. PETERSBURG — Tom and Mary James on Wednesday signed their names to the last steel beam framing the 105-ton stone mesa that will be built at the entrance of the museum that bears their name: the James Museum of Western and Wildlife Art.

    The topping-out ceremony of the James Museum of Western & Wildlife Art was held Wednesday morning in downtown St. Petersburg. Mary James (from left), husband Tom and Mayor Rick Kriseman signed the final beam before it was put into place. When finished, the $55 million museum at 100 Central Ave. will hold up to 500 pieces of the couple's 3,000-piece art collection. [Courtesy of James Museum of Western & Wildlife Art]
  2. Heights Public Market to host two Tampa Bay food trucks

    Business

    TAMPA — The Heights Public Market announced the first two food trucks for its "rotating stall," which will feature new restaurants every four months. Surf and Turf and Empamamas will be rolled out first.

    Heights Public Market is opening this summer inside the Tampa Armature Works building.
[SKIP O'ROURKE   |   Times file photo]

  3. Author Randy Wayne White could open St. Pete's biggest restaurant on the pier

    Food & Dining

    ST. PETERSBURG — The story begins with Yucatan shrimp.

    St. Petersburg Deputy Mayor Kanika Tomalin, pilot Mark Futch, Boca Grande, St. Petersburg Mayor Rick Kriseman, and author and businessman Randy Wayne White,  Sanibel, exit a Maule Super Rocket seaplane after taking a fight around Tampa Bay off the St. Petersburg waterfront, 6/28/17.  White and his business partners are in negotiations with the City of St. Petersburg to build a fourth Doc Ford's Rum Bar & Grille on the approach to the St. Petersburg Pier with a second event space on the pier according to White. The group met near Spa Beach after a ground breaking ceremony for the new pier. "We want to have our business open by the time the pier opens," said White. Other Dr. Ford restaurants are located on Sanibel, Captiva and Ft. Myers Beach. SCOTT KEELER   |   Times
  4. Guilty plea for WellCare Health Plans former counsel Thaddeus Bereday

    Business

    Former WellCare Health Plans general counsel Thaddeus M.S. Bereday pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District …

    WellCare Health Plans former general counsel Thaddeus M.S. Bereday, pleaded guilty to one count of making a false statement to the Florida Medicaid program, and faces a maximum penalty of five years in federal prison. A sentencing date has not yet been set, acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida stated Wednesday. [LinkedIn handout]
  5. DOT shows alternatives to former Tampa Bay Express toll lanes

    Transportation

    TAMPA — State transportation officials are evaluating at least a half-dozen alternatives to the controversial Tampa Bay interstate plan that they will workshop with the community over the next 18 months.

    Florida Department of Transportation consultant Brad Flom explains potential alternatives to adding toll lanes to Interstate 275 during a meeting Wednesday at the DOT’s Tampa office. Flom presented seven diagrams, all of which swapped toll lanes for transit, such as light rail or express bus, in the I-275 corridor from downtown Tampa to Bearss Avenue.