Sorry I see the 98.5 for the year end 2013 but I don't see how your getting to 206.5 from there? Their total costs are only 148m on the statement of operations. Also presumably some of that stock based compensation is in lieu of paying cash. I'm not sure its fair to discount it entirely.
edit: I sleuthed out what TC means. Tech Crunch are referencing first half of 2014 this article is year end 2013.
I tried, and I only use it for 1 specific group conversation, but it's a group with about 40 people in it and only a small minority were willing to switch [to Telegram], due to their own network effects. :(
Probably taxes. There are non-trivial tax credits for R&D spending. My guess is they shoehorned as much of their costs into R&D as they could. You can see they got 1.2 million in R&D credits in 2013 in the referenced document.
Given that it's unlikely users will jump ship if they are happy with it over $1/year and the fact that they have 400 million users I think there's a pretty good chance that revenue number will come up.
Telegram is "free". I'm not sure why "free" needs to be in quotes. I don't know how I feel about Privacy being touted as a benefit of using anything owned by Facebook.
Of course we should note that WhatsApp (and Facebook!) is piggy-backing on the work of the many thousands of telecom engineers who have over the years built and maintained the infrastructure that both Facebook and WhatsApp require to survive.
I think the Whatsapp price was a huge blunder by Zuck. Whatsapp has lots of users - most of whom are in countries viewed as almost worthless by advertisers. Their US footprint is insignificant, and shows no signs of growing here or in many other valuable countries. Their current revenue - $10.2M/year with 400M users - shows their users' propensity to pay.
Even if you valued Whatsapp by Facebook's P/E ratio of 87.74, it would have to make ~$215M/year in net profit to justify the (original) $19 billion price tag. That's around $0.50/user/year in net profits. I just don't see it ever happening.
It's popular in emerging markets. Maybe it won't be worthless in 10 years. I still don't get the price. WhatsApp doesn't have the market cornered. There are 2-3 competitors and most locals I've met use all of them.
It's myopic to think that anything/everything they do is advertiser driven. If you think of Facebook's goal as to "connect the world," and with such a large user base on WhatsApp, you can imagine that all WA needed to do was add a profile feature, and BAM - legitimate Facebook contender.
It's why I think FB is nervous now that Twitter's profiles look a tad like FB timelines...the boundary is now a bit blurred.
Oh come on - it's not like we think Google abandoned their "do no evil" mantra or their mission to organize the world's information simply because they went public...or Apple stopped designing great products and revolting against mainstay ways we view our relationships with technology. Granted, there may be additional considerations, but I doubt any person who has worked there would say that optimizing shareholder value is #1 priority
(though I do believe the former was abandoned for other reasons, but that's a separate discussion...)
Whatsapp has completely won in many foreign markets.
I don't have a Facebook, but network effects forced me to use whatsapp. Literally every woman I've attempted to communicate with over the past year uses whatsapp exclusively. They may be from Africa, central Europe, India, Vietnam, its all the same - whatsapp.
Personally I hate it - it's terrible compared to google hangouts and doesn't even have a web client. But if I don't use it, no women.
Maybe you want to write off the rest of the world, but zuck isn't.
> Literally every woman I've attempted to communicate with over the past year uses whatsapp exclusively. They may be from Africa, central Europe, India, Vietnam, its all the same - whatsapp.
Just for reference, in China it's wechat, and whatsapp is unknown.
More seriously, I'm a foreigner and I live in a college town so I get many opportunities to meet foreigners. Indians also tend to view me more as a source of novelty sex rather than as a real relationship [1]. US/Africa culture gaps are also a LOT smaller than US/India or Africa/India culture gaps which sometimes makes things easier.
[1] I'm not moralizing or criticizing nor am I particularly averse. One night stands are great. I'm merely at a place where companionship is as important to me as sex.
[edit: I should clarify that I'm an American, I currently live in India, and "foreigner" = "not Indian".]
> Whatsapp has lots of users - most of whom are in countries viewed as almost worthless by advertisers.
Really? I have run campaigns in almost every country on this rock. All people are valuable in some way. Sure a wealthy country citizen is worth more but you'd be surprised how much companies will still pay and compete to reach that villager in Thailand on their mobile phone.
I agree that $19b was excessive for this company, but if they can maintain/grow market share then it wont be that bad. But given the way technology changes I think they should have discounted their offer to offset the risk another service gains popularity. Unless FB do something to lock in distribution like create their own mobile OS, this will remain a big risk.
This article creates a fictitious binary world and then makes arguments within its nonsense universe. Take this quote: "Investors appear unfazed by the willingness of its founder, Mark Zuckerberg, to make huge bets on money-losing companies, instead trusting Silicon Valley logic over conventional measures of corporate worth." David Gelles also says that facebook values "users before profits." He's trying to create a binary world where silicon valley does one thing and the rest of the world does the "conventional" thing with the implication that silicon valley is stupid. While we know there may be a tradeoff between the users and profits they are definitely not mutually exclusive. There is no "conventional" logic versus some special "silicon valley logic" there is only "logic" and smart decisions, the foundation of all good business. Users today drive profits tomorrow.
Another thought: by the time some logic has become conventional and commonplace is it not outdated? Recognizing unique opportunities that no one else sees seems to be the basis for all successful companies in and outside of silicon valley.
A lot of people are missing the point, citing the income WhatsApp has to make for Facebook to make back the money.
What they forget is that WhatsApp was able to serve almost half a billion users with "minimal" hardware. That's what Facebook wants, Facebook will save a lot of money if they can be as efficient as WhatsApp in terms of hardware savings, engineer ratio user ratio. I would imagine that's Mark is aiming for.
They bought a massive customer base in developing countries, and they manage to secure all of those users who use a messaging app without probably doing any deals with any telcos.
Not only that, they gained a potential advantage in the payments space. Potentially turning their users into being able to make payments within the facebook & partners networks.
Look at what is happening in China with companies turning their chat apps into taxi booking apps like WeChat.
50 comments
[ 4.9 ms ] story [ 105 ms ] threadThis is a poor headline.
edit: I sleuthed out what TC means. Tech Crunch are referencing first half of 2014 this article is year end 2013.
I'm super-confused by this, can anyone explain what sorts of expenses would be this high and labeled as R&D costs for a company like WhatsApp?
That could mean bringing in expensive consultants to assist.
Global SMS: 7.5tr messages a year
WhatsApp: 7.2tr messages a year (with just 30 engineers)
[1] https://news.ycombinator.com/item?id=8524256
Even if you valued Whatsapp by Facebook's P/E ratio of 87.74, it would have to make ~$215M/year in net profit to justify the (original) $19 billion price tag. That's around $0.50/user/year in net profits. I just don't see it ever happening.
Facebook is presumably making the bet that eventually those countries will no longer be deemed worthless by advertisers.
It's why I think FB is nervous now that Twitter's profiles look a tad like FB timelines...the boundary is now a bit blurred.
(though I do believe the former was abandoned for other reasons, but that's a separate discussion...)
I don't have a Facebook, but network effects forced me to use whatsapp. Literally every woman I've attempted to communicate with over the past year uses whatsapp exclusively. They may be from Africa, central Europe, India, Vietnam, its all the same - whatsapp.
Personally I hate it - it's terrible compared to google hangouts and doesn't even have a web client. But if I don't use it, no women.
Maybe you want to write off the rest of the world, but zuck isn't.
Just for reference, in China it's wechat, and whatsapp is unknown.
More seriously, I'm a foreigner and I live in a college town so I get many opportunities to meet foreigners. Indians also tend to view me more as a source of novelty sex rather than as a real relationship [1]. US/Africa culture gaps are also a LOT smaller than US/India or Africa/India culture gaps which sometimes makes things easier.
[1] I'm not moralizing or criticizing nor am I particularly averse. One night stands are great. I'm merely at a place where companionship is as important to me as sex.
[edit: I should clarify that I'm an American, I currently live in India, and "foreigner" = "not Indian".]
I agree that $19b was excessive for this company, but if they can maintain/grow market share then it wont be that bad. But given the way technology changes I think they should have discounted their offer to offset the risk another service gains popularity. Unless FB do something to lock in distribution like create their own mobile OS, this will remain a big risk.
Another thought: by the time some logic has become conventional and commonplace is it not outdated? Recognizing unique opportunities that no one else sees seems to be the basis for all successful companies in and outside of silicon valley.
What they forget is that WhatsApp was able to serve almost half a billion users with "minimal" hardware. That's what Facebook wants, Facebook will save a lot of money if they can be as efficient as WhatsApp in terms of hardware savings, engineer ratio user ratio. I would imagine that's Mark is aiming for.
Not only that, they gained a potential advantage in the payments space. Potentially turning their users into being able to make payments within the facebook & partners networks.
Look at what is happening in China with companies turning their chat apps into taxi booking apps like WeChat.