Facebook To Buy WhatsApp

Scott Lambert

In a deal that has shocked the markets, Facebook has agreed to spend $19bn in order to acquire the mobile messaging start-up WhatsApp, which has enjoyed a meteoric rise over the past five years. With 450 million users, the subscription-based service is currently acquiring another million every day; what is more, it is particularly popular with young people – just the demographic Facebook has been struggling to connect with.

Describing the smaller company as “incredibly valuable”, Mark Zuckerberg went on to say that he is excited to partner with its co-creator Jan Koum, who is apparently an old friend, to “make the world more open and connected”. Koum will now join Facebook’s board of directors. Facebook has asserted that it intends to run WhatsApp as a stand-alone project, as it has done with Instagram; however, as it is still unclear how it expects to make serious money out of the latter, there are suspicions that Facebook is looking for ways to use both to filter new users through to its main product. Part of WhatsApp’s job may now be to make Facebook look cool again.

According to Zuckerberg, this deal was made after just 11 days of negotiation. It has been paid for with a mixture of cash and stock. The cost per user is $9 higher than anyone has paid before – at least at this level – and it is thought to reflect Facebook’s anxiety about getting a grip on the mobile communications network. Notoriously poor at the communications side of managing online interaction, Facebook may in part see WhatsApp as a learning opportunity; it may also have been motivated by concern that if it did not snap up this particular hot product quickly, somebody else would. To assure the WhatsApp team of its sincerity, Facebook has pledged a gift of $2bn even if the deal falls through.

There is one party that may be left feeling awkward in the aftermath of this deal and this is Snapchat, for which Facebook offered a mere $3bn last year. Staff at WhatsApp are likely to be happy, as some of the money from the deal is being distributed among them – and there are only 50 of them.

Some commentators have suggested that what Facebook is really doing is trying to buy up successful young companies with the potential to outdo it in certain markets and with which it does not have the expertise to compete. Whether Koum’s involvement will make it a more effective competitor remains to be seen.

Scott Lambert

Written by Scott Lambert

For 35 years, Scott has been at the forefront of digital transformation and how it is effectively applied in businesses and organizations to market, sell, and support customers and members more successfully and cost effectively. Scott is President and Co-Founder of Xcellimark, an award-winning digital marketing agency serving clients throughout the U.S., Canada, Central America, and Germany. Xcellimark helps businesses succeed through the implementation of its unique digital marketing and sales approach specifically designed to meet their specific goals and objectives. Scott’s marketing, sales, and operations experience have included key management positions at industry leaders including AT&T, iXL (now SapientRazorfish), eSchool Solutions (now TalentED), and BellSouth, where he led the product development, marketing efforts, and market launch of BellSouth.net, the second public ISP developed in the U.S. Scott is the author of articles highlighted on leading online publishers such as LinkedIn, Business 2 Community, and he was recently featured by LinkedIn in the Entrepreneur magazine article on “No Time for Marketing? Hire a Freelancer.” His engaging personality and wealth of real-world and business experience make Scott a frequently requested speaker. Some of his engagements include being the featured speaker in a series of Orlando Business Journal seminars on Digital Marketing, speaking at the WSI London conference, and at international conferences in Belize. Scott has a Bachelor’s degree in Accounting from the University of Mississippi and a Master’s of Science in the Management of Technology from the Georgia Institute of Technology (Georgia Tech). Scott has been active in global mission efforts and is a board member of Global Teams, a Christian outreach organization. He lives in Winter Springs, FL with his wife Nancy and dog Sadie.

Topics: Social Media

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