The mind boggling valuation of WhatsApp

I was dumbfounded by the incredible price that Facebook paid for WhatsApp earlier in the day today.  For those of you who still haven’t heard the news, Facebook paid an incredible $19 billion for WhatsApp today! 

Those are American Dollars, not Zimbabwean!

It is hard to fathom how big this number is and even harder to think that a company with just 55 people can be valued at so much!

At today’s exchange rate, there are only 15 Indian companies that are worth more than WhatsApp, and I know these comparisons are a bit ridiculous but WhatsApp is worth more than the GDP of Nepal!

The thing that most amazes me about WhatsApp however is not the price but the number of employees and the realization that scale means quite a different thing these days than it used to a few years ago, and a lot of companies are supporting billions of transactions per day without having to spend insane amounts of money on infrastructure. I’ve recently bought some shares in which is a pioneer in cloud computing, and they support a ridiculous number of transactions per second as well. They crossed a billion transactions a day mark about two years ago. Twitter routinely discusses their high transaction volume, and Facebook is talking about 3 billion users!

Finally, in terms of user experience, it seems like Facebook is not looking to show ads on WhatsApp right away, but they may want to make you tie the account to your Facebook in addition to your phone number, and then all your data sent through WhatsApp is stored with them as well, and that’s nothing to be excited about.

8 thoughts on “The mind boggling valuation of WhatsApp”

  1. It is not the product which is being sold, it is the users who are being sold!!
    Today they are having a free app that lets them connect to friends/family. Monetization has already been worked out, after 1st year you need to pay 0.99US$ per year. i.e. they give you ample time to fetch all your contacts in WhatsApp :), those who don’t pay might have some restrictions on messages they send or face ads, who know!!

  2. Stratospheric valuations are not unheard in the post-internet era. A lot of it is defensive, where you buy potentially damaging competition and sometimes, quietly bury it. Microsoft did it, Oracle did it, Warner did it, and this will just not go away. It is when the real substance of these deals are put to test that a small number will remain and the rest will be washed away.

  3. It is actually mind boggling to find such valuations for an application platform which can be replicated or improved upon very easily by any new comer tech buddy and also which does not have any credible and sustainable revenue and business model (because they don’t give any ad on WhatsApp platform).

  4. valuations are surprising, but seethe growth rate of “whatsapp” and others (Gmail,FB, Twitter and Skype). Whatsapp is conveinient also. However future competition with somr new player is imminent

  5. I was still thinking that there might be soon be a clarification on the value being miss-quoted to agencies. I have calculated and recalculated it in INR terms and surprised myself every time.

    1. It is all about existence. Facebook was smart. It saw a danger clearly approaching. Going by the pace of growth of whatsapp , it was very clear Whatsapp will have more growth than Facebook for next atleast 3 years and may even overcome Facebook in popularity and users. Very fact that Whatsapp is more dominant in mobile space compared to Facebook , they had no choice but to pay whatever Whatsapp wanted. Facebook may have learnt from Nokia/Blackberry experience when Apple and Samsung emerged. I dont want to even compare Indian companies with Facebook and Whatsapp on valuations.


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