Being in the industry, however, I will always remember how quickly my jaw hit the floor when I read the value associated with the sale. At today’s value of Facebook shares, it’s a $19,000,000,0000 deal!
Yes, that’s right. $19 Billion Dollars!
I thought I would take a moment to examine the factors which led to this valuation, and ultimately determined the ‘price-per-user’ that WhatsApp was able to secure in their deal with Facebook – which, by the way, was just over $42.
WhatsApp has over 450 million active monthly users
That means, 450 million people use WhatsApp to communicate with people about a variety of topics right from their mobile device.
The Lesson: Find something that needs to be used by lots of people, and needs to be used often.
WhatsApp has real data on its users
Where WhatsApp differs from many other messaging providers, is it must be linked to a real mobile number. This means, the data collected by WhatsApp on how mobile numbers are used in different parts of the world and by different people is real and targeted.
The Lessons: Data is more valuable when it’s verifiable. Make the data you are collecting be qualified as well as quantified.
WhatsApp needs only 50 staff to run a $19 Billion business
This kind of dollar-per-employee ratio is absolutely off the charts! It takes only 50 staff to manage a business that has 450 million users per month. This is a testament to the power of Cloud Computing, Effective Management, and running a Lean Business.
The Lesson: Keep a lean workforce with scalable infrastructure and invest in strong management.
50% of WhatsApp’s staff are software engineers
WhatsApp knows what it is. It provides a technology service that allows people to communicate instantly, effectively and globally. In order to keep its service best-of-breed, it needs to hire experts in the field – specifically Techies. This is similar to Google’s model. Although Google is one of the largest and most diverse companies in the world, which inherently sells advertising, they stay true to their core by ensuring the majority of their staff are trained in software engineering.
The Lessons: Be true to your roots. Know your core offering. Keep a good number of staff who share these skills and interests above all, rather than giving into temptation of “growing by salesforce”!
WhatsApp is incredibly engaging
Over 70% of WhatsAppers use the product every day. While this does not currently play into WhatsApp’s revenue model, I can assure you that Facebook will find this a very valuable metric to add to their arsenal. Mark Zuckerberg spoke at the Mobile World Congress this past Monday where he decreed that WhatsApp’s purpose was now to focus on connecting more people, effectively letting Facebook worry about how that would be monetized. His goal, as it was with Facebook, is to get the user numbers and engagement so high that monetizing becomes, basically, a walk in the park.
The Lessons: Focus on your consumer, and build a product that people will love to use. Solve a real problem, and solve it elegantly.
I wish I could say that keeping to above lessons would guarantee you a $19 Billion exit plan! If that were the case, I would be likely not have time to write this article, because I would be too busy in Mauritius sipping cocktails served to me by supermodels while chatting with Brian Acton about how our respective islands are coping with climate change, and whether or not we had eradicated world poverty yet.
But, with just the right mix of idea and execution, and by keeping these lessons in mind, you too could be staring the Zuck in the eyes one day and having the best golden handshakes of your life! After all, if Facebook continues their acquisition path, they are going to become the number one collection of online brands on the planet. May as well have your brand among them, right?