Whatsapp? $19 billion: that’s what

If only we could all deal with rejection like Whatsapp founder Jan Koum. After being rejected for a job at Facebook back in August 2009, he went away and created an app called ‘Whatsapp’ which would go head to head with SMS messaging, but instead would use your phones’ 3G and Wi-Fi to send messages faster and more reliably.

Last week Koum sold Whatsapp to Facebook for 19 billion dollars (£11.4 billion) and will take up a seat on Facebook’s board. I bet someone in Facebook’s HR department is feeling pretty silly right now.

Now $19 billion may sound like a lot of money, which of course it is, however the money is being paid with $4 billion in cash, $12 billion in Facebook shares, and $3 billion in Restricted Stock Units to Whatsapp employees. When you consider that Whatsapp only has 32 engineers, a lot of people were made multi-millionaires overnight. Whatsapp doesn’t even employ a PR or marketing person, and doesn’t pay for advertising, which makes the fact that the app has over 450 million users all the more impressive. They don’t even hang a sign outside their offices, and yet they’ve managed to reach users all over the world.

You may be thinking that Zuckerberg and co. must be crazy: they already have Facebook Messenger, and who ISN’T on Facebook these days?! Well it turns out that Whatsapp is proving to be popular in lots of developing markets in Asia and South America where Facebook isn’t as big. Whatsapp is adding a million new users world-wide every day, to the 450 million in total currently, and they’re projected to hit a billion users in the near future.  This is where Zuckerberg is seeing the potential. If Whatsapp can hit a billion users and charge them $0.99 a year, then it isn’t hard to see Whatsapp justifying that $19 billion price tag at some point in the future.

Whatsapp is adding a million new users world-wide every day

Not only that, but the SMS industry is estimated to be worth $100 billion a year worldwide, and with competitors like Kik, Snap-chat, iMessage, Skype and BBM all battling it out for the top spot, Facebook just bought a ticket to being odds on favourite to steal the show. This will no doubt terrify the likes of Vodafone, T-Mobile and O2, especially with the announcement that Whatsapp will be adding voice calls to the app in the coming months. Just imagine, your next 2 year phone contract could be your last.

Mark Zuckerberg has promised to keep Whatsapp independent of Facebook and ad-free for the foreseeable future and only assist in terms of supplying engineers and servers to help scale – and who better to assist the ambitious Whatsapp than a social media juggernaut with 1.25 billion users? However, with ads starting to trickle in to Instagram feeds everywhere, the Zuck could be straight up lying to us.

Apps like Flappy bird will come and go from your phone’s home screen, you can be certain of that. Yet, it would appear that Facebook and now Whatsapp are certainly here to stay.