$19B 4 txt app WhatsApp…omg!

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$19B 4 txt app WhatsApp…omg!

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Publication Date:
January 13, 2015

Industry:
Telecommunications

Industry:
Technology

Source:
Harvard Business School

In February 2014, Facebook announced the acquisition of WhatsApp for $19 billion. WhatsApp, founded in 2009, was a relatively young company that employed only 50 people and earned merely $10 million in revenue in 2013. It was one of many mobile messaging services that allowed users to contact each other without paying costly text message fees. However, its popularity and growth potential enticed Facebook, a company facing many challenges and looking for opportunities to expand its user base. Facebook, the social networking website that allowed users to share information with friends, believed WhatsApp was a logical next step that would help it achieve its mission of “making the world more open and connected.” When Facebook announced the acquisition, it vowed to keep WhatsApp operating independently, letting the founders control the direction of the company and allowing WhatsApp to stay true to its mission. Yet, many debated the logic behind paying so much for such a small company with limited revenue streams. Was Facebook correct to purchase WhatsApp? Even at $22 billion? How could it create value if it did not integrate WhatsApp with Facebook?

Copyright © 2021 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

$19B 4 txt app WhatsApp…omg!

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