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2/21/2014
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Facebook's WhatsApp Buy: 10 Staggering Stats

Let's put the $19 billion purchase price of messaging service WhatsApp in perspective using some added figures.

7 Facebook Wishes For 2014
7 Facebook Wishes For 2014
(Click image for larger view and slideshow.)

After news broke Wednesday that Facebook agreed to buy messaging service WhatsApp, all eyes were on the mind-boggling purchase price: $19 billion in cash and stock. It makes this acquisition the second-largest in recent tech history, second only to Hewlett-Packard's acquisition of Compaq in 2001 for $25 billion.

WhatsApp's focus on simplicity sets it apart from similar applications. Jim Goetz, a partner at investor Sequoia Capital, shared a note that WhatsApp cofounder Brian Acton sent to CEO Jan Koum, who keeps it taped to his desk. It reads, "No Ads! No Games! No Gimmicks!"

That's exactly how the app has operated since its launch in 2008: Users aren't charged text messaging fees. Instead, the app transmits text and photo messages via the user's Internet data plan, even if the messages are sent internationally. The app is free to download and free for the first 12 months. After that, it costs just 99 cents annually.

Its simplistic approach has won over users across the globe. According to Goetz, WhatsApp reached 450 million users faster than any other company and signs up 1 million new users each day. In comparison, Facebook had fewer than 150 million users after its fourth year.

[What's in store for Facebook in the next 10 years? Read Facebook's Next Decade: 3 Key Challenges.]

The deal, which is set to close later this year, will make cofounders Koum and Acton very rich. Koum, who was born in Ukraine and whose family reportedly lived off food stamps, holds about a 45% stake in the company, making him worth about $6.8 billion.

Acton, who was rejected by both Facebook and Twitter jobs in the past, owns a stake estimated at over 20%, making him worth at least $3 billion, as of Facebook's closing share price on Wednesday.

Those aren't the only impressive statistics from Wednesday's announcement. Here's a look at 10 more that put Facebook's WhatsApp acquisition in perspective.

1 to 14 million: The ratio of WhatsApp developers to active users. WhatsApp runs lean, with only 32 engineers.

$345 million: The estimated cost Facebook paid per WhatsApp employee (the company employs 55 people).

$40: How much each WhatsApp user is worth. The app has about 450 million users, about twice that of Twitter. Facebook's IPO suggested each Facebook user was worth about $125.

50 billion: The number of messages that WhatsApp processes every day, using the Erlang programming language. Sequoia Capital calls it "an unusual but particularly well-suited choice."

$0: How much money WhatsApp has invested in marketing. The company doesn't employ any marketing or PR staff.

72%: The percentage of users who use the app each day. In contrast, the industry standard is between 10% and 20%. Facebook's daily engagement sits at 61%.

$60 million: How much Sequoia invested for a stake valued at up to $3 billion in the deal, according to the Wall Street Journal. Sequoia is set to make about $3.4 billion on the deal.

35%: How much of Facebook's cash it is using for this deal.

$10 billion: How much Google reportedly offered to purchase WhatsApp, according to CNN.

$160 million: How much early WhatsApp employees are said to rake in from this deal, according to Forbes. They are reported to have equity shares of close to 1%.

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Kristin Burnham currently serves as InformationWeek.com's Senior Editor, covering social media, social business, IT leadership and IT careers. Prior to joining InformationWeek in July 2013, she served in a number of roles at CIO magazine and CIO.com, most recently as senior ... View Full Bio

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PaulS681
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PaulS681,
User Rank: Ninja
2/26/2014 | 8:04:09 PM
Re: Emperor is wearing no clothes
@Petey... I agree. It will all shake out eventually and we will find out what they really gained from this purchase.
petey
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petey,
User Rank: Strategist
2/26/2014 | 10:02:32 AM
Re: Emperor is wearing no clothes
If I'm a stockholder, I care. If I buy a hotdog on the street I'm a customer, if I bug FB stock I'm an owner. Who are FB customers? People who have accounts? Companies that want to sell to the 1 billion FB users? And how many of those 450 m phone numbers are actually different from the current FB users? I see nothing but speculators in this stock people either long or short. Does anyone think this WA purchase will matter 5 yrs? Hopefully things work out but does mgmt spend 19 billion with the word hopefully associated ?
blonkm
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blonkm,
User Rank: Apprentice
2/26/2014 | 9:19:21 AM
Re: Emperor is wearing no clothes
Well if you buy a hotdog on the street you also don't make a profit of it. But do you care?? Paying 55 employees yearly is nothing with Facebook's chunky fat wallet.

And this hotdog contains 450 million phone numbers.....

Facebook (the company) makes money with Facebook (the website).


So what's the problem?

 
Kristin Burnham
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Kristin Burnham,
User Rank: Author
2/24/2014 | 9:04:11 AM
Re: Hold on to the kids
I imagine there will be some integration with Facebook later down the road, but what's most important to the company is the mobile data that WhatsApp's 450 million users can provide.
Kristin Burnham
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Kristin Burnham,
User Rank: Author
2/24/2014 | 9:00:44 AM
Re: Income Inequality
We'll have to wait and see after the deal is finalized -- there weren't any specifics on that group of employees.
petey
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petey,
User Rank: Strategist
2/23/2014 | 7:34:34 PM
Emperor is wearing no clothes
I really believe this is not about business. Facebook has so much cash from their IPO it's almost like casino money where they are playing with house money. No profits, no discernable business plan and no hurry. It almost seems like a hobby gone wild. I understand why they wanted this company. I do not see how this is going to produce profitable results. The emperor is wearing no clothes.
PaulS681
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PaulS681,
User Rank: Ninja
2/22/2014 | 7:20:14 PM
Re: Most surprising?

The most surprising to me is how much it's worth. I never heard of it before this story broke. What will be interesting to see is how Facebook uses this. I imagine they have some pretty big plans but I'm struggling to think of ways they are going to use this to grow it.

techbuzzer
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techbuzzer,
User Rank: Apprentice
2/22/2014 | 10:09:23 AM
Income Inequality
The artical says early employees made millions.  What about employees who joined later?  Did they share in the winnings?
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
2/21/2014 | 5:19:11 PM
Hold on to the kids
Stunning that a company with a tiny staff and no PR or marketing can grow to 450 million users. But if WhatsApp is remaining independent, how does that help Facebook keep teens and millennials on the site? Isn't that the goal here?
Alison_Diana
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Alison_Diana,
User Rank: Author
2/21/2014 | 5:01:52 PM
Re: Most surprising?
That is an amazing fact. Talk about great word-of-mouth marketing! Interesting that he's from the Ukraine, given what's happening there right now, and that he was down to food stamps. What a literal rags to riches story. Thrilling and a great source of optimism for all the other entrepreneurs working in their basements right now!
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