Why WhatsApp is worth 19 billion
Yes, it can quickly make you dizzy: a staggering 19 billion dollars for a simple short message service programmed by a Ukrainian immigrant. by Manuel P. Nappo
(Fun Fact: Last year, the U.S. government allocated $18 billion for immigration enforcement.) 19 billion. A lot of money, considering that Facebook paid "only" one billion for photo-sharing app Instagram a year ago. In terms of functionalities, the app is quite simple. Users can exchange text and voice messages, photos or videos, or chat in groups via the smartphone app WhatsApp. But the social media giant still has good reasons to shell out such a high sum for WhatsApp. Let's take a closer look.
WhatsApp now has more than 450 million active users (70% of whom use the app daily). A few months ago, it had just 200 million (already more than Twitter back then). Around one million are added every day - no other online service is growing faster. The company is well on its way to reaching one billion users in the next few years. Once you have it, you can't and won't do without it. It is simple, practical and fast. WhatsApp has thus strongly established itself as an SMS alternative. "The truth is that there are very few applications that can reach a billion users," said Facebook founder and CEO Mark Zuckerberg at the world's largest mobile trade fair in Barcelona. Do you know how many employees a company with 450 million customers needs? 55. (By comparison, Amazon has 117,000 employees and "only" 224 million customers.) 55 employees (of which 32 are software engineers) handle about 50 billion messages per day. One developer per 14 million users.
But the number you should remember in connection with WhatsApp, and the reason why this transaction deserves a place in Advertising Week, is another. It is the number zero. 55 employees and not a single one in marketing or PR. Since its founding in 2009, WhatsApp says it has invested zero dollars (yes, you read that right, zero) in marketing. The app has spread through very simple word of mouth. Or how did you hear about it? "Advertising is insulting your intelligence and interrupting your train of thought," says Whats app founder Jan Koum on his blog. A critical thought that we cannot ignore. Because WhatsApp proves: Word-of-mouth is the most successful advertising of all. And nothing can stimulate global word-of-mouth like social media. Is your company ready for it?
Manuel P. Nappo, Director of Studies CAS Social Media Management HWZ Hochschule für Wirtschaft Zürich. www.fh-hwz.ch/smm
