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Zuckerberg on WhatsApp acquisition: “I could be wrong, but I doubt that I am”

Posted on 9 0
Zuckerberg and Sandberg: teamwork

Zuckerberg and Sandberg: teamwork


Mark Zuckerberg was bullish about the prospects for his latest acquisition, the instant messaging service WhatsApp when addressing the Mobile World Congress in Barcelona on Monday, although he was forced to concede that in purely economic terms his acquisition is a pretty speculative one.

“it’s hard to exactly make that case today, because they have so little revenue”, he commented about Facebook’s 19bn valuation of the Company, but stressed that the deal appeals to him as it is one of very few services capable of achieving the holy grail of 1bn worldwide users.

For Zuckerberg, the acquisition represents another step along the journey towards realising his vision of “connecting the world”, a project he has labelled “”.

Although his enthusiasm was infectious, and given the astonishing success of Facebook, it may be churlish to doubt his assertion that he can “prove that the model works”, for a man who has just spent the sum that he has, it has to be said there was very little in the way of detail to  support his impressive rhetoric.

It is likely that, as is often the case with the maturing Facebook, Zuckerberg was acting as the Company’s mouthpiece, its icon, the young buck with the brilliant mind re-creating the history of communication from the ground up, whilst Cheryl Sandberg, the COO Zuckerberg poached from Google several years ago, handles the business side of things.

The evidence is suggesting that investors favour this model, with the acquisition of WhatsApp well received despite the fact that it’s only revenue stream is the 99 cent annual charge for using the service. Investors want to be part of Zuckerberg’s journey as he seeks the 3-5 more carrier partners he says he needs to make a reality. If the whole world is going to become connected, they reason, then who better to have pulling the strings than the tech world’s golden boy, a laid back Harvard educated Californian who doesn’t wear suits and was writing code when the rest of us thought a web was something for catching flies in.

There is however, something just a little more pragmatic about the WhatsApp purchase than talk of the “internet for everybody” would have us believe, an idea that has been referred to in some quarters as “The Proctor and Gamble-isation” of Facebook.

The best way to describe this approach to business is perhaps, “if you can’t beat ‘em, buy ‘em”. It has been acknowledged by those at the sharp end of the tech business world that WhatsApp doesn’t bring anything genuinely new or original to the Facebook proposition. Sure, it’s a great messaging service, but is it revolutionary, will it change the way we think about communication? No, it will just make existing communication easier to manage.

So what could it be that Facebook sees in this app that the rest of us don’t. The answer may be found further to the East, in China to be precise. WhatsApp has broken the Chinese market in a way that Facebook, with all the privacy issues associated with making all of one’s status updates, likes and uploads visible to whoever wishes to look, has not been able to do.

Facebook has been blocked in China since 2009, meaning it does not have access to the country’s 600 million internet users, but WhatsApp has a solid if unspectacular customer base there, and most importantly, it’s not banned.

So could WhatsApp be the “Trojan horse” that allows Facebook to sneak into the Chinese market. Well, let’s wait and see, but one thing is for sure: there’s and the dream of a virtual world accessible to all-comers, where information is a basic right, and then there’s plain good business sense. In Sandberg and Zuckerberg, perhaps Facebook has the 2 people most capable of delivering a little bit of both.

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