So it's been a couple hours now that the news is out: Facebook purchased WhatsApp for €16B (plus €3B on top for employee retention). There's plenty of press out there about this so have fun sifting. Nevertheless, it seems like there are two things missing from the analysis of this purchase.
1. Facebook just made every damn other messaging app that much more expensive. They have WhatsApp now. Good luck if you are a FB competitor and are considering buying one of WhatsApp's competitors. You just found out you have to pony up a shitload more to purchase them. If you're Google or Apple, that's no big deal. Everyone else though does kind of hurt if they have to spend 3 or 5 or 7 BILLION more, don't you think?
2. At the same time, every messaging app right now thinks it's worth twice as much as it did last night. Facebook took one of the leaders off the market and made the rest of the market a nightmare for a while! Super smart! See how they did it with Instagram. Thereafter, you just basically stopped hearing about photo apps. The market was DONE! Financing dried up for the segment and only the big boys remained. Same goes now for the messaging market.
Well played Mark. Well played!
P.S. There's a third point about this that is blatantly clear but bears repeating. Once again, Silicon Valley proves that if you want the real money, you have to have cross-pollination at board level and amongst your VC's to really drive up valuation. Does the 16B make sense? Hell no! Does it make sense amongst the network of players "in the game" out West! You bet!