And yet their purchase of WA shows Zuck's ruthlessness and business genius. He saw his team fail to beat WA, he realized they would never beat them, and he made a decision to buy WA for what was an insane price.
16 billion dollars for a 24(?) person company with no revenue.
I think 99% of executives on earth wouldn't have made that decision. They would have believed their teams that said victory was around the corner, or deluded themselves into thinking success was inevitable, or would have been afraid to demoralize their team, or would have rationalized away why messaging wasn't important after all.
He just acted and won, for what now seems like a bargain.
It was a smart acquisition for sure, but "ruthless business genius" is a bit of hyperbole imho. FB's market cap was in excess of 200B at the time and they were growing like crazy. 16B on buying what they had failed to build internally and needed as a moat around their core business seems pretty straightforward. Mere mortals like us just get caught up on all the extra zeroes these guys are playing around with.
Exactly, spending 10% (!) of your business to buy something that adds no revenue, was built by 20 people, where your team is working on an alternative that is "better", "just around the corner", etc is actually insanely counterintuitive. If it were one percent of the business, sure, play defense, whatever--but 10%, over an abstract notion of "defensibility" is a really hard pill to swallow.
It would be amazing to know what the FB board thought at the time, and if zuck had to push hard for the transaction or not .
You don’t need to respect him but continuing to disregard the intelligence of people you’re against (or not ) arbitrarily isn’t a smart move. Zuckerberg has proven beyond doubt that he’s more of a visionary than all other tech bro cEOs he gew along side.
In addition to the agreed price of $16B, Facebook added $3.6B to retain employees. WhatsApp had 55 employees at the time . Near the end of the referenced article is an interesting comparison of different prices/employee for other acquisitions.
32 of the employees were engineers .
>I think 99% of executives
That is giving too much credit to 1% of executives, I am willing to bet 99.999% wouldn't have made that decision.
Although arguably speaking, executives are managerial mindset. Which is very different to entrepreneur.
WhatsApp had revenue; part of their “what could have been” tragic narrative was they charged $1/yr, iirc.
Most of users never paid it, and skeleton of the team they had was supported also by contractors, and most importantly, ignoring any abuse. That was ok in those days, but it wasn’t sustainable as they grew. Dealing with abuse, spam, misinformation is very costly, even when you’re e2ee.
> shows Zuck's [...] business genius
> I think 99% of executives on earth wouldn't have made that decision.
We conclude, 99% of executives are geniuses. I just feel like the term 'genius' gets thrown around inflationary. Being successful != being a genius. There is more to it (it actually isn't even a requirement) . At least I want to believe that.
> 16 billion dollars for a 24(?) person company with no revenue.
You are minimizing the impact of WA….. by a lot. At that time, almost all the smartphone users in India were using WA. The transaction gave FB all of those ~half billion users in just one shot.
It’s notable here that none of the founders of IG and WA are with Meta today - due to ethical differences.
Fair point, but he also had the opportunity to buy Twitter for 500m and passed on it.
He knew it was all bots then and still is now :)
I think they did, just not in the way they expected. They've developed a messaging platform where finding the user you want to message is handled outside of something as arbitrary and transitory as a phone number.
For example, military members (in the US) rely heavily on FB Messenger because deployments, short tours, and overseas assignments kill the reliability of using a regular phone number to maintain contact with friends and family. Messenger handles that by connecting via Facebook and maintaining that connection regardless of the users' phone numbers or email addresses.
Thats the norm, not the exception.
Back in the early days that was the only way these services operates: AOL IM, MSN Messenger, ICQ, IRC, Yahoo! Messenger, Google Talk, Skype, MySpaceIM etc.
Even now you have Discord, Slack, Steam Chat… and that’s before you start taking federated services like (Matrix and XMPP) or other social networks (like Twitter, Reddit, etc) into account.
This shift to using mobile numbers is a recent change. And not one I’m particularly fond of either.
When your phone number changes, WhatsApp asks if you want to change your number. You don't have to accept this, it will work fine on your old number. It is risky if you lose the SIM card but it works, I continued using an old number for three or four years after changing numbers and I was never forced to prove that I still was the owner of the old number.
And when your old phone number gets re-used by the telco, some random person will start getting your messages.
A friend was quite freaked out when multiple afgans started messaging him on whatsapp on their "new" phone number. Apparently it formely belonged to a member of the local afgan diaspora. Thankfully they ware able to get a new number from the telco to deal with it.
This works until the current owner of the previous number installs WhatsApp.
> They never did catch up on table stakes
What didn't they catch up on? To me Messenger seems like a better user experience than WhatsApp or any of the other three messaging clients I need to use.
Indeed WhatsApp is lacking basic functionality like a desktop app. Also, a client tied to a phone number may work well for some people, but a pain whenever you change your number, and it makes discovery of people much harder.
WhatsApp has had a desktop app for years.
Does my phone need to be on/connected to the internet for it to work? That's always been the weird thing for me about Whatsapp, is that your phone seems to be the "server" for the app.
The old website/app was very primitive. Only this year did multi device linking come out of beta.
I know everyone else in the west seems to use WhatsApp but in my social circle I connect to nearly everyone via FB Messenger. I have but don't use WhatsApp. I have no idea what it provides that FB Messenger doesn't provide and better. I don't need a phone number for FB Messenger. I can access it trivially at messenger.com, no need for the crazy QR code non-sense of WhatsApp. I also do not have to give FB Messenger access to my contact list, unlike WhatsApp (maybe that's changed but it used to be required).
WhatsApp doesn’t provide anything messenger doesn’t. As far as I can tell, WhatsApp as a product reached its ‘market fit’ years and years ago, in that they stopped bothering trying to add anything to it. Real pity in some ways its not even slightly extensible
> WhatsApp doesn’t provide anything messenger doesn’t.
People say Telegram provides everything Signal does too, but seem to forget about E2E by default.
>Just buy WhatsUp
I mean you could just tell how unpopular WhatsApp is in the US. I still remember no one in the US have heard of Whatsapp when Facebook announce the 16B acquisition.
But WhatsUp could certainly be another Startup idea.
WhatsApp is like the metric system. Used almost universally, except in the US.
I went to college in the USA, and none of my classmates had any idea what WhatsApp is.
Funnily enough, my US university's "international office" (the department that deals with international students including facilitating visas, travel signatures, SEVIS, resolving other confusions of international students etc) setup a WhatsApp group to communicate with all international students because that's the one app all of us had in common.
As far as I can tell, there seems to be a great deal of competition in the messaging app space, in addition to Whatsapp and Messenger, you have Hangouts, Signal, Viber, Telegram, Wire, Skype, Slack, Discord, and of course good old SMS. And these are just off the top of my head.
I would not be surprised if we see more consolidation in the sector.
> They never did catch up on table stakes,
In what sense? The table stakes of boring functionality seem to me to be much better implemented in messenger than whatsapp. Everything from a more intuitive UI to a web option is better done in messenger.
Our of curiosity, what was so hard for FB to have reliability, performance… and what exactly is pushability?
Is it because the whatsapp dudes used Erlang?
When you have 1000+ cooks in the kitchen, all being judged by how many new features they can pump out, just doing:
Creates a 250+mb ios/Android binary that bump against app store limits
yeah I was thinking the same thing? Maybe its something to do with CD/CI. being able to push changes to end users fast ?
I’m curious about this. Is it not possible to buy usage data from other network operators without owning them? As much as I hate it, I’d expect this is sold much like location data is.
Sure, you may not get the raw traffic but that seems not very useful for FB.
A lot of that data probably is for sale, but think how much more powerful the VPN is when the metadata is more valuable than the probably-encrypted-anyway raw traffic:
- you can directly correlate an Onavo user's traffic to their Facebook profile for demographic and interest data which telecoms won't even know.
- if two Onavo users are both Facebook users, you can identify up-and-coming apps which pose a threat to Facebook's most valuable asset: the social network itself (the links between people, not any FB software). That includes both explicit links ("Friend" requests) as well as implicit links like mutual group memberships, mutual participation in comment threads, mutual "private" sharing of the same content, etc.
- you get a more complete picture of a person's phone habits across the entire day, not just when the Facebook app is front and center. Remember that this happened immediately after the failure of the "Facebook Home" product which provided application usage tracking by acting as an Android "Launcher" replacement.
- you get a more complete picture of up-and-coming apps' "stickiness", i.e. if a person opens the competitor app immediately when a notification comes in versus if they leave it for a while and get back to it later.
- you get a more complete picture in markets where dual-SIM phones are popular (e.g. when people might have voice/SMS service on one and pre-paid data on the other).
- you get a more complete picture in markets where people seek out Wi-Fi for high-bandwidth activities due to the expense or unavailability of unlimited mobile data.
- you can use Facebook's ad targeting system to directly push Onavo on people in markets you want to enter and dominate.
Re your first part, WhatsApp could've expanded out into a full social network the same way LINE and WeChat did in Asia. So I think Zuck was onto something
Re: the rest: That's an interesting outlook. I wonder if younger audiences are more resilient to being tricked into trying to compete for "Likes" in a semi-public forum of their friends and family..
> WhatsApp could've expanded out into a full social network the same way LINE and WeChat did in Asia
That was never going to happen. If you listen to the interviews from Brian Action, he wanted WhatsApp to stay minimal. He didn't like those other apps that had tons of features/ bloat.
Acton left Facebook over a dispute in the direction Facebook wanted to take WhatsApp. Changing the app's direction after his departure seems like it would have been entirely possible.
Using a spyware VPN called Onavo might not be the same thing as 'onto something'
> but now almost a decade later and it's hard to see how FB got a return on that 20 billion investment for that particular acquisition.
WhatsApp is the 3rd largest social media platform in the world with 2 billion users. FB today is worth about $400 billion more since buying whatsapp. This is after the recent stock market correction. FB could today sell WhatsApp for a lot more than what they paid for in 2014. Say what you want about zuckerburg, but his purchase of instagram and whatsapp was a big win for him and facebook.
> Mark's dogmatic commitment to the alter of public newsfeed paradigms has caused almost all his platforms to evolve towards a dying entity one by one
Dying? Facebook owns 4 out of the top 7 social media platforms.
Not only that, many business, governments, schools, etc are locked into facebook platforms.
It's current enterprise value is only part of the story - and as we all know a valuable company today can entirely disappear in the future if it is sufficiently mismanaged. Vendor lock in was the favorite tool of IBM and Oracle. Things certainly change no matter how dominant a company can appear at a moment in time. Doubly so with social media with fickle users and generational opportunities with younger cohorts replacing and redefining usage patterns.
Yes, Facebook has by all accounts a commanding position, except competitors are demolishing it with younger demographics in key bellwether regions, and there are many concerning aspects about it's recent growth prospects. Facebook holds the record for the biggest single day market cap evaporation in stock market history (and also the record for second biggest). They are closer to their pre-WhatsApp market cap today then they are to their previous peak.
This was around the era where Snapchat was starting to take off, and I think someone real forward-thinking should have seen the writing on the wall that young people don't want to be doing all of their social interactions in public any more, nor do they want their cringey past coming back to haunt them. They were on Facebook, and then their moms all joined Facebook. They migrated to Instagram, and then Facebook bought it and pushed all the moms there too. Snapchat though, has a couple unique aspects that I think were critical to its success.
First, all the interactions are built around curating who sees it, and keeping things private and temporary. The most public thing you can do is post a story, and that's where you send stuff that even if your mom adds you, you can keep that in mind while sharing to that. But for anything else, you build up a list of people who can see your private story, and send it to that one. And everything that goes to either of those places is gone after 24 hours, which was also not exactly a selling point for the older generation that want to use social media as a scrapbook.
The other thing is that Snapchat is quite unintuitive and confusing to use. I've seen this stated as a criticism, and sure you can make it that, but I think that's also part of the secret sauce that made it so successful. The way you use the app is like its own separate language compared to all social media platforms of the past. And that in itself is enough to keep older people off of it, who had enough trouble trying to figure out Facebook. Plus I think there's some fun and engagement to be had when someone says "hey did you know you can do this?" and you discover a new feature in the app. I've been of the theory that Snapchat keeps itself awkward to use on purpose, because it seems legitimately beneficial to keeping its user base.
> First, all the interactions are built around curating who sees it, and keeping things private and temporary.
Didnt Google+ had something similar called circles, you could share different things with different people based on which circle they were in.
It did, but it still doesn't have the quickly-expiring content and fast interactions like Snapchat. Google+ was basically a Facebook clone but with more complicated sharing settings.
If anything, Google+ seemed to encourage people posting everything publicly. I didn't use it much, but I recall being able to click around into people's profiles and see a bunch of public posts, more than you'd expect clicking into a random profile on Facebook. I'm sure this was in part due to the fact that once they got people to merge their YouTube channel with their Google account, all your comments would show up as public G+ posts. Nothing about Google+ seemed like a private social experience to me.
And predictably Zuck went after it to try to kill it. Quel surprise. :|
Though Snap Spotlight feels like a tacked-on tiktok clone and the amount of ads on the non-friend stories is crazy.
It's almost like he isn't a good businessman and was just at the right place at the right time.
I worry that the majority of billionaires were just lucky and confused that for skill. Then we give them disproportionate influence over society. Basically letting the pigeons drive the bus.
Reminds me of Fiddler on the Roof:
The most important men in town would come to fawn on me! They would ask me to advise them, Like a Solomon the Wise. "If you please, Reb Tevye..." "Pardon me, Reb Tevye..." Posing problems that would cross a rabbi's eyes! And it won't make one bit of difference if i answer right or wrong. When you're rich, they think you really know!
>It's almost like he isn't a good businessman and was just at the right place at the right time.
What's this claim based off of? Is there anything concrete you can point to in the earnings reports, whether recent or any of them over the last decade, to justify this statement?
From what I see, he is willing to eat his word, be wrong, and be successful instead
You're right, they were at the right place, right time. Others were as well though, so I give them credit where it's due.
> it's hard to see how FB got a return on that 20 billion investment for that particular acquisition.
In many many countries you can't live without WhatsApp. That can't be said about the rest of their apps.
Back then, everyone was thinking about how to make a super app like WeChat. The thinking was that if you hooked everyone on some practical application, like chat, you could add in banking, lending, games, news, etc. FB sorta did this with FB itself to some extent but never completely achieved that super app status. Messenger obviously did not, and neither did WhatsApp. If someone did do this, they would have achieved complete dominance.
That's why it was worth 20B.
It's interesting how detailed and thorough his thinking is and at the same time all his strategic direction seems to be 100% personal intuition. FB must have an army of researchers who could tell him what users actual want and he doesn't even think of that.
Thank you for that.
Pasting a long document as multiple images via a Twitter thread needs to be some sort of punishable crime.
Yeah, twitter is definitely not meant for long content!
Not only that, but a long essay broken up into dozens of screenshots of text. Is there a prize for the most bits per character?
TIL Elon Musk goes by the handle of chinchilla2020 on HN. Just kidding.
Many of the ideas he expressed (in terms of interacting with businesses) seem to be how WeChat runs, very successfully (never used it myself, just based on what I've heard).
Booking a restaurant is generally ok by phone but if you try to do it online you often get some crappy random website that’s different every time. I can imagine a world where you do it by some messenger interface which somehow Facebook make hard to fuck up for the business. I can imagine that being good, half good (I think there are roughly two kinds of booking. One starts with criteria about date/time/occasion/party/budget/location/cuisine and looks for available places and the other starts with a specific restaurant with other particulars relatively free. An experience might only work well for one), or bad. But it isn’t obviously bad.
Much as a decentralised Internet has good properties, having every small business outsource a nontrivial online presence to a bunch of crappy other companies that lack the scale or incentives to do well is not one of them.
>Mark getting excited about using a message to book a restaurant seems like a prime example of this.
He was basically explaining chat bot/s without knowing it.
If you read point (4) he clearly did know it, he just saw it as a more ambitious and challenging problem.
Chat bots usually are built by the end service, not acting as a meta agent.
The problem is it's never been his Kool Aid. He stole the Kool Aid from multiple other people and is pretending like he invented the concept (yes people will now argue you can't steal the 'concept' of Kool Aid, and it's about execution; but my point stands, other people can't borrow the concept if one person pulls the rug out from everyone else) of Kool Aid
Microsoft stole GUI concept from Apple and Apple stole it from Xerox. Good artists copy but great artists steal.
I'm curious, why did it flop? Internal coordination issues? NLP tech not being ready yet?
NLP not being nearly ready. Some of the requests were powered by people on the backend and we hoped to use that as a training set. We could, but we only were able to automate the most basic things like reminders, weather, todo lists, daily transit, etc
It's so weird.
People have been using text menus, back through early SMS, all the way to dialup in the 70s. Probably before.
But instead of proper menu items (1 for restaurants, 2 for blah blah), then submenus (1 for order, 2 for reservation), there is this strange fascination with natural langiage parsing via text.
Meanwhile, typing '1', then '1' is far better than 'i want to order from a restaraunt'.
Shorter, no mistakes, more precise, easy to use.
Search, such as 'search restaurants' has been a thing too.
I don't want to talk to a machine, which is designed to use as many glue words as possible, and seeks natural language as a reply. What a time waste!
All that politeness is for humans, we don't need it from a bot.
He didn’t launch a competitor, but Zuckerberg approved the blocking of Vine’s API access to find Facebook friends a few days after it launched.
TikTok must have paid a pretty penny to have access to it today.
> Facebook needs a Martin Luther King Jr, not a Thomas Edison or Steve Jobs.
Every part of society needs an MLK Jr.
We pay so much attention to elites who are as trivial and uninspiring as they are rich and powerful. It's been so long since a public figure was someone to believe in. Other than perhaps briefly Obama, I don't think it has happened in my lifetime (I'm under 40).
They may be more popular outside the US. Where I am a lot of big businesses still use facebook for their online presence, and use those very annoying chat bots as their support gateways. Really frustrating as a user, but that's the state of things where I am.
Chat bots are definitely still a big thing, but the value proposition has completely flipped.
Zuckerberg (and others) were pushing an experience for the user, where they'd be delighted by interacting with a humanlike support bot that could interpret their human request. The value would come from additional user engagement with the platform, and therefore ad revenue.
In reality, chat bots are a cost optimization technique for businesses, where they save money by paying support bot services in exchange for reduced support staff. Still making money for someone, but they're nearly universally a worse experience for the end user, and certainly not a reason why users would engage with the FB platform.
On the contrary, I've had much better experiences with chat bots than I have had speaking with customer support on the phone. With a chat bot, I can wait for a response and be notified immediately. I wouldn't even mind if they took multiple hours to fulfill my request. Staying on hold on the phone for even 5 minutes feels like hell.
He himself was burned by Facebook's privacy settings when private photos of him and his then girlfriend were leaked. In other photos his laptop has tape over the webcam and microphone. He knows why people are privacy advocates. Probably moreso than anyone else, given the data he has access to.
Personally, I think it was always a matter of time until this sentiement found it's way to the general public.