Why did Facebook bought Whatsapp for $19 Billion? Reasons from perspective of a marketeer.

1. The Facebook-Whatsapp
Deal
Animesh Jain, BM PARICHAY 2014

2. Facebook
• Facebook is now valued at $175 billion
• Facebook passes 1.23 billion monthly active
users, 945 million mobile users, and 757 million daily
users.
• Available on All Platforms.
• Mobile Compatibility
• Chats, Photo Sharing & Gaming
• Also Acquired Instagram.

3. Whatsapp
• Mobile Messaging App
• WhatsApp has only 55 employees.
• 450 Million Users.
• 70% Active users and 1 Mn Users daily joining it.
• Same growth trajectory continues it will make $1
billion a year of revenue in a few years.
• Enables Photo, video Sharing.

4. Competitive Advantage
• Through Resources.
• Through Capabilities
• Vertical Integration
• Creating Entry Barriers

5. Ans-off Matrix

6. Changing Market Trends
• Changing communication requirements have
altered the use, and impact, of things like images,
photos, charts and text.
• All of these have the potential impact of slowly (or
not so slowly) eroding the value (which is noticeably
lofty) of Facebook.

7. Move fast to avoid
irrelevancy
• How to compete in a market where many
consumer demands are unfulfilled?
• New technologies, customer behavior patterns,
regulations, inventions and innovations constantly
challenge old success formulas.

8.  Recognize the market shift. Accept it.
If there is a better solution, rush toward it rather than ignoring it.
 Bring it into the company, and leave it independent.
 And as long as you can convince investors that you are maintaining
your relevancy use your highly valued stock as currency to keep the
company moving forward.

9.  The acquisition used a mix of cash, Facebook stock and restricted
Facebook stock for employees. The latter two of these three items
are not real money. They are simply pieces of paper giving claims to
ownership of Facebook, which itself is valued at 22 times 2013
revenue and 116 times 2013 earnings.
 Facebook really bought "the next Facebook.“ as WhatsApp also does
a lot more than "text-messaging." It allows users to send photos,
videos, and voicemails to each other and keep the conversations
forever.
 Buying WhatsApp allows Facebook to both own "the next
Facebook" and prevent "the next Facebook" from eating Facebook's
lunch.