Rarely do I get asked to elaborate on a tweet, but I got a dozen requests in five minutes on this one.
Tempted to buy more $FB. the whatsapp acquisition is expensive but perfect.
— Scott Rafer (@rafer)February 19, 2014
I don’t have time today to write this beautifully, but here’s why the acquisition makes so much sense to me:
- The top of the engagement funnel leads directly to Facebook’s ability to make money. Take away the ‘timewasters’ of chat and photos, and the rest of FBs revenue machine goes down the tubes fast. Instagram might look cheap before long.
- FB’s engagement growth is all outside the US — yet Whatsapp is bigger than them in Brazil if I recall correctly. FB needs to own the big developing economies to keep growing revenue aggressively. And there is a ton of revenue in the social messaging businesses per WeChat’s success with Red Envelopes for Chinese New Year and taxi hailing.
- I’ve been focused on the independent social messaging apps as a 2014/15 distribution channel for a while. It was Lumatic’s plan for this year, and I’m still focused on it for Nanigans (where I work), et al.
P.S. Requesting elaboration on a short-form posting is a key gesture of a social publishing site that you haven’t heard of but need to — http://sayhi.co
P.P.S. I’m looking at my first East Asian angel investment, which is marginally wrapped up with WeChat and certainly stands to make money from everything above. Let me know if you want in. :)