“The 16 or 19 or whatever billion dollar deal where Facebook bought WhatsApp only exposes what amounts to a shell game in Silicon Valley,” Rocco Pendola writes for TheStreet. “‘I’ll ‘invest’ in this ‘company’ and then this other ‘company’ will go public and then this company over here will buy that company while this other company buys this company and then we’ll ‘invest’ in this awesome new company that Jiz Rock started because we really need in on this deal because, of course, somewhere down the line somebody will buy his company or he’ll take it public.'”
“And we’ll all make out like pigs moving money around in these hollow financial transactions while the jock sniffers on Twitter and in the media take what we do so seriously they legitimize it,” Pendola writes. “Great gig if you can get it. And you wonder why these albeit misguided souls in San Francisco have resorted to smashing shuttle bus windows.”
Pendola writes, “Apple has no reason to participate in this game. And I’m not sure why anybody of sound and sane mind and body would imply that it should.”
Read more in the full article here.
[Thanks to MacDailyNews Readers “Arline M.” and “David E.” for the heads up.]
I agree this shell game sounds insane. WhatsApp earned $1 a year from subscribers, after trying it out for a year for free. With 450 million potential subscribers from their user base, that translates to $0.5b dollars a year. A lot of money for sure, but nowhere near the $19b Facebook expects to recoup down the road with the acquisition. It will be interesting to see how they monetize it without alienating their users.
Anybody else see a dèja vú of Google and Motorola selloff?
Oh *SNAP* yes!
But this Facebook *faceplant* is unparalleled in my experience. I’d call it a mile stone on the road to major FAIL. We shall see.
Nope, I don’t. Motorola at least had assets (like manufacturing equipment and patents) that it actually could sell at the end. WhatsApp has nothing. This will be a total and complete writeoff of goodwill when all is said and done, far worse than what Google did with Motorola. Good luck with it. The utter stupidity of this deal is truly shocking.
Easy. what’s app will now require a Facebook account for new users and will sell Ads trough what’s app.
Time to jump ship.
Whatsapp is for pikers who are too cheap to pay for messaging – why is this a desirable group to acquire for Facebook. I do not understand this. Now everyone on whatsapp will just move on to the next app.
He’s only jealous because he has none of the stock.
Whatsapp you say? I didn’t hear ya.
When I read about this buy Buy BUY! phenomenon, leading to fail Fail FAIL! I am reminded of Eastman Kodak and their lunacy buying stuff with the $Billions that had nothing to do with the company.
Most infamous: Kodak buying Lehn & Fink, the makers of Lysol. WTF were they thinking? That was one of the first divisions they sold off once the digital age kicked them in the nuts.
But also: Kodak bought four different printing technology companies over the years. They KILLED ALL OF THEM.
Buying crap is an addiction once a company has made mucho money but have no focus, not unlike what happens to Jane and Joe Blow when they hit the lottery.
Google’s addicted.
Facebook’s addicted.
Buy-buy turns into bye-bye bucks!
To be fair, I think that a lot of this is companies doing what Wall Street rewards. As the Google and Facebook founders hold such large stock positions, they would be stupid not to.
Google has not been punished for bad acquisitions, and Facebook probably will not be either.
Of course, it’s a matter of persecutive.
I was thinking today that the Facebook blowing multiple billions of dollars on an unprofitable little company is an act of DESPERATION as a move to monopolize mobile user communication. It’s beyond ridiculous. Facebook got taken. Facebook are suckers.
However, setting aside the profound waste of money, it certainly makes business sense. It adds positive diversity to their services. It keeps the youth culture engaged, if only off to the side. It’s a reasonable technology to own.
Another point of view: How sad that Wall Street itself is so incredibly desperate that it thinks only in the short term, almost never in the long term. That’s self-destructive, as I often point out. I bodes poorly for Wall Street’s future.
Rocco is on his meds, off his meds, on his meds, off his meds, again.
It’s possibly a money laundering job. The purchase needs to be investigated.
Facebook used billions of fake valuation to buy another company with no value. Kinda like those $3000 socks you see on ebay or Amazon, that have no more value than $1… I check lots of things online, shopping for cheap cables, movies, watches, etc. I see these bizarre items, going for $100s or $1000s… I even wrote to a seller asking them why the price was such. They said it was a mistake. However I see too much of it to believe it.
LIKE x INFINITY
I live in the valley. The VC environment is better than in the 90s. Most companies do have a business plan and revenues… but the shell game does continue… and it foreshadows another (hopefully not) inevitable bubble and crash.
This is a very wisely written piece…
1st, FB sucks.
always did.
always will.
2nd, FB will not last.
it’s useless.
they did not invent socializing, Mankind did so since stoneage.
what’s the point of FB?
likes?
who cares.
anything with ego does not last.
anything with bloat.
with SillyFactor (not X-Factor or AttractorFactor) does not either.
3rd, WhatsApp?! No – What’s Up!
who the F pays $16B for a silly sms app 2014-02-19?!
guess again: FB! as $1B for Instagram (2012-04-12) app that can’t even zoOm?!
FB (founded 2004-02-04) does not learn from Google (founded 1998-09-04):
Google is clueless, spineless since it lost its mojo as it buys up anything and counts on luck to take it forward, thought it has not succeeded in monetizing anything since its origin: ad search
Google does not learn from Msft.
Goo buys ideas that do not bring in profits, wither away on back shelves just as it’s 1000s of lab experiements are impractical and its business management/hope haphazard – not as Apple’s Think Different but precise organizatin.
Goo did the same as Msft for a decade prior to Goo’s existence: licensing to all (Android) like a whore. Outcome: popularity is bought (cheap) and eventually it bites you in the ass (profitless): un-sustainability is Goo’s mojo/MO too…