Reflections on the Sale of WhatsApp

I remember the first text message I ever sent.

It must have been 1994, it was on my Dad’s spare business phone, an Ericsson 388.

I think I sent the message to myself.

I used to wake up at 5 in the morning and potter around the house while everyone was asleep.

Our old house creaked with a close warmth that I would revel in before the day began and the curtains were swept from its eyes like sleep.

The quiet folds of those early mornings provided me with a sanctuary in which to interrogate new objects and subjects without embarrassment.

Latin vocabulary. Early attempts at poetry. The Man from UNCLE on television. Harry Potter. Seemingly infinite Hardy Boys stories. Biggles. The occasional diary entry. New technology. Radio controlled cars. Handdrawn diagrams of submarines that would have been both fatal and useless.

It was in those early hours, of those early years, that I first explored mobile phones.

I have always loved the capability of new devices, even before I found a use for them. The cardinal sin of any labourer: to love his tools more than his work.

I fell in love with the game of Snake. I remember wifi long before it was useful. I discovered steering wheel attachments for gaming. RAM upgrades. I followed the exponential enhancement of

I don’t remember the first message I sent. Certainly ‘Hi’ or, more typical of a younger, more conscientious self, ‘Hello, this is a test.’

Since then, over the last 20 years, text messaging has come and gone and come again from my life. Resurgent of itself and in new forms as IM, AOL chat, Facebook messenger, Twitter, iMessage and latterly WhatsApp.

20 years after I sent my first text message, Facebook bought WhatsApp for $16 billion. The two events weren’t related, except an illustration of how long it takes to build a ‘high-growth’ tech company.

How many services came and went before text messages became WhatsApp and sold for an astonishing sum of money?

WhatsApp’s users were valued around $50 a piece by Facebook, which, considering they are each currently worth about $0.49 per year, seems difficult to account for.

Much analysis ensued as to how the valuation might have been achieved, how it would amortise, what Facebook planned for WhatsApp to make its users worth that amount.

Facebook spent $16bn buying a company that allowed people to send text messages, something I was doing aged 9, twenty years ago on my Dad’s Ericsson 388.

In 2014, you can’t buy Ericsson phones except on eBay. Ericsson is installing and operating telecoms infrastructure. WhatsApp was the last mover in text messaging and seems to have swept the board.

At the financial heart of the WhatsApp business model is a straightforward arbitrage. The cost of tiny volumes of data (>$0.001) vs the cost of international text messages (<$0.2).

But for over 500 million daily active users of WhatsApp, the personal reality of that arbitrage is a kind of magic. Unfortunately for pundits, there is no accounting line for ‘magic’.

The fact that it is free for me to message my family when they are abroad is magic. A functionality that exceeds the financial value of its constituent parts. That is why it is a great product. That is why it sold for an astonishing amount. What Facebook sees in WhatsApp is the capacity to touch, and positively influence the lives of its users. That is why it has successfully harvested vast volumes of data from its existing users, allowing it to grow into a

What else is there to say about WhatsApp? It’s nice. Reliable. Quick. You can make groups. No one cares that you can change the background. It defies boundaries.

Facebook paid a lot of money for it. It’s a good app if you like sending text messages.

I use it to speak to my girlfriend on the other side of the world and that’s something that I can’t put a value on.

This post was first published on a now defunct blog called in 2014.