When news broke on Twitter (240 million users) that Facebook (1.2 billion active users) had purchased WhatsApp (450 million users), it took the Wednesday (7.14 billion users) crowd largely by surprise. It was as if another continent, existing in the middle of some rather unprepossessing ocean, had been discovered only because someone had paid $19-billion in cash and stock for it.
WhatsApp is a cross-platform mobile application that allows users to send text messages, pictures, recorded audio messages and video using a data plan or wireless at the cost of a dollar a year, with the first year free. Characteristically, the North American response to the sale was: "If it was worth that much, I would know something about it." But more than 50 billion of these WhatsApp messages are exchanged daily.
About one million people a day sign up to use WhatsApp and, once there, they are mainly fierce and loyal users – and a good many of them are under 25 years old.
Facebook's purchase doesn't seem nearly so extravagant when one thinks of it as paying just under $40 a head for a dedicated young user in the very demographic that is increasingly losing interest in Facebook's flagship product. It's a fair price to pay for fresh meat.
For a generation who essentially grew up with Facebook, going onto the site has become rather like visiting home. I heard a mother call out to her child the other day "Check your Facebook!" It's the new "You never call..."
And indeed everything about Facebook – so unproductively busy, so echoing with unrealized plans, so guilt-inducing and prying (stop asking me about university) – is like a tense homecoming to a place with questionable design where you're always happy to see _____ but feel obliged to engage with _____ and of course compliment _____ while you're there.
The photos on Facebook might as well sit clustered and dusty on your grandparents' piano. The aunts are arguing it up like it's the Passive Aggressive Palace. It's someone's birthday. It's a catalogue of obligation.
iStrategy Labs, a marketing and Internet consulting firm, recently reported an 85-per-cent surge in Facebook users aged 55 and over. That demographic is mostly where the money is, so advertisers might be satisfied. But while the kids still go to Facebook, the basement party is on Instagram and elsewhere, and when they do use Facebook, more often than not they are there to send each other direct, private messages, not to post old-timey statuses.
It's impossible to say for sure that the WhatsApp purchase was a savvy one. It's just a mobile messaging app after all, and there others out there and more coming. (I do wonder if it's like acquiring a dog: Can they change the name? It's a terrible name.)
I suspect this sale isn't a case of "If you build a better app, the world will beat a path to your door," bringing $19-billion with it. This deal is less about capitalizing on new technology than it is about capitalizing on our old and most human qualities – we do love to talk to one another, and we have a tendency toward inertia.
In both our personal and technological dealings, this inertia is often mistaken for loyalty and, call it what you may, investing in that human unwillingness to abandon things that just work in favour of things that work better can be worthwhile.
No one knows this better than Facebook.
There are lessons old media could learn here from Facebook, whose overall growth is still strong. Facebook could easily see the migration of an older, wealthy demographic to their once college-based site as the very definition of success and make the company's work exclusively about keeping those people there – at their laptops posting and liking, debating niceties and clicking on ads. It's working.
What the WhatsApp purchase suggests, however, is not just that Facebook founder and owner Mark Zuckerberg is dedicated (astutely) toward making his company a serious player in the mobile market but that the company is watching and taking cues from the next generation. They grow up so fast.