In Facebook – WhatsApp Deal Strategy Trumps Numbers

Facebook announced it will buy WhatsApp for $19 billion on February 19, 2014. There is no way that I can, in any credible means, justify or explain the purchase price because it’s absurd in my opinion. WhatsApp has no advertising revenues and charges each of its 450 million active users a yearly fee of just $1.

Putting the hefty purchase price aside, this deal demonstrates closing an acquisition is not always about spreadsheets and hard negotiation. Often it’s about two parties with a shared strategy and vision having a conversation.

While the formal deal came together very quickly, both Zuckerberg and WhatsApp co-founder Jan Koum had been in informal talks for the past two years. They met for the first time  in a coffee shop in 2012. I often say that meeting an owner of a privately held, not-for-sale company for the first time is like a first date; you want to put your best foot forward.  For Zuckerberg and Koum, their first date turned into many more until the deal was finalized over this Valentine’s Day weekend.