WhatsApp Founder Used Unchangable Airline Ticket To Pressure Facebook

McGruber writes "In a post on the Flyertalk website, WhatsApp founder Jan Koum provides another interesting detail about how he steered WhatsApp into a $16 billion deal with Facebook: 'we announced the deal with Facebook on wednesday after the market closed. during the process, we realized there was a chance we might not be able to get the deal wrapped up and signed on wednesday and it could delay. when the risk of the delay became real, i said: "if we don't get it done on wednesday, it probably wont get done. i have tickets on thursday to fly out to Barcelona which i bought with miles and they are not easily refundable or even possible to change. this has to be done by wednesday or else!!!"...and so one of the biggest deals in tech history had to be scheduled around my M&M award ticket."

Really though?

[Anonymous Coward]

It's hard to think that FaceBook would take this threat seriously. It's a $10+ Billion deal. Throwing in some extra first class seats for a different day would be the equivalent of a give-a-penny-take-a-penny dish compared to this.

Oh my god, what a stupid idea.

[SeaFox]

This is Facebook we're talking about. They could have offered to charter a jet to take him where he needed to go if missing his flight was a possibility from long negotiations.

Yeah, Facebook caved over an airline ticket cost.

Re:Refund.

[Anonymous Coward]

Thats a clever way to get users to tie billing info to their accounts and would add lots of value.

Re:Oh my god, what a stupid idea.

[phantomfive]

It's not exactly caving when everyone in the room wanted the deal. Also, realize they were all probably tired of negotiating. Would you want to keep negotiating for weeks, or would you want to get it over with? Of course they all knew that the flight (bought with miles!) was cheaper than the smallest deal anyone was considering.

The real threat was that the deal wouldn't get done. The airline ticket was just a way to say that politely.

BS

[bloodhawk]

The word BULLSHIT jumps to mind. If facebook felt the need for more time they would have happily bought him a replacement first class ticket to anywhere he wanted to go, especially when it is billions of dollars on the line.

Re:Refund.

[Anonymous Coward]

Right, 2 hours of downtime is clearly worth the same as a year's subscription.

It's amazing how people can keep such separate concepts of how much they think it's reasonable to pay, and how much it's reasonable to be paid in their heads at the same time.

Re:Really though?

[K. S. Kyosuke]

Perhaps he simply bullshitted them into thinking that he was dumb enough to actually do it?

Facebook was dumb.

[140Mandak262Jamuna]

The non refundable tickets story looks phony. Facebook could afford to fly the founder on a private jet if needed. No matter whether this story is false or true, Facebook paid foolishly high sum for Whatsapp.

The main draw of Whatsapp is that it allows penny pinchers to save on texting fees. In the countries dominated by WhatsApp all incoming calls and texts are free by law. People only pay for outgoing texts. If you have WhatsApp account, from a dumb phone you can send an SMS paying for just one outgoing local text fee. If you have smart phone, it would come under your data plan. That SMS could be echoed to many people as incoming texts by WhatsApp, across countries if necessary. Thus you avoid international texting charges too. These users are tightwads and penny-pinchers extraordinaire. They are the ones who developed elaborate missed-call etiquette and protocols to avoid paying air-time charges. They would sign up, use the first year for free, and create a new account under a new user name and get one more year free. WhatsApp knew it and it did not care, it is able to count old users as new users and show phenomenal user base growth. You can not make any money off these users. They will dump WhatsApp the moment it tries to charge any fees. There is no compelling reason to use WhatsApp and the switching costs are minimal. It is not like Facebook where all your friends are and you have to be in Facebook to see it.

In a developed market with smartphones, where dumb phone market is shrinking, there is no way FB can make any money off WhatsApp. And it has spent 35% of cash on hand in this acquisition. Media is making a big deal of 19 billion dollar figure. But much of it is from overvalued FB stock so that is not relevant. What is important is, in the coming year it is going to be cash strapped. It is having huge buyers remorse. It is going to more circumspect in the next acquisition target. It will swing in the other direction and let a good deal slip in the coming year. That is the effect of WhatsApp on FaceBook.

Re:Something doesn't add up

[Lumpy]

Ungodly Churn, almost nobody uses WhatsApp.

Re:Really though?

[Anonymous Coward]

The use of "literally" to mean "figuratively" goes back to the 1700s. This usage has appeared in the Oxford English Dictionary since 1903. Get over it.