WhatsApp Founder Used Unchangable Airline Ticket To Pressure Facebook 144
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."
Refund. (Score:5, Funny)
Re:Refund. (Score:4, Insightful)
Thats a clever way to get users to tie billing info to their accounts and would add lots of value.
For the sake of $1 ... (Score:1)
Thats a clever way to get users to tie billing info to their accounts and would add lots of value.
Wonder how many of the 450 million subscribers would sign up for the $1 refund ?
Some might not sign up because they didn't know about it, some might not sign up because it's merely $1, but then ... some might not sign up because their privacy is worth much more than $1.
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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.
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look at some SLAs (yeah, WA has no SLA for its users, and should not have). If you get uner 99% uptime, you may need to pay more than a years pay back to the customer.
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Let me clue you in. Don't think of it as an IM, think of it as an SMS replacement. It functions and behaves as SMS would, except that it is dirt cheap and can handle way larger data. The most genius thing they did was that you did not "sign up", you just installed the app and got all your fiends that used WA immediately. This is a classical example of "reducing friction".
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If there is something special about WhatsApp, I'm having a difficult time seeing it.
Re: Refund. (Score:1)
You're not missing anything. It's a scam. If you have friends overseas you can't send them free SMS. You could use one of those services you mentioned, but they all require that all your friends have an account and are tech-savvy. WhatsUp works like SMS and for them is free.
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Whatsapp works worldwide, has better privacy features and you can group chat (I don't think you can do that on SMS but I may be wrong). Skype is slower and buggier. Hangouts is fine but whatsapp is older and many people were already on it by the time Hangouts caught up.
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You are presumably in the USA. Apparently, people NOT in the USA do NOT often have unlimited SMS, and have to pay even more than U.S. subscribers do. Thus, this is a money-saving program for them, especially since (AFAIK), text messaging is even more prevalent outside the U.S. than inside.
Something doesn't add up (Score:5, Interesting)
Hey should give all 450 million customers a $1 refund.
They supposedly have 450 million users and charge $1 a year, but in 2013 they only had $20 Million in revenue. Either the 450 million users is an inflated meaningless number, or they have huge churn where only 4% of users stick around past the first year that's free.
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Ungodly Churn, almost nobody uses WhatsApp.
Re:Something doesn't add up (Score:5, Informative)
Ungodly Churn, almost nobody uses WhatsApp.
Perhaps in your part of the world, but outside of the US, Whatsapp is big in some countries. As in used by practically everyone kind of big.
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It has come and gone in Thailand. Somehow everybody switched to Line, seemingly overnight.
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Ungodly Churn, almost nobody uses WhatsApp.
Perhaps in your part of the world, but outside of the US, Whatsapp is big in some countries. As in used by practically everyone kind of big.
I'm left wondering, network effects being what they are, why people are using Whatsapp instead of Facebook Messenger (given that they're probably already subscribed to Facebook anyway).
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Facebook messenger is a hog. Removing it from my android phone reduced battry consumption by 50%
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Atrium works for me.
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it is freaking massive in Hong Kong... I don't know anyone who doesn't have it.
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Android users get a 1 year free subscription that can, under some circumstances, be extended also for free. If you pirate the iphone app, you also get the 1 year free subscription. If you don't pirate it, the subscription fee is included in the app price.
Also I think this free / non free renovation is decided upon IP geolocation.
You pay for the service, not the app. As your user id is yo
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I do know of some users of alternative clients that couldn't log in after the expiration and had to pay.
Of course it's a ridiculous fee compared to what some telcos charge for SMS, but in places where international CC aren't ubiquitous, it's a real pain in the ass to make electronic payments (Yeah, outside US not only SMS aren't free, you may live without a CC).
So in whats app business model, you need to know if the person you are charging wi
Re:Something doesn't add up (Score:5, Interesting)
Not all their users pay the $1 a year. Some of them get free renewals after their year is up, for instance.
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actually, in 2012 they didn't have 450 million users. Their instantaneous growth rate as reported is about 1 million a day, so it is likely that most of their 450mil users were acquired in 2013. That's not unusual for exponential growth (as this would be due to the network effect that got those people on to begin with).
I am sure facebook examined the turnover rate. It is likely that their revenue in 2014 should be in the 100s mils. If that holds up, this would reflect a 10x increase in revenue year over
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First year is free, and if you get a new phone or new phone number your year resets. A bunch of my friends and I have been using over for well, over a year. Anyone who got a new phone or phone number and it reset, in my case I had a phone that died after 14 days, but same phone number, and that reset the counter too.
So at any given time I could see them having less than half of their active users paying (which would be 200 million dollars a year ish) but if they have a factor of 10 growth in a year, whi
Re: Something doesn't add up (Score:3)
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Simple: I use whatsapp but haven't paid a thing. I don't know anyone else who has either. The first year/18 months is/was free.
Itr's likely that it will stay that way, with Facebook switching to an ad-supported model.
Realistic Refund (Score:1)
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He sold it. It's not his problem any more. Facebook can refund or whatever.
his last miles award.... (Score:2, Funny)
think he'll be flying to Barca on a private jet next time.. at at least a full fare F ticket.
How cute (Score:2)
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Go to http://soylentnews.org/ [soylentnews.org] and just enjoy slashdot again.
Re:How cute (Score:5, Informative)
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Sign up for an account at Soylent News [slashdot.org] and enjoy all the benefits of a low user id.
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That'll teach me to preview.
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Interesting, but does it actually support the D2 comment system (heresy, I know)? I've tried setting it a couple times and it always returns to the classic system whenever I save. I do like to be able to uncollapse comments inline to see what context I missed from a high-rated reply.
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Really though? (Score:5, Insightful)
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.
Re:Really though? (Score:5, Insightful)
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Perhaps he simply bullshitted them into thinking that he was dumb enough to actually do it?
Well if he did that good for him, Facebook kind deserves a kick in the nuts^H^H^H^H wallet. Judging from his Tweets, when Facebook turned him down for a job, he wasn't bummed out about it and when Twitter gave him the thumbs down too he was still sending out very optimistic tweets. He didn't let it get him down when most people would have, and being a pessimist myself I like people with that kind of incurable optimism. I bet Facebook is kicking itself for telling him to take a hike back then it would have c
Re:Really though? (Score:5, Funny)
At least he can afford a new keyboard now. One with a shift key, maybe.
If only... (Score:2)
If I had mod points today, you, good sir or mam, would get them all!
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Yes, but facebook wasn't dealing with a huge corporation where the whims of one man were irrelevant. The whims of this man would make or break the deal. Just how quirky is he? Would he throw the whole deal out the window because he'd been inconvenienced? Maybe...
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only a moron blows $10- 20 billion dollars over a couple of grand.
that is literally being a penny pincher but blowing ten thousand on hookers, and crack.
it doesn't make sense. if Facebook fell for it then they really are on the way out the door.
450 million users, however 400 million plus probably are already active on Facebook.
Facebook spent $16 billion on software, and 50 million users.
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Really not a hard negotiation tactic.
Re:Really though? (Score:4, Interesting)
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.
Indeed. I expect that the deal happened in spite of, and not because of, this 'threat'. Sure, Facebook's team would have had an "Oh shit!" moment--but it would have been "Oh shit, we're dealing with an unprofessional nitwit" and not "Oh shit, he might walk away". Given that Koum has apparently decided it's a good idea to broadcast his unprofessional nitwittery, I imagine that Facebook's first move will be to keep him as far away as possible from anything dealing with 'business' as they possibly can.
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Let me re-phrase the threat.
"I don't have billions of dollars from you yet, so I can't just spend forever here, and I don't mind walking away. This plane ticket thing gives me an excuse to walk away, but if I let you buy me a ticket, I've given you a HUGE headwound with a cluebat that I'm desperate and will sell for way less than I'm asking. Signaling my intent to leave, and ask for more later, I'm taking a gamble that you will blink first."
Who blinked first? FaceBook, because if you study the financials
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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.
What actually happened was this person said "we've already agreed on the price, just hurry up and get the paperwork ready so I can sign it".
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the threat wasn't about flying away to some random location but flying to barca to meet some other possible investors....
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I doubt this story is anything other than him bullshitting. I'm sure the ticket was real, but as you point out I'm also pretty sure that didn't matter to Facebook. Just another attention whore here, nothing to see.
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He did not have a deal. Agreeing to take free tickets from the person across the negotiating table from you would take a deal. Not the same deal, but reaching some sort of deal.
Facebook: Here, have some free tickets so we can continue talking you into the gutter.
WhateverTheFuck: No, thanks, that just means you want to find new ways to undercut me. If you're not making a deal, I'm not sitting around.
FaceBook: No, really, if we're going to buy you for $10B we don't mind funding your later tickets
WhateverTh
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I'd have flown the entire negotiating team to Barcelona if it were to shave a billion off the deal.
Good for WhatsApp founders.
Oh my god, what a stupid idea. (Score:5, Insightful)
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:Oh my god, what a stupid idea. (Score:5, Insightful)
The real threat was that the deal wouldn't get done. The airline ticket was just a way to say that politely.
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The real threat was that the deal wouldn't get done
on time.
Ticket, no ticket, plans were made, and he said he was leaving, it could have not about the cost of the flight and more about sticking to former plans.
Kind of equivalent to a 2 bit lawyer threatening to storm out of the room - everybody knows it's theater, but it still gets people talking.
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That deal was pure lunacy. There are a ton of competitors to Whatsup, all are free as well (I use Viber). Carriers won't just roll over and die either, next thing you know, they are bundling sms with voice and or data rather than selling seperately. There is more than one way for 'free sms over data' company to be outcompeted. The first year of whatsup is free. By the second year ppl will look at another free app. Again, it is trivial to have billions of users if you give away the house for free. A re
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How is it moral for someone to make billions of dollars off a messaging service.
How is it moral to prevent them from making billions of dollars off a messaging service? Any moral system you design is ultimately arbitrary.
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Yea they could have even dropped in a small learjet in the price (Just keep it...)
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Sure, although it points a broader point about his willingness to engage in prolonged negotiations (for whatever reason) and willingness to drop the deal. It's kind of like trying to negotiate with North Korea -- the stated reasons they do anything are equally ridiculous, but you have to go along with it if you're actually looking to finalize those negotiations.
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Yeah, that and it wasn't as though there were other parties lining up to throw $19B at him. Facebook could probably have "lowballed" him at $15B and still closed the sale.
Is this an ad for Capital One? (Score:2)
Whats in Your Wallet
BS (Score:4, Insightful)
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The word BULLSHIT jumps to mind whenever Facebook is mentioned.
Re: BS (Score:3)
Actually, I don't know if they could.
If Facebook had bought him a ticket, that could have been considered a bribe, and the regulatory agencies would have had all sorts of fun with that.
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A "bribe"? WhatsApp is a private company, they can take money from whoever they want for whatever purpose they want.
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Facebook want the deal as well, so they can use this to pressure their ditherers
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The word BULLSHIT
is another way of saying "negotiations."
Ok (Score:1)
and so one of the biggest deals in tech history had to be scheduled around my M&M award ticket
There are no grown-ups running businesses in this country.
We Better Get This Deal Done ASAP... (Score:5, Funny)
Well... (Score:2)
Now he has the money to fly to Barcelona and back every day for the rest of his natural life, so that worked out great.
Bullshit (Score:1)
Why is this a story? Obviously nobody was pressured by the cost of an airline ticket. So that's bullshit, and that's the entire story. Are you trying to get the content down to the quality of the Beta site?
hip! (Score:2)
Chump change (Score:2)
This kind of ultimatum sounds like standard chest-thumping. Yeah, sure, you're going to walk away from a 16-billion-dollar deal for the sake of an airline ticket. Pull the other one.
Lufthansa (Score:2)
Reading posts like this remind me why I'm glad I collect miles (aka Avios) with British Airways rather than Lufthansa (M&M = Lufthansa Miles and More). As a BA Gold I can change my miles bookings free of charge up until 24 hours before my flight.
I'm currently in Prague at the moment, decided I want to get a later flight back tomorrow so logged in and switched my booking.
There's a reason why those who are not fans of Lufthansa call their scheme Miles and Less. It's one of the least generous schemes out t
Cute story but he's a sell-out (Score:2)
Facebook was dumb. (Score:5, Insightful)
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:Facebook was dumb. (Score:4, Informative)
You are mostly right, i live in Venezuela, here we only get charged for data/outgoing sms/outgoing calls. Incoming sms and calls are free, as they should. Of course, our cell plans suck, for example i only get 60 minutes a month, 300 sms and 250 MB of data.
You are wrong about whatsapp not caring for new accounts, it is widely known whatsapp 450M users have about 70% of daily use.
Here a trick for whatsapp users: don't want to pay anually? Have android? Borrow an iphone, put your simcard, buy whatsapp for 1$, put your simcard back into your android phone. Boom, you get lifetime service for 1$.
Whatsapp is good enough, its strenght isn't security or privacy, but rather its comfort. You don't need to add anyone, no pins, usernames, passwords or logging in. If you want security then use BBM.
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User friendly (Score:2)
Whatsapp is good enough, its strenght isn't security or privacy, but rather its comfort. You don't need to add anyone, no pins, usernames, passwords or logging in.
Very true. It stores your phone number and contact details in the cloud, which is very useful when you change phones. Just install the app on your new phone and boom! All your contacts are there.
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Not true, whatsapp doesn't store contacts, as it doesn't do contacts authorization.
When you change your android phone, you put your gmail account and you get your contacts back (this is being done by the OS), whatsapp just queries the server to find out if your contacts have whatsapp and shows accordingly.
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pennypinchers? Nice ad hominem, dickwad. WhatsApp excels because it allows SMS+ features over a data plan, like video or audio, that doesn't work so well over SMS.
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Whatsapp is useful if you have moved country and would like to keep receiving texts from your old friends without putting them out. It is one of those cases where politeness dictates that you can't expect people to keep texting you, even though you would have no issue paying the £10 it would cost per month to send 50 text messages.
That said, catering for us is not an 'insanely hot' business idea and a lot may well be swayed to move to Google Hangouts or Skype quite easily.
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As a whatsapp's customer (and I say customer, not user, because I actually paid them 3 years ago and got the lifetime subscription), it's clear to me that you have never used this app.
I'm from Spain, where Whatsapp has a >99% penetration; I've have been using whatsapp daily since I installed it. You got almost all of your facts wrong:
>If you have WhatsApp account, from a dumb phone you can send an SMS paying for just one outgoing local text fee
There is no Whatsapp app for dumbphones. There is no way
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WTF (Score:2)
I know that editor's at slashdot have a reputation for not editing summaries, but this has got to be the worst example of a summary I've ever seen. Perhaps Timothy's shift key is broken, or is it now acceptable to start sentences with a lowercase letter? Proper nouns seem to have escaped the need for an uppercase letter as well. I normally just ignore typos in the summaries, but this is beyond belief.
Not credible (Score:2)
Is Bullshit.. (Score:2)
spelled with 1 *L* or 2?
Who really cares about theatrics?
implausible (Score:2)
Hah! You think we believe that? Getting M&M to issue a ticket to Barcelona is a lot harder than closing a $16b deal with Facebook!
Riiiight.... (Score:3)
I'm sure a $2K flight ticket really influenced everyone involved this deal when there was $16B at stake.
Psycho or Crazy Like a Fox? (Score:3)
A psychopath brags.
Either that, or the facebook guys asked him to say it.
Fuck Facebook.. (Score:2)
For $16B .... (Score:2)
Or Antarctica, if that's where you'll be.
This is not bulshit (Score:2)
Ob (Score:2)
Reminds me of when Gary Kildall said to IBM "The last bus goes in an hour, and no way am I taking a taxi, you bastards."
This how Microsoft got to [re]write DOS for the PC. The rest, as they say, is geography.
Interesting way to see how CEOs think. (Score:2)
CEOs are rich because they pinch on things that seem strangely unreasonable to the layman. I bet one CEO pressing another to an appointment because he otherwise has wasted his Miles was actually a solid appeal to Zuckerbergs politeness and courtesy and Zuckerberg felt compelled to follow suit - and rightly so.
Zuckerberg, Jobs and other rich people have strange money saving habits they carry on well into being insanely rich. I'll still be mending my own trowsers should I ever land a lucky punch, f.i. Zuckerb
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You probably smell tapas too after the 50th trip.
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Actually, from the evidence, I think our economy is run by monkeys. It would explain a lot.