• The Most Important Takeaway of Todays Huge Buyout of WhatsApp

    These days, the Zuck seems to be doling out cash and making it rain even better than the most eccentric Russian millionaires.

    But Facebook’s monstrous buyout of WhatsApp also proves a few things:

    1. Zuckerberg is swimming in unhealthy sums of cash
    2. WhatsApp is probably the greatest messaging app of all time
    3. Startups don’t actually need a whole lot of funding to become a billion dollar company

    Wait a second, what was that 3rd one again?

    UPDATE: well, it turns out WhatsApp wasn’t that cash strapped after all with a reported 60 million in total funding over the years led by original investor, Sequoia. Still, turning $60 million in funding to a 19 billion acquisition is nothing to sneeze at.

    Yes, today’s 19 billion dollar buyout was historical and unheard of, but the greater takeaway is the fact that WhatsApp was able to use their funds with such striking efficiency.

    In a day and age when wee little startups with barely a product and no revenues are getting huge VC dollars and over the top valuations, the founders of WhatsApp managed to get by these past few years on just $8 million $60 million from Sequoia.

    Although I am not privy to the inner workings of WhatsApp and its financials, the fact that they made it all work with a modest funding is a testament to Brian and Jan’s ability to run a tight ship. This is in stark contrast to most startup founders who instead, find themselves jumping off their ships while its burning due to dwindling cash reserves.

    When we look at companies like FAB who received $336 Million in funding but are struggling to even stay in the black, its easy to see what happens when you are capital efficient.

    Did I also mention that WhatsApp has only 55 employees?

    It amazes me how the allure of large funding rounds continues to create spend happy startups who are more than eager to blow that first check on trendy, froufrou offices complete with the most expensive Apple products and company branded swag.

    WhatsApp on the other hand, was not so easily seduced.

    It’s graffiti filled Mountain View offices are sobering compared to the gaudy workspaces of most Silicon Valley startups. They don’t have a sign at the front door, no logos or branding of any kind that would indicate the existence of a fledgling startup, let alone one that is worth billions of dollars. 

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    Instead, the space was meant to focus its employees on building the best product possible without being in the spotlight.

    And what a company they’ve built!

    In the end, you can’t help but applaud the founders for what they’ve accomplished. The funding they received was comparable to the huge multi-million dollar Series B,C,D rounds we see commonly, but what’s truly remarkable was the fact they spent their funding more wisely than any other startup in history. They also resisted the temptation to become a startup cliche by maintaining a laser focus on the product and a bare bones work environment.

    So the next time you decide whether or not to fund a startup, it might behoove you to ask the founders what plans they have for the offices - WhatsApp now has 19 billion reasons why you should.

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