The lesson from Facebook's acquisition of WhatsApp? Never rest

No company wants to become like Nokia, a firm that failed to keep up

Share

Flick through the business pages of any newspaper and you will see countless stories about acquisitions and takeovers but few of them get people talking quite so much as those involving technology companies.

It is as if the dotcom bubble had never grown to circus-like proportions and burst so dramatically as it did at the turn of the 21st century, ruining companies such as Boo.com and Pets.com in the process.

So it is today that we turn on to news that Facebook has bought WhatsApp in a deal worth $19 billion. It beats, by some margin, the $1 billion the social network paid for the photo-sharing service Instagram. It is also close to tripling the $7.2 billion fee that Microsoft agreed with Nokia for its entire mobile phone business.

But this is good news. WhatsApp was launched five years ago by Americans Brian Acton and Jan Koum, both having decided to leave their jobs at Yahoo! and go it alone. Their mission was a simple one: “building a cool product used globally by everyone.” “Nothing else,” they say, “mattered to us.”

That they achieved their aim is enough cause for celebration. Their “over-the-top” messaging service can be used on any smartphone without users having to eat up text allowances. They have a user base of 400 million each month. A million new users sign up each day. But now Acton and Koum are rich beyond their dreams - just like Instagram founders Kevin Systrom and Mike Krieger before them.

READ MORE: WHAT IS WHATSAPP AND WHAT DOES IT DO?
WHY DID FACEBOOK PAY $19bn FOR WHATSAPP?

What this does is inspire hope. It shows that a good, attractive and well-implemented idea will be rewarded in some way, either through cold hard cash or through popularity. It drives pioneers and entrepreneurs, whether in Silicon Valley or in London's Silicon Roundabout, and it helps to push them forwards.

They see bids like this one succeeding and their jaws drop. Equally, they hear about the people behind the photo messaging app SnapChat rejecting Facebook's $3 billion advance and they know that there is a chance they can also make it big alone.

As a result, we're seeing innovation and challenges. The WhatsApp developers didn't just create a messaging service, they grew it into an effective rival to Facebook which is undoubtedly why it decided to step in with an offer. The ability to create groups within WhatsApp, for example, turned it into a social network in its own right. This in turn inspired other people to have a go-  such as Hike which offers offline and push-to-talk messaging (like walkie-talkies).

 

This keeps everyone on their toes. Those small companies that grow big know they have to keep looking over their shoulder just in case two people in a garage come up with something that takes the world by storm. Investors become more willing to take a gamble on the little people who believe their idea will be a winner.

So nobody rests and, if they do, they are found wanting. Facebook learned this the hard way when it was slow to latch on to the growing numbers of smartphone users. It launched an iPhone website in 2007, the same year that Apple launched its smartphone and an app came a year later but it is only recently that it has started to take advantage of the many features a smartphone has to offer.

As well as acquiring other companies, it is now looking to develop its own initiatives, even if it that means borrowing some ideas. The new Paper app has been very well received, following the likes of Feedly with a news reader fromat that actually makes far better smartphone use of Facebook. It also updated its Android app last month so that it could read text messages on the user's smartphone.

No company wants to become like Nokia, a firm that was once at the top of its game but failed to keep up when Apple and then Android began to dominate the smartphone space. There's a stark reason why, at this moment in time, WhatsApp costs $19 billion and why Nokia can be bought for a small proportion of that sum. The game changes fast, and you’ve got to move with it.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

Commercial Property Solicitor - Bristol

Highly Attractive Package: Austen Lloyd: A VERY HIGH QUALITY FIRM A high qual...

DevOps Engineer (Systems Administration, Linux, Shell, Bash)

£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

Day In a Page

Read Next
 

The power of anonymity lies in the freedom it grants

Boyd Tonkin
Rebel fighters walk in front of damaged buildings in Karam al-Jabal neighbourhood of Aleppo on August 26, 2014.  

The Isis threat must be confronted with clarity and determination

Ed Miliband
Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone