I finally had a moment to figure out the Whatsapp business model. First year is free and then $0.99 per year thereafter . With 400 Million users, that is about $400M in revenue per year (or per next year). They do 18 Billion messages per day. Using Amazon AWS SQS or SNS pricing of $0.50 per Million, that is $9,000 per day of approximate cost, or about $4M of costs per year. I know that is probably a bit light because I am not including data transfer costs of about a Nickel/GB. For employee costs, they had about 60 people at an average fully burdened load of $200K is about $11M. The big cost for WhatsApp are the Apple and Android Store transaction fees of 30% - about $120M. So, a net income (next) year of ~$260M. Put that net at a 73X P/E ratio and it gets you to the $19B valuation. Comparatively: IBM has a PE of 12 Red Hat has a PE of 64 Facebook has a PE of 112 Amazon has a PE of 580. Of course it positions Facebook well to address some challenges it has. The tw
Showing posts from February, 2014
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Wikipedia defines: " Capitalism is an economic system in which trade, industry and the means of production are controlled by private owners with the goal of making profits in a market economy ." This definition has always bothered me. I prefer a different model where there is equal recognition of the three primary drivers behind the success of a company: Owners Employees Customers I like to think of it as a three legged stool, where each leg is as important as the other. One gets too large or small and the stool tips over. The free market is supposed to take care of Employees and Customers. Employees because the Owners will create so many jobs that due to supply and demand, employees will receive competitive pay. Customers because if the owners are not building the right thing, then they can go elsewhere. As someone who has helped to build about 10 startup companies now, I have seen the power in making these three stakeholders equal partners.