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Old 02-20-2014, 09:35 PM
 
4,072 posts, read 9,067,331 times
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Whatsapp had 50 employees, yet sold for 19 billion dollars to Facebook. Getting so valuable with such minimal manpower would have been impossible 20 years ago, as well as throughout history.

Being that this is a very new phenomenon, what kind of effect do you think it will have? I understand the value of cornering a market and being the leader in a sector, but I think some of these internet stocks are out of control with how speculative they have become.
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Old 02-20-2014, 10:22 PM
 
2,485 posts, read 1,845,613 times
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Quote:
Originally Posted by GiantRutgersfan View Post
Whatsapp had 50 employees, yet sold for 19 billion dollars to Facebook. Getting so valuable with such minimal manpower would have been impossible 20 years ago, as well as throughout history.

Being that this is a very new phenomenon, what kind of effect do you think it will have? I understand the value of cornering a market and being the leader in a sector, but I think some of these internet stocks are out of control with how speculative they have become.
This phenomenon exists mostly in the Internet business. Most of these companies are relatively small compared to their profit. The entrepreneur takes the most money, followed by the key people and high-skill engineers. You have to be super good to get one of these jobs. Some of these are done by high-skills professionals from other countries.

The challenge now is that if you aren't one of these amazing people, you make a whole lot less.
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Old 02-21-2014, 08:41 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
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This is why we are currently looking at a preview of the future, with the big disparity between the high and low income levels. Those 50 people are providing an extremely high value to their employer. As more of these companies succeed they and their employees will make a lot of money, while the fast food workers and retail clerks art crying for $15/hour.
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Old 02-21-2014, 09:26 AM
 
Location: WA
5,394 posts, read 21,393,457 times
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Quote:
Originally Posted by GiantRutgersfan View Post
...
Being that this is a very new phenomenon, what kind of effect do you think it will have?
...
It's not really... overpaying for internet companies has been going on for years (broadcast.net made Mark Cuban wealthy when Yahoo bought it for 6 Billion in '99 and it never did much for them) so expect gambles using shareholder money will continue.
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Old 02-21-2014, 09:31 AM
 
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I know a company like that. These guys figured out how to trade waste fossil fuel products and sell it to utilities. The amount of money this six person office makes is somewhere around $200,000,000 annually. Even the secretary gets a cool million a year.
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Old 02-21-2014, 09:43 AM
 
Location: Living on the Coast in Oxnard CA
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Value is being placed on companies that may or may not work out. Many times this is to enhance an allready growing enterprise such as Facebook or Google. Other times the company could be seen as a threat to the larger company. Who knows the real value of the company. Value is depended on what someone places on a company or asset.

I remember reading of an investor that would take large positions in start ups. He would invest in maybe 10 or 12 companies hoping that one or two would be the one to make him more money. Lets say he was having a 90% failure rate. Still he was successfull because of the home runs he would hit with 10% of the investments. The guy did do his home work. He was not just tossing money to the wind. Still only 10% or so were making him any real money.

Maybe Facebook and others are thinking in a similar way. I have no idea what plans they may have. I would have no idea knowing what the value of any of their purchases would really be. Still I am wondering could they hit a few home runs that would more than make up for any losses? Time will tell.
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Old 02-21-2014, 07:47 PM
 
4,232 posts, read 6,058,374 times
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To give you any idea how insane this $19 billion dollar valuation is, start looking at companies that make and sell durable tangible goods.

IMO Facebook found another outlet to increase it's burn rate, but hey its not Zuckerberg's money any more. Just some poor sap who had this garbage loaded into his 401k as a growth stock thinking 20 years out.
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Old 02-21-2014, 08:08 PM
 
724 posts, read 616,773 times
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Quote:
Originally Posted by cpg35223 View Post
I know a company like that. These guys figured out how to trade waste fossil fuel products and sell it to utilities. The amount of money this six person office makes is somewhere around $200,000,000 annually. Even the secretary gets a cool million a year.
Waste oil disposal can make big bucks on a few employees. But closer to $20M.
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Old 02-22-2014, 07:38 AM
 
Location: Currently living in Reddit
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If you want to be rich as an entrepreneur, don't try to make a better mousetrap. Aim to make the mouse irrelevant - even extinct.

That's basically what WhatsApp did. It found a way to provide a service 450 million people wanted (mostly overseas) going outside typical distribution channels and is/was a threat to any and all companies that profit from charging for messaging.

If Facebook didn't buy them, Google likely would have at some point.

With the right idea you don't need many people to pull it off.
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Old 02-26-2014, 10:30 AM
 
Location: Haiku
4,060 posts, read 2,571,078 times
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Quote:
Originally Posted by GiantRutgersfan View Post
Whatsapp had 50 employees, yet sold for 19 billion dollars to Facebook. Getting so valuable with such minimal manpower would have been impossible 20 years ago, as well as throughout history.

Being that this is a very new phenomenon, what kind of effect do you think it will have? I understand the value of cornering a market and being the leader in a sector, but I think some of these internet stocks are out of control with how speculative they have become.
You are looking at the wrong metric. The value is not the employees, it is the 450 million (and rapidly growing) mobile users of WhatsApp. Analysts believe FB cannot be successful without a strong mobile presence. WhatsApp gives that to them. It is a good move by FB.

Did Zuckerberg pay too much for WhatsApp? Perhaps but it will not affect FB all that much except to dilute their EPS since they have to issue new shares. It is highly likely there were other suitors and he had to move aggressively. Google comes to mind.
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