WhatsApp Takeaway

whatsappFor better or worse, a great deal of investment in technology is driven by pattern matching. In that world any company (including Automattic) that generally eschews hype, is largely subscription driven, and has a small number of employees relative to its audience should be thrilled at the 19 billion dollar acquisition of WhatsApp. The deal is incredible.

This has kicked off another round of pattern matching and halo effects, which are currently incredibly favorable but will evolve over the coming years based on how things go post-integration, just like the public perceptions of Geocities, Youtube, Doubleclick, Bebo, and Skype wildly shifted based largely on the press coverage over their latest traded value.

I’m thrilled with the outcome for WhatsApp and the manner in which they built their company, their product, and I hope they bring more of that thinking to Facebook, but I don’t think they should become a playbook any more than Instagram should inspire a no-revenue playbook. The pattern we should take away from this story is that there is no pattern. (In Perl, “there’s more than one way to do it” or Tim Toady.) As an entrepreneur making decisions for your company, always go back to your first principles of what’s important to you and why you started in the first place. As a journalist, try not to fit everyone into arcs you’ve seen before or ascribe value to previous coverage (or lack of coverage). As an investor try to evaluate every situation on its unique merits. Should founders be CEOs or not? Well, it depends on the founders, the company, and what it means to be CEO, not what an over-normalized sample of a few hundred companies did before in completely different contexts.

There are also products that succeed with design that seems childish or terrible on the surface (Myspace, eBay, Snapchat). A lot of what it comes down to is have you made something people want, and are they finding out about it from their friends. That’s often the realm people think of as marketing. The best marketers in the world don’t fit our preconceptions of what that word means because they’re in hoodies instead of suits and create environments and ecosystems rather than the traditional trappings of marketing.

Update: From @dsa, here’s a great follow-up read on Techcrunch: What Games Are: Flappy Bird, Patterns, And Context.

8 thoughts on “WhatsApp Takeaway

  1. Matt, running a musical-influenced blog, I’m not technical, but I can relate to the ‘have you made something people want’ /’Be Good’ supplement to your piece, in many ways.
    I was reading about the death of SCTV star Harold Ramis (‘National Lampoon’s Animal House’, Caddyshack, Groundhog Day’, etc) that there was always a broader nuanced spiritual message to any comedy in which he was associated.

    I believe that every business school in the world should put this message into their curriculum. In fact, just today I heard a radio interview (CBC.ca) with Philip Roscoe (School of Management, University of St. Andrews) re: his new book ‘I Spend, Therefore I Am: The True Cost of Economics’, who talked about the perverse short-term personal and corporate financial incentives – driven by greed and cheating – that drive down “quality” and never add to the common good, because the bigger, long-term picture is never considered.

    “Everybody knows that the dice are loaded/ Everybody rolls with their fingers crossed
    Everybody knows that the war is over/ Everybody knows the good guys lost
    Everybody knows the fight was fixed/ The poor stay poor, the rich get rich”
    – Everybody Knows by Leonard Cohen

    Maybe, for some, it will always be that way.

    However, all around the world, the internet – in all its forms – are showing ordinary people the benefits of working together in communities of common interest … like a tide that raises all ships. And, like the ‘Be Good’ article, his many examples turn our intuitive feelings, on the subject, into hard black and white facts.

    In the movie, ‘A Beautiful Mind’, Russell Crowe’s character (John Nash) corrects his fellow students, saying that Adam Smith (“the father of modern economics”) who said that the best result comes from everybody in the group doing what’s best for themselves. Nash showed them that (see YouTube clip from the movie) Adam Smith’s theory was incomplete, because the best result comes from everybody in the group doing what’s best for themselves and the group.

    Thus was created the Nash Equilibrium (law of ‘Governing Dynamics’) which won the Princeton University professor the Nobel Prize for Economic Sciences in 1994.

    It must be true, because you writing that sparked me to write this, and so on, and so on.

    “Take it or leave it, or try to believe it/ If you’ve been down too long
    Rainy day lovers don’t hide love inside they just pass it on” – Rainy Day People by Gordon Lightfoot

    And, who wants to be on ‘the wrong side of history’ on that one?

  2. When http protocol was made Tim Lee hardly thought that net would become a monopoly of few giants. The way I am forced to see FB comment boxes and buttons these days, if it was Microsoft, there would be hundreds of anti-trusts and law suits by now. It is sad that Whatsapp decided to sell itself – I understand the essence of commerce and am not averse to it, but I share the same concern and sadness with Tim Lee that net is ceasing to be an interconnected network of multitude of sites but rather becoming a monopoly of a few hungry datamining giants. The sale of Whatsapp was a great personal blow to me.
    BTW, at one time we had stuffs like WordPress, Drupal, Joomla, Geeklog etc being invented and made available freely and widely used (yes WP is till used massively), and they were the *giants* – but over the last 5 or 10 years there has been no such creation/invention of php scripts. Good for the net? No. And things like Whatsapp come and get sold slavishly!

  3. I still believe WhatsApp was over valued. Facebook went too far to acquire it. The future is not in instant messaging, it’s something bigger than that. When wearable technologies becomes mainstream, Whatapp will be useless.