> They were charging $1/year which is less than the operating cost of the servers and bandwidth
Are you sure of this? If they have a billion users, they're earning a billion dollars a year off of this. Considering that they don't need to store messages for an extended period of time, or run analytics, do they really need all that much?
Most people weren't actually paying. Apparently, the vast majority of users were granted free lifetime memberships (see comments here [1] and article here [2]). When Facebook acquired it, it only had $10 million in annual revenue [3] against 450 million users. Clearly, most users were jumping on board during times when it was made available for free.
Do you need more than $10M/year for 450M users? As I've said in another comment they barely stored anything server-side and it's known they have a very optimised stack
You do if you’ve been acquired for $19 billion. The founders couldn’t have been naive enough to think that Facebook and its shareholders didn’t have a need to monetize such an enormous investment. Facebook is not a charity, it’s a business.
Facebook monetizes Whatsapp by limiting its growth. You can easily think of all the “social” functionality Whatsapp could have added in competition with FB and Messenger.
That is what I am seeing now here in India, folks in my circle barely post anything to facebook now, all pictures, status messages are on WhatsApp now.
If you didn't bother reading and contemplating, here's the gist:
There is no wolf to fear. We are all finite beings with finite time and resources. You 'stealing' his hypothetical business model doesn't really accomplish anything except tie up your resources retracing his steps. You would be the fool reimplementing the pipe.
Now if you are the type of person who reduces life down to only pursuing the almighty dollar rather than trying to solve difficult extant problems... Well... Maybe that would be worth it to you. Even then though, he has already captured his audience, and he'll likely have a reputation advantage over your copy.
Is this new? I tried it out a couple years back on a decent spec phone and it was the slowest app I've ever used. I'm pretty sure Snapchat the app was known for being sort of a wreck at some point. My daughter still put up with it but it was painful to watch her use it.
I have a fairly high end Android phone (OnePlus 3) and Snapchat freezes up all the time. Video pretty much always stutters without fail. IIRC it was the same on my Nexus 5 as well.
Not to mention the video someone posted beloew from an engineer talking about Erlang there in 2014 has some interesting numbers. Christmas/New years is peak, and on Christmas Eve they were maxing out at 146GB/s out.
If we assume they maybe averages 75% of that over 6 hours, that's 146Gb/s * (60606)s / 8bytes/byte * 0.75 * 0.05dolars/GB = $14,782.50 for a 6 hour period (estimate).
That's highest listed bandwidth tier price for Azure, I'm sure they would pay less for a number of reasons. But let's just say that $10k for a whole day may not be out of the realm of possibility. That puts bandwidth costs possibly North of $3 million a year. Even at $1 million, that's a lot of money.
Ok but a serious company wouldn't pay per byte if they were trying to save money. They could buy that much connectivity for like 50k a month. (Though they'd need to get some switches and have a network engineer.)
And if that's audio/video Vs just text, clever NAT hole punching techniques could reduce it if truly needed.
But, it seems WhatsApp was on SoftLayer? In that case their costs might have been vastly higher.
I find that hard to swallow for a small company size, such as being discussed here. Do you have a reference or some reasoning to support this? I'm interested to know where it comes from.
Benefits, office space, equipment, T&E, employment taxes, etc. This is an old article but it suggests about 2.7x. [1] I agree that it might be less for a startup assuming a frugal startup but it's probably at least 2x salary on average.
I'm not sure a ratio-to-salary is the best tool here. I mean, why would a developer on $150,000 have twice the healthcare cost, or office space cost, or equipment cost of one on $75,000?
I started paying before they were bought, I might even have paid twice and I loved it. Would happily paid for a few famuly members as well.
Also there should be a huge possibility to increase revenue by selling API access (think appointment reminders etc as well as the whole bot ecosystem).
When Telegram started they talked about price and I think I remember being unconvinced. I wanted to pay. As we (used to) say here on HN: if you're not paying you are the product.
(Of course now we have learned that some companies charge us and still sell our (meta)data and advertise to us.)
In 2015, when WhatsApp had ~1B active users, Facebook said that the overall revenue from it was insignificant enough they they were just making it free. I'm pretty sure it wasn't charging the vast majority of users (which is how it got popular in developing countries in the first place).
> Facebook said that the overall revenue from it was insignificant enough they they were just making it free
Have you considered that Facebook might not be telling the whole truth?
"insignificant" compared to what, how much money Facebook makes off of every extra user (who wouldn't want to pay) on their platform? Making it free can only be a profitable move because of what Facebook could do with the data, not because a few million dollars a year is truly "insignificant".
Articles I read when Facebook bought them said they were losing money. Most reports I just Googled were subscription only or plastered with ads but here's financial sheets:
Are you sure of this? If they have a billion users, they're earning a billion dollars a year off of this. Considering that they don't need to store messages for an extended period of time, or run analytics, do they really need all that much?