The Inside Story Of How Facebook Bought WhatsApp For $19 Billion

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Reuters/Robert Galbraith

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Today Facebook announced that it acquired Whatsapp for $19 billion.

It was a deal two years in the making.

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Facebook CEO Mark Zuckerberg first called Whatsapp CEO Jan Koum in the spring of 2012.

A month after the call, the two went out for coffee Los Altos. They went on a hike.

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Despite Zuckerberg's wooing, the deal didn't happen.

But the two stayed in touch. There were dinners and lot more hikes.

There were three reasons Zuckerberg was so fascinated with Whatsapp:

  • He's confident it's going to reach 1 billion users in no time. Even with 450 million monthly active users, Whatsapp's growth rate is faster than Facebook, Instagram, Skype, or Gmail.

  • Of those 450 million monthly active users, 70% come back every day. That's a stickiness that is unheard of. Zuckerberg is proud that Facebook is among the stickiest ever, and only 62% of its user come back every day.

  • Zuckerberg looked at other products as popular he expects Whatsapp to be: Tencent, Google search, YouTube, Facebook. They are all extremely valuable.

So Zuckerberg stayed on Koum.

Finally, on February 9, 2014 he had Koum over for dinner at his home. He proposed the merger. Zuckerberg said to him: Let's connect the world together. He said that this would not be an ordinary startup acquisition - it would be a partnership. He said he wanted to put Koum on Facebook's board.

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Koum thought about it for a couple days.

Then, last Friday - on Valentine's - Koum came over to Zuckerberg's house. Interrupting Zuckerberg's Valentine's dinner with his wife, Priscilla, Koum said yes, he wanted to do the deal. The two hammered out pricing and terms over chocolate strawberries.