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WhatsApp Founder Used Unchangable Airline Ticket To Pressure Facebook

Posted by timothy on from the they-knew-what-they-were-getting-into dept.

McGruber writes "In a post on the Flyertalk website, WhatsApp founder Jan Koum provides another interesting detail about how he steered WhatsApp into a $16 billion deal with Facebook: 'we announced the deal with Facebook on wednesday after the market closed. during the process, we realized there was a chance we might not be able to get the deal wrapped up and signed on wednesday and it could delay. when the risk of the delay became real, i said: "if we don't get it done on wednesday, it probably wont get done. i have tickets on thursday to fly out to Barcelona which i bought with miles and they are not easily refundable or even possible to change. this has to be done by wednesday or else!!!"...and so one of the biggest deals in tech history had to be scheduled around my M&M award ticket."

40 of 144 comments (clear)

  1. Refund. by o_ferguson · · Score: 5, Funny

    Hey should give all 450 million customers a $1 refund for the service outage that happened after the deal went through.

    --
    - In Soviet Korea, only old people loose all their bases to Natalie Portman's petrified hot grits overlords.
    1. Re:Refund. by Anonymous Coward · · Score: 4, Insightful

      Thats a clever way to get users to tie billing info to their accounts and would add lots of value.

    2. Re:Refund. by Anonymous Coward · · Score: 2, Insightful

      Right, 2 hours of downtime is clearly worth the same as a year's subscription.

      It's amazing how people can keep such separate concepts of how much they think it's reasonable to pay, and how much it's reasonable to be paid in their heads at the same time.

    3. Re:Refund. by Anonymous Coward · · Score: 2, Funny

      He sold it. It's not his problem any more. Facebook can refund or whatever.

    4. Re:Refund. by rioki · · Score: 2

      Let me clue you in. Don't think of it as an IM, think of it as an SMS replacement. It functions and behaves as SMS would, except that it is dirt cheap and can handle way larger data. The most genius thing they did was that you did not "sign up", you just installed the app and got all your fiends that used WA immediately. This is a classical example of "reducing friction".

    5. Re:Refund. by mattack2 · · Score: 2

      You are presumably in the USA. Apparently, people NOT in the USA do NOT often have unlimited SMS, and have to pay even more than U.S. subscribers do. Thus, this is a money-saving program for them, especially since (AFAIK), text messaging is even more prevalent outside the U.S. than inside.

  2. his last miles award.... by Anonymous Coward · · Score: 2, Funny

    think he'll be flying to Barca on a private jet next time.. at at least a full fare F ticket.

  3. How cute by Buck+Feta · · Score: 2

    Slashdot: News for nerds, stuff that matters. Timely news source for technology related news with a heavy slant towards Linux and Open Source issues.

    --
    I am Audience.
    1. Re:How cute by mx_mx_mx · · Score: 3, Informative

      Go to http://soylentnews.org/ and just enjoy slashdot again.

      --
      Linux forever
    2. Re:How cute by demonlapin · · Score: 5, Informative

      I'll join the karma bonfire. Come on over to Soylent News and enjoy actual news for nerds.

  4. Really though? by Anonymous Coward · · Score: 5, Insightful

    It's hard to think that FaceBook would take this threat seriously. It's a $10+ Billion deal. Throwing in some extra first class seats for a different day would be the equivalent of a give-a-penny-take-a-penny dish compared to this.

    1. Re:Really though? by K.+S.+Kyosuke · · Score: 4, Insightful

      Perhaps he simply bullshitted them into thinking that he was dumb enough to actually do it?

      --
      Ezekiel 23:20
    2. Re:Really though? by Hognoxious · · Score: 5, Funny

      At least he can afford a new keyboard now. One with a shift key, maybe.

      --
      Confucius say, "Find worm in apple - bad. Find half a worm - worse."
    3. Re:Really though? by Idarubicin · · Score: 3, Interesting

      It's hard to think that FaceBook would take this threat seriously. It's a $10+ Billion deal. Throwing in some extra first class seats for a different day would be the equivalent of a give-a-penny-take-a-penny dish compared to this.

      Indeed. I expect that the deal happened in spite of, and not because of, this 'threat'. Sure, Facebook's team would have had an "Oh shit!" moment--but it would have been "Oh shit, we're dealing with an unprofessional nitwit" and not "Oh shit, he might walk away". Given that Koum has apparently decided it's a good idea to broadcast his unprofessional nitwittery, I imagine that Facebook's first move will be to keep him as far away as possible from anything dealing with 'business' as they possibly can.

      --
      ~Idarubicin
    4. Re:Really though? by dreamchaser · · Score: 2

      I doubt this story is anything other than him bullshitting. I'm sure the ticket was real, but as you point out I'm also pretty sure that didn't matter to Facebook. Just another attention whore here, nothing to see.

    5. Re:Really though? by Bite+The+Pillow · · Score: 2

      He did not have a deal. Agreeing to take free tickets from the person across the negotiating table from you would take a deal. Not the same deal, but reaching some sort of deal.

      Facebook: Here, have some free tickets so we can continue talking you into the gutter.
      WhateverTheFuck: No, thanks, that just means you want to find new ways to undercut me. If you're not making a deal, I'm not sitting around.
      FaceBook: No, really, if we're going to buy you for $10B we don't mind funding your later tickets
      WhateverTheFuck: If you're not going to do a deal now, you're going to do either a shittier deal later, or no deal later. I'm flying and taking my 450 million u$er$ with me
      FaceBook: Okay, no tickets. How about half off for a handy?
      WhateverTheFuck: I took matters into my own hands earlier today, so I'm good until my plane takes off. Fuck yourself, and gimme billions.

    6. Re:Really though? by Bite+The+Pillow · · Score: 2

      Let me re-phrase the threat.

      "I don't have billions of dollars from you yet, so I can't just spend forever here, and I don't mind walking away. This plane ticket thing gives me an excuse to walk away, but if I let you buy me a ticket, I've given you a HUGE headwound with a cluebat that I'm desperate and will sell for way less than I'm asking. Signaling my intent to leave, and ask for more later, I'm taking a gamble that you will blink first."

      Who blinked first? FaceBook, because if you study the financials of the companies involved, FaceBook did not have a choice. And WhatTheFuckSapp pretty much knew it. Not a guarantee, but considering the price range they agreed on, FaceBook was willing to shiv its own grandmother for the users.

  5. Oh my god, what a stupid idea. by SeaFox · · Score: 4, Insightful

    This is Facebook we're talking about. They could have offered to charter a jet to take him where he needed to go if missing his flight was a possibility from long negotiations.

    Yeah, Facebook caved over an airline ticket cost.

    1. Re:Oh my god, what a stupid idea. by phantomfive · · Score: 4, Insightful

      It's not exactly caving when everyone in the room wanted the deal. Also, realize they were all probably tired of negotiating. Would you want to keep negotiating for weeks, or would you want to get it over with? Of course they all knew that the flight (bought with miles!) was cheaper than the smallest deal anyone was considering.

      The real threat was that the deal wouldn't get done. The airline ticket was just a way to say that politely.

      --
      "First they came for the slanderers and i said nothing."
  6. BS by bloodhawk · · Score: 3, Insightful

    The word BULLSHIT jumps to mind. If facebook felt the need for more time they would have happily bought him a replacement first class ticket to anywhere he wanted to go, especially when it is billions of dollars on the line.

    1. Re:BS by Rosco+P.+Coltrane · · Score: 2

      The word BULLSHIT jumps to mind whenever Facebook is mentioned.

      --
      "A door is what a dog is perpetually on the wrong side of" - Ogden Nash
    2. Re: BS by maccodemonkey · · Score: 2

      Actually, I don't know if they could.

      If Facebook had bought him a ticket, that could have been considered a bribe, and the regulatory agencies would have had all sorts of fun with that.

  7. We Better Get This Deal Done ASAP... by raftpeople · · Score: 4, Funny

    or my 16oz latte is going to get cold and I will need to buy another one.

  8. Re:$16B buys by Rosco+P.+Coltrane · · Score: 2

    You probably smell tapas too after the 50th trip.

    --
    "A door is what a dog is perpetually on the wrong side of" - Ogden Nash
  9. Something doesn't add up by rudy_wayne · · Score: 4, Interesting

    Hey should give all 450 million customers a $1 refund.

    They supposedly have 450 million users and charge $1 a year, but in 2013 they only had $20 Million in revenue. Either the 450 million users is an inflated meaningless number, or they have huge churn where only 4% of users stick around past the first year that's free.

    1. Re:Something doesn't add up by xvan · · Score: 2

      AFAIK only iShiny users have to pay for the app, the android one is free but you need to pay their subscription fee.
      Android users get a 1 year free subscription that can, under some circumstances, be extended also for free. If you pirate the iphone app, you also get the 1 year free subscription. If you don't pirate it, the subscription fee is included in the app price.
      Also I think this free / non free renovation is decided upon IP geolocation.
      You pay for the service, not the app. As your user id is your phone number, and other users find you by that id, after a year of use you are forced to pay. Otherwise you'd better use another service.

    2. Re:Something doesn't add up by Camael · · Score: 4, Interesting

      Not all their users pay the $1 a year. Some of them get free renewals after their year is up, for instance.

    3. Re:Something doesn't add up by Camael · · Score: 4, Informative

      Ungodly Churn, almost nobody uses WhatsApp.

      Perhaps in your part of the world, but outside of the US, Whatsapp is big in some countries. As in used by practically everyone kind of big.

    4. Re:Something doesn't add up by Anonymous Coward · · Score: 2, Informative

      it is freaking massive in Hong Kong... I don't know anyone who doesn't have it.

    5. Re:Something doesn't add up by Sir_Sri · · Score: 2

      First year is free, and if you get a new phone or new phone number your year resets. A bunch of my friends and I have been using over for well, over a year. Anyone who got a new phone or phone number and it reset, in my case I had a phone that died after 14 days, but same phone number, and that reset the counter too.

      So at any given time I could see them having less than half of their active users paying (which would be 200 million dollars a year ish) but if they have a factor of 10 growth in a year, which for a free app is not unreasonable at all, that would put the numbers where they are.

      That doesn't justify the buyout price, but that's a whole other ballgamae.

    6. Re: Something doesn't add up by snero3 · · Score: 2

      I have used whatsapp heavily for years. They say that the first year is free and then you have to pay, but they never come through. So ya multiple years of use without paying a cent. To be honest I always suspected this is what he planned to do with the company, never to actually make money from running it as a service.

      --
      It said "windows 98 or better" so I installed Linux
  10. Facebook was dumb. by 140Mandak262Jamuna · · Score: 4, Insightful
    The non refundable tickets story looks phony. Facebook could afford to fly the founder on a private jet if needed. No matter whether this story is false or true, Facebook paid foolishly high sum for Whatsapp.

    The main draw of Whatsapp is that it allows penny pinchers to save on texting fees. In the countries dominated by WhatsApp all incoming calls and texts are free by law. People only pay for outgoing texts. If you have WhatsApp account, from a dumb phone you can send an SMS paying for just one outgoing local text fee. If you have smart phone, it would come under your data plan. That SMS could be echoed to many people as incoming texts by WhatsApp, across countries if necessary. Thus you avoid international texting charges too. These users are tightwads and penny-pinchers extraordinaire. They are the ones who developed elaborate missed-call etiquette and protocols to avoid paying air-time charges. They would sign up, use the first year for free, and create a new account under a new user name and get one more year free. WhatsApp knew it and it did not care, it is able to count old users as new users and show phenomenal user base growth. You can not make any money off these users. They will dump WhatsApp the moment it tries to charge any fees. There is no compelling reason to use WhatsApp and the switching costs are minimal. It is not like Facebook where all your friends are and you have to be in Facebook to see it.

    In a developed market with smartphones, where dumb phone market is shrinking, there is no way FB can make any money off WhatsApp. And it has spent 35% of cash on hand in this acquisition. Media is making a big deal of 19 billion dollar figure. But much of it is from overvalued FB stock so that is not relevant. What is important is, in the coming year it is going to be cash strapped. It is having huge buyers remorse. It is going to more circumspect in the next acquisition target. It will swing in the other direction and let a good deal slip in the coming year. That is the effect of WhatsApp on FaceBook.

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
    1. Re:Facebook was dumb. by Espectr0 · · Score: 3, Informative

      You are mostly right, i live in Venezuela, here we only get charged for data/outgoing sms/outgoing calls. Incoming sms and calls are free, as they should. Of course, our cell plans suck, for example i only get 60 minutes a month, 300 sms and 250 MB of data.

      You are wrong about whatsapp not caring for new accounts, it is widely known whatsapp 450M users have about 70% of daily use.

      Here a trick for whatsapp users: don't want to pay anually? Have android? Borrow an iphone, put your simcard, buy whatsapp for 1$, put your simcard back into your android phone. Boom, you get lifetime service for 1$.

      Whatsapp is good enough, its strenght isn't security or privacy, but rather its comfort. You don't need to add anyone, no pins, usernames, passwords or logging in. If you want security then use BBM.

      --
      Open Source Java Web Forum with LDAP authentication
    2. Re:Facebook was dumb. by DrPBacon · · Score: 2

      70% of people get automatically logged in by their phone each day, maybe. I've been trying to delete WhatsApp, but the uninstaller just doesn't seem to work. Seems like a pretty good way to claim 70% are online if you're actually saying 70% of phones are switched on. Unless they actually have message counts from these 315 million people daily users... and they all high-five each day when people just love typin' on their pioneering piece of chat window... but that would be weird, if they knew I was a 'heavy user' and that it was a chronic problem... I mean what..........

      --
      Spent All My Mod Points
    3. Re:Facebook was dumb. by GauteL · · Score: 2

      Whatsapp is useful if you have moved country and would like to keep receiving texts from your old friends without putting them out. It is one of those cases where politeness dictates that you can't expect people to keep texting you, even though you would have no issue paying the £10 it would cost per month to send 50 text messages.

      That said, catering for us is not an 'insanely hot' business idea and a lot may well be swayed to move to Google Hangouts or Skype quite easily.

  11. If only... by Oyjord · · Score: 2

    If I had mod points today, you, good sir or mam, would get them all!

  12. Riiiight.... by Goody · · Score: 2

    I'm sure a $2K flight ticket really influenced everyone involved this deal when there was $16B at stake.

    --
    Tired of being "punished" by the Slashdot $rtbl since 2002. I'm now over at http://soylentnews.org/ .
  13. Psycho or Crazy Like a Fox? by mattr · · Score: 2

    A psychopath brags.
    Either that, or the facebook guys asked him to say it.

  14. Re:$16B buys by demonlapin · · Score: 2

    A million fully refundable first-class round trips to Barcelona.

  15. Fuck Facebook.. by AlphaBro · · Score: 2

    ...and this stupid fucking social media bubble. Can it please pop, already?