For all the attention Facebook's $19 billion acquisition of WhatsApp is getting, one detail stands out to me the most: chocolate-covered strawberries.
According to the New York Times, Facebook cofounder and CEO Mark Zuckerberg and WhatsApp cofounder and CEO Jan Koum negotiated the deal over a plate of chocolate-covered strawberries at Zuckerberg's house.
Think about this. When was the last time you visited someone's house and ate chocolate-covered strawberries? Does that seem like something likely to happen during a rigorous due diligence process? Or does it require a certain level of familiarity and friendship?
As it turns out, Zuckerberg and Koum are friends. In recent years, notes the Times, they've shared dinners and gone on hikes together.
In light of last week's report on The Information that "Google Was Willing to Beat Facebook's $19B Offer for WhatsApp," I think Zuckerberg and Koum's relationship deserves more attention. While Koum had 19 billion reasons to choose Facebook's offer, there's some evidence that this deal was about more than money for both the buyer and the seller. It was about the alignment of long-term visions.
The Price of Long-Term Alignment
To illustrate what I mean, here are two key quotes about the deal from major players:
1. "WhatsApp had every option in the world, so I'm thrilled that they chose to work with us," said Zuckerberg on a conference call.
What stands out in this bit reported by the NY Post? Zuckerberg's framing. He does not describe the acquisition as an acquisition, per se. He says that WhatsApp "chose to work with us." Sure, $19 billion will change hands, but Zuckerberg's comment suggests that this will be a collaboration. Is this conference-call rhetoric? You could call it that, but you'd be ignoring the fact that Koum will also be receiving a seat on Facebook's board--an action, on Zuckerberg's part, that strongly substantiates the collaborative tone of his remarks.
2. "Facebook has assured Jan [Koum] and Brian [WhatsApp cofounder Brian Acton] that WhatsApp will remain ad free and they will not have to compromise on their principles. We know that Jan, as a new member of Facebook's board, will continue to champion the rights of WhatsApp users."
This quote appeared on the Tumblr blog of Sequoia Capital, which according to the Times has invested about $60 million in WhatsApp for a 15-20 percent ownership stake. It drives home a simple-point: That a core value of WhatsApp is the avoidance of ads.
No ads. According to the Sequoia blog, it's not only a core value, but also a prime reason WhatsApp outlasted its competitors:
When we first partnered with WhatsApp in January 2011, it had more than a dozen direct competitors, and all were supported by advertising. (In Botswana alone there were 16 social messaging apps). Jan and Brian ignored conventional wisdom. Rather than target users with ads--an approach they had grown to dislike during their time at Yahoo--they chose the opposite tack and charged a dollar for a product that is based on knowing as little about you as possible. WhatsApp does not collect personal information like your name, gender, address, or age. Registration is authenticated using a phone number, a significant innovation that eliminates the frustration of remembering a username and password. Once delivered, messages are deleted from WhatsApp's servers. (Boldface is mine.)
You can see why it was important to Koum and Acton to stay ad-free. To do anything else would seem like a betrayal of their 450 million monthly users. WhatsApp's business model was premised on a deep sensitivity to the privacy fatigue that most of us feel in our day-to-day lives.
A figure like $19 billion will justifiably dominate the headlines. But you could argue that the Facebook-WhatsApp deal is just as much a matter of chocolate-covered strawberries--and a level of trust--between friends who are more than business acquaintances.