WhatsApp’s Revenue Model (Facebook’s Strategy)įacebook acquired WhatsApp in 2014 for $19 billion and this opened many new doors for the application. After two long years of being wooed by Facebook’s CEO Mark Zuckerberg, WhatsApp was acquihired by Facebook on February 2014 for $19 billion and all the employees were put to Facebook payrolls including Koum, who is now a part of Facebook’s board. This strategy of creating a network first and money after proved to be fruitful. This required them to capitalise on the network effect. The strategy of the founders was to position the brand as a synonym for an instant messaging application. This is why WhatsApp waved off the $1 subscription fees. There wasn’t much expenditure involved in running the application the primary cost included server costs and costs relating to sending a verification code to the users.
This was the only source of income for the 50 staff members of WhatsApp.
The second and third round of funding was carried by Sequoia Capital which invested a total amount of $60 million ($8 million in 2011 and $52 million in 2013) in WhatsApp Inc. WhatsApp got its first round of funding of $250k by five ex-Yahoo! friends who were granted a cofounder status.
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