Unbundling @Facebook: what the Whatsapp acquisition tells us about Facebook’s mobile strategy

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When the HTC First was released in early 2013, critics scoffed at the idea of a so-called “Facebook Phone”. It didn’t help that the product appeared half-baked – and many considered it to be Facebook’s first flop. AT&T quietly dropped the phone from its offerings mere months after launch. 

Today’s announcement of Facebook’s $19B acquisition of Whatsapp reveals that Facebook hasn’t given up on taking over our phones – but taking a much more hacker-like approach. It went from a standalone, all-encompassing app to a network of apps, including Instagram, Messenger, Paper, and now Whatsapp. That’s not including other mobile assets that Facebook attempted to buy (Snapchat, Waze, etc.) On Messenger, one of the coolest, least-known features is the Talking Heads. It allows you to include a contact on your Android home screen, to quickly launch a conversation with him/her. 

The platform wars are over – iOS and Android have emerged as the winners. But true to its hacker DNA, Facebook still wants to take over the mobile experience, one product/feature/use case at a time.

For me as an investor, the much more interesting question is, what’s next?

  • Storage: The idea of storing files/messages/photos/etc. is central to the phone experience. Facebook acquired the now defunct Drop.io team in late 2010 as most likely an acq-hire. I think they’re still looking for this functionality – maybe Dropbox or Hightail?
  • Location: Gowalla and Hot Potato were two other acq-hires, but Facebook places never took off and they were outbid for Waze. Perhaps Foursquare, Factual, Yelp, or PlaceIQ? This one I’m unsure about, since I don’t have visibility into how robust the Facebook Places data set is.
  • Music / Video: Google has Youtube, and Apple has iTunes. Consuming media is a highly social experience, so will Facebook want a content distribution platform as well? Hulu, Soundcloud, Rdio, and Oyster come to mind. 
  • Commerce: The shopping experience on mobile is incredibly compelling and we already know how CTR and conversion rates can be higher than those on the desktop. There are a few startups powering commerce on Facebook’s native platform, such as Soldsie and Chirpify. Short of purchasing another asset like Pinterest, I’m curious to see how Facebook will proceed in this vertical.
  • Calendar / Events: When I think about what products I use the  most, Google Calendar is a top contender. Facebook Events haven’t integrated with my calendar app very well – and there’s definitely an opportunity to better discover events, a la Eventbrite  
  • What else do you use your phone for?

10% of Facebook’s market cap is a lot to pay for an acquisition (of only 32 engineers!) But when I start thinking about paying 10% for a messaging platform that is so core to our mobile experience – it starts looking like a steal.

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