The floodgates have just burst open, not just in the world of technology, but in the entire free market. In the very way we view capitalism.
I am, of course, talking about Facebook’s acquisition of WhatsApp for $16 billion ($19 billion when you count the restricted stock units). It is the largest acquisition of a private, venture-backed company in history. This deal is worth more than the GDP of nearly half of the countries on earth. Let that sink in for a moment. We haven’t had an event this high on the Richter scale since AOL-Time Warner and the 2000 bubble.
Of course, the market then isn’t the market now. As my old colleague Chris Taylor intelligently points out, the Facebooks, Googles, Apples and Amazons of the world have grown up. They have billions in cash. They are profitable. They aren’t going anywhere, even if it means acquiring their future threats for $19 billion. Or acquiring one of the world’s most advanced robotics companies. Anything it takes.
Zuckerberg is a rare breed. He’s willing to do anything to make sure Facebook is at the forefront of its mission of connecting people, even if it means giving up 9.5% of his company to do it. He doesn’t care — he thinks about the next 30 years, not the next three. And he has the complete control to make deals like this one. But so does Larry Page. And the same will be true of more and more founders who reach the IPO pinnacle. As Zuckerberg has shown, control is good.
Two years ago, everybody stood shell-shocked when Instagram sold to Facebook for $1 billion. Now we don’t even bat an eye to that number. And with the WhatsApp acquisition, that number is going to continue to look smaller and smaller.
Facebook has opened the floodgates. Nobody knows what’s going to happen next. Don’t believe anybody that tells you otherwise.