March 3, 2014

Uncovering the Strategy: What A Facebook Acquisition Means

We’ve all heard the major news: Facebook acquired WhatsApp and paid a massive sum. Facebook is becoming a predominantly mobile company, and the amount of money that it spent on WhatsApp shows that it has a strong mobile advertising model.

So now we’re wondering: Is this a worthy spend? Why did Facebook think so? And, most of all:

What does it mean when Facebook makes an acquisition –or, better yet, what would it mean if Facebook acquired your company?

We have some ideas.

1. You’re talented.

Facebook is a leader in acqui-hiring. The social network’s main goal in most of its purchases is talent acquisition. Often the company does not acquire a company’s products, but focuses on a team that has proven adept at creating beautiful, innovative, and unique products. Before Instagram, almost all of Facebook’s acquisitions had a primary goal to acquire technical talent. This practice also provides an intact team that, as HR thought-leader Dr. John Sullivan has written, “if integrated correctly, can be productive almost immediately.”

2. You’re going to change.

Three months after Facebook acquired location-based social networking company Gowalla in 2011, it shut the company down. When Facebook acquired Instagram in April 2012, it announced changes to its Privacy Policy and Terms of Service soon thereafter, which angered a very vocal user base. Toward the end of 2013, Instagram started to deliver paid images to users in the United States. In tandem with its purchase of ambient location mobile social app Glanceein in May 2012, Facebook shut the company down. Also in May 2012, Facebook acquired mobile commerce startup Karma, which made apps for gifting, and later shut the company down. Less than a week after its acquisition, WhatsApp announced the addition of phone calls to its services, a feature that will become available over the next few months.

Zuck Reviews” = business closure or new features.

3. Expansion is near.

At the time that Facebook acquired Instagram, the platform had 30 million users and was iOS-based (the expansion to Android happened just a week earlier). As of January, “Instagram has 150 million active users, 16 billion photos shared, 1.2 billion likes daily, 55 million photos posted daily and 7.3 daily visitors.” That’s a whole lot of growth! WhatsApp clearly has a lot to look forward to.

Tags: Facebook

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