David Rosenthal: prediction

Transcript context

…You nailed it. This is the real crux of grading. It’s not so much about what is Facebook gaining by owning it. It's how much they are decreasing their risk of having no value in the future by this thing existing. Facebook's entire business is maintaining attention share. So long as you are spending your time and attention with Facebook, they're going to keep printing money to the tune of 45% operating margin, $20 plus billion of profit a year. It's a freaking cash machine and by looking out in the world and observing WhatsApp and saying, “We’ll have to squint to your point in execution risk.” But there could be this thing that leverages all that connectivity that people have with each other. They’re exchanging messages which isn't so different than public posts, and they're exchanging statuses which isn't so different in the way that we started with wall posts. It could evolve into thing that steals attention share. The what would have happened otherwise way to think about this is, they could have been independent and they could have evolved to do their own social network or to your point earlier, Google could’ve bought them and that would have been catastrophic, because I think Google would've been the only formidable ones as you mention who could have paid up, but then also who would have executed attention-grabbing strategy there. To wrap this, I think my little rant here, what would have happened? One billion people could have shifted attention from Facebook to WhatsApp, but I'm going to hold off right now on trying to put a price on that until we get to grading. Well, I’ll only go one step further. Okay, you all have this line of logic. You could say if you're listening, that doesn't add up. The same thing could’ve been said more credibly about Snapchat and Facebook wasn't able to buy Snapchat. Zuck only offered $3 billion, things fall apart. Certainly, if he's willing to pay $22 billion for WhatsApp, he certainly could have had Snapchat for $22 billion, I suspect. I don't know for sure, but why didn’t he put that $22 billion on the table for Snapchat? Here's what I think is interesting. Snapchat execution-wise is a much clearer path to what we were just talking about, advertising-based network, super attention-based, all that stuff, but it's a much smaller network, much, much smaller. WhatsApp is the largest, I believe, the largest network in the world and it’s global. I pulled some stats here, these are all monthly active users. Facebook has 2.4 billion MAUs, YouTube has 2 billion, WhatsApp has 1½ billion, making it the largest messaging network. iMessage, which I think is an interesting one to consider here, is 1.3 billion, Facebook Messenger also 1.3 billion.…

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