5 ms·

It blows my mind that todo list app can be worth $200 million... Then again a chat app is now worth several billion... I don't have any idea of how this works.

dtech 7y ago
Chat app is only worth that with a huge network of users, which is the real value. Anyone can make a chat app. Making a chat app with 100M+ users takes years of effort and luck.
- 4ntonius8lock 7y ago
  There are other factors. Valuations in tech now depend on our current regulatory and financial environment: 1- Absolutely no real privacy regulation exists in the US, where people's information can be bought and sold freely. (I know there is regulation, but not real regulatory activity means it's de-facto unregulated) 2- There's no anti-trust activity and companies like microsoft, google and facebook can engage in anti-competitive behaviors of all types: buying competitors and closing them to reduce competition (it seems the case with Wunderlist), operate a market and be a participant in it while undermining other market participants using inside information, create a monopoly or oligopoly with no real regulatory costs (aside from a small % of earnings being taxed as 'fines'), actively conspiring to avoid competition for employee salaries, etc 3- Very low interest rates/net negative interest rates for capital holders with opaque and byzantine distribution of newly minted fiat. 4- Zero consequences for undermining democratic institutions by creating revolving doors between regulatory agencies and the companies they are supposed to regulate. 5- Regressive regulatory compliance costs While the ones who benefit from such an environment would like to make it seem this is the natural state of the economy, it isn't, it's a very new and very strange experiment. Also, while capital holders would like people to think that the current state of prosperity is caused by our current system of regulatory and financial application, these same people then agree that the greatest advancement in standards of living for the western world happened during the 1920-1960s, a time when the regulatory and financial systems were very different (like a 90% tax on earnings above $50 mill/year (in 2019 money)). So I'd guess we could advance just as well if not better with something more akin to what was then. I'm hoping our current conditions will not remain over the next 40+ years and some of these valuations will be more in line with traditional P/E ratios.
grumpy8 7y ago
It's far from accurate, but an easy way to think about it is: 200 000 000 users * $1.
- kaushikt 7y ago
  They had 200,000,000 users?
  - nikhilbagadia 7y ago
    They didn’t at the tome of selling it to Microsoft.
  - bearcobra 7y ago
    Closer to 13,000,000 at the time of acquisition.
momokoko 7y ago
It is not a chat app. Its a searchable document and knowledge database. Same goes for note taking apps. Same as GMail. What makes these ultimately valuable(and sticky) to companies is that once they get some use, they become essential searchable databases.
woadwarrior01 7y ago
It isn't the chat app, it's the perpetual access to the contacts list on the phones of all its users that is worth billions.
- coss 7y ago
  To do what though?
  - youeseh 7y ago
    One possibility would be to build a more accurate social graph. So, let's say you have 500 friends on Facebook, but only 50 of those are people you speak to on a regular basis. This helps Facebook better understand your preferences based on your online interactions and the people who you associate with on a regular basis. You are the average of the 5 people who you spend the most time with, or something. This hopefully means that they'll be able to show you better ads.
  - Torwald 7y ago
    to drive down advertising costs.
    - thelittleone 7y ago
      Is it not also true that Whatsapp is (was) a competitor to FB? I mean, if I wanted to get rid of FB, the only other place I know I can reach the majority of my contacts is WhatsApp. Now since they own both I have no non-FB alternative.
  - woadwarrior01 7y ago
    People who aren't on your contacts list probably aren't your friends. :)

dtech 7y ago

Chat app is only worth that with a huge network of users, which is the real value. Anyone can make a chat app. Making a chat app with 100M+ users takes years of effort and luck.

4ntonius8lock 7y ago
There are other factors. Valuations in tech now depend on our current regulatory and financial environment: 1- Absolutely no real privacy regulation exists in the US, where people's information can be bought and sold freely. (I know there is regulation, but not real regulatory activity means it's de-facto unregulated) 2- There's no anti-trust activity and companies like microsoft, google and facebook can engage in anti-competitive behaviors of all types: buying competitors and closing them to reduce competition (it seems the case with Wunderlist), operate a market and be a participant in it while undermining other market participants using inside information, create a monopoly or oligopoly with no real regulatory costs (aside from a small % of earnings being taxed as 'fines'), actively conspiring to avoid competition for employee salaries, etc 3- Very low interest rates/net negative interest rates for capital holders with opaque and byzantine distribution of newly minted fiat. 4- Zero consequences for undermining democratic institutions by creating revolving doors between regulatory agencies and the companies they are supposed to regulate. 5- Regressive regulatory compliance costs While the ones who benefit from such an environment would like to make it seem this is the natural state of the economy, it isn't, it's a very new and very strange experiment. Also, while capital holders would like people to think that the current state of prosperity is caused by our current system of regulatory and financial application, these same people then agree that the greatest advancement in standards of living for the western world happened during the 1920-1960s, a time when the regulatory and financial systems were very different (like a 90% tax on earnings above $50 mill/year (in 2019 money)). So I'd guess we could advance just as well if not better with something more akin to what was then. I'm hoping our current conditions will not remain over the next 40+ years and some of these valuations will be more in line with traditional P/E ratios.

grumpy8 7y ago

It's far from accurate, but an easy way to think about it is: 200 000 000 users * $1.

kaushikt 7y ago
They had 200,000,000 users?
- nikhilbagadia 7y ago
  They didn’t at the tome of selling it to Microsoft.
- bearcobra 7y ago
  Closer to 13,000,000 at the time of acquisition.

momokoko 7y ago

It is not a chat app. Its a searchable document and knowledge database. Same goes for note taking apps. Same as GMail. What makes these ultimately valuable(and sticky) to companies is that once they get some use, they become essential searchable databases.

woadwarrior01 7y ago

It isn't the chat app, it's the perpetual access to the contacts list on the phones of all its users that is worth billions.

coss 7y ago
To do what though?
- youeseh 7y ago
  One possibility would be to build a more accurate social graph. So, let's say you have 500 friends on Facebook, but only 50 of those are people you speak to on a regular basis. This helps Facebook better understand your preferences based on your online interactions and the people who you associate with on a regular basis. You are the average of the 5 people who you spend the most time with, or something. This hopefully means that they'll be able to show you better ads.
- Torwald 7y ago
  to drive down advertising costs.
  - thelittleone 7y ago
    Is it not also true that Whatsapp is (was) a competitor to FB? I mean, if I wanted to get rid of FB, the only other place I know I can reach the majority of my contacts is WhatsApp. Now since they own both I have no non-FB alternative.
- woadwarrior01 7y ago
  People who aren't on your contacts list probably aren't your friends. :)