Mindsets

• Why is culture important? 
• Do you think Facebook overpaid for WhatsApp? Why? 
• What are some of the problems bringing in new investors?

 

Badr Abduldaim - TP074644 & Abdulhadi Muhammad - TP077039

figure 2 :Pinterest  (Emily Eyster)

Why is Culture Important?

To start of, what is culture? Culture is the way of living and how people interact with each other in a particular region. It’s the definition of how people celebrate events, shop, eat and even how they sleep, to be specific it is the way that traditions affect their lives.

Culture serves as the essence of a thriving community, manifesting in various forms such as storytelling, commemoration of history, entertainment, and envisioning what lies ahead. Through our creative endeavors, we shape our identities and gain insight into diverse perspectives. Ontarians engage with culture in numerous roles, including as spectators, practitioners, enthusiasts, contributors, and supporters (WolfBrown, 2011).

Culture is important as it has very deep effects on peoples lives. Understanding different cultures is really important for entrepreneurs, as its vital to know if the product or service being offered is considered offensive or not. It is also important to learn and understand cultures to better interact with people and companies from different countries and cultures across the world.

References 

WolfBrown, “Ontario Arts Engagement Study” (San Francisco: WolfBrown, September 2011); Nordicity, “2012 Canadian Interactive Industry Profile: Final Research Report” (Canadian Interactive Alliance (CIAIC), October 2013): 36; Canadian Media Production Association et al., “Profile 2014: Economic Report on the Screen-based Media Production Industry” (Canadian Media Production Association, 2015): 36.

Ahmed Jinan Ali - TP075798

What are some of the problems bringing in new investors?

Bringing in new investors is crucial for the success and growth of a startup. However, there are several problems that startups may face when trying to attract new investors. One of the main problems is the issue of investor control (Kumar, 2021).Investors often seek a significant amount of control over the startup in exchange for their investment. This can lead to conflicts between the founders and the investors, as the founders may feel that their vision for the company is being compromised by the investors' desire for control. According to the source, investors are usually well connected and have expansive networks of contacts in key areas and industries, which can be invaluable for a new business. Attracting investors can bring in valuable expertise, industry connections, and financial resources.

References

Isher, A. Kumar., Gangwar, V. P., Dwivedi, S., & Sharma, S. (2021). Impact of COVID-19 Pandemic on the Agribusiness Start-ups: Case of Jammu City.

Alfiansyah Clark - TP075566

Figure 1: Facebook Purchasing WhatsApp (Dev, 2014)

Do you think Facebook overpaid for WhatsApp? Why?

In 2013 WhatsApp was a rising competitor in the social media/messaging space and was touted to have potential to be a future rival to Facebook. (Newman, 2014) Facebook was late to mobile messaging with it only really focusing on it in 2011, whilst WhatsApp was solely focusing on that, providing a very positive user experience. (Metz, 2014)

Facebook is the most popular social network in the world, however in order to retain it, they must be constantly monitoring and adapting their own views and businesses to accommodate what the market wants. The market wanted a Mobile messaging service and WhatsApp was rising in prominence so instead of trying to play catchup to WhatsApp, Facebook instead decided to acquire them. In 2014, WhatsApp did use to cost 99 cents a year and there were at least 500 million users, however in 2016 the subscription-based model was scrapped. Instead, whilst it is free for normal users, businesses who want to be available on a messaging site which hosts over 2 billion users as of 2023, they are the ones who bare the burden of having to pay if they wish to use this communication channel. (Hill-Gray, 2022)

In 2014, WhatsApp’s revenue was $1 million, and now in 2020, their revenue was $5.5 billion. (Metz, 2014) Overall, despite the high price tag and risk, Facebook’s acquisition seems to have paid off. By creatively attracting users and businesses WhatsApp has become a giant messaging platform. The purchase of WhatsApp for $19 Billion dollars was a strategic acquisition with the goals of expanding its reach to a wider consumer market and so far along with their greater plans to expand their user base, (Swider, 2014) it seems to have been a worthwhile venture.

References

Dev, S. (29 March, 2014). Facebook Buying WhatsApp. Retrieved 23 April, 2024, from Invest Internals: https://investinternals.com/2014/03/facebook-buying-whatsapp/

Hill-Gray, R. (24 March, 2022). As a Free Messaging Service, How Does WhatsApp Make Money? Retrieved 24 April, 2024, from Market Realist: https://marketrealist.com/p/how-whatsapp-makes-money/

Metz, C. (20 February, 2014). Here's why Facebook paid $19bn for WhatsApp. Retrieved 23 April, 2024, from Wired: https://www.wired.com/story/facebook-whatsapp/

Newman, J. (20 February, 2014). Facebook’s WhatsApp Acquisition Explained. Retrieved 23 April, 2024, from Time: https://time.com/8806/facebooks-whatsapp-acquisition-explained/

Swider, M. (20 February, 2014). Why did Facebook buy WhatsApp? Retrieved 23 April, 2024, from Tech Radar: https://www.techradar.com/news/internet/web/what-s-up-with-facebook-buying-whatsapp-it-s-about-the-developing-world-1226429

Abdirahman Warsame - TP077730

Do you think Facebook overpaid for WhatsApp? Why?

Facebook's acquisition of WhatsApp for $19 billion in 2014 raised eyebrows due to its hefty price tag. While WhatsApp provided messaging services like other platforms, its rapid growth, and unique features, such as group chats and media sharing, differentiated it as a mobile social media platform (Kerravala, 2014). Additionally, WhatsApp's strong presence in Europe and emerging markets, where Facebook faced challenges, made it an attractive acquisition target. Despite WhatsApp's relatively low revenue at the time of acquisition, its user base of 450 million and potential for future monetization justified Facebook's investment (Deutsch, 2024).

However, the acquisition's financial implications were significant. Facebook's balance sheet saw a substantial increase in goodwill and net intangible assets, totaling over 40% of total assets (Niu, 2016). WhatsApp's financial performance, with a revenue of $22.7 million and a net loss of $311.9 million in the trailing 12 months, raised concerns about the acquisition's valuation (Niu, 2016). The acquisition posed a risk for Facebook shareholders, as failure to meet high expectations could result in significant write-downs and impairment charges (Niu, 2016).

In conclusion, while Facebook's acquisition of WhatsApp was strategic in expanding its user base and presence in key markets, the high price tag and WhatsApp's financial performance post-acquisition sparked debate about whether Facebook overpaid (Kerravala, 2014). Nevertheless, WhatsApp's subsequent growth to over 1 billion users validated Facebook's long-term vision, demonstrating the potential value of the acquisition in the evolving landscape of mobile messaging and social media (Deutsch, 2024).

References
Deutsch, A. L. (28 April, 2024). Whatsapp best facebook purchase ever. Retrieved from investopedia: https://www.investopedia.com/articles/investing/032515/whatsapp-best-facebook-purchase-ever.asp

Kerravala, Z. (20 Febuary, 2014). Did facebook overpay for whatsapp? Retrieved from networkworld: https://www.networkworld.com/article/748104/cisco-subnet-did-facebook-overpay-for-whatsapp.html

Niu, E. (19 Febuary, 2016). 2 Years Later, I Still Think Facebook Overpaid for WhatsApp. Retrieved from fool: https://www.fool.com/investing/general/2016/02/19/2-years-later-i-still-think-facebook-overpaid-for.aspx