Why Facebook Paid $16 Billion For An Ugly, Primitive App

The answer lies partly in design, but not in the way you might think.

Facebook agreed to pay some $16 billion for an app called WhatsApp this week, leading to widespread confusion and surprise among analysts (Forbes called it a "stunner," Reuters a "shocker"). Why would Facebook pay what is, objectively, an obscene amount of money for an app most Americans have at best barely heard of? (For comparison, Instagram and YouTube sold for $1 billion each, and the venerable and profitable Jim Beam bourbon company sold for only $13 billion.) And for those who have heard of it, why would Facebook pay so much money for a barebones, borderline-ugly chat app?

WhatsApp seems like a million other apps: it lets you chat with people. Why is it different, and much more valuable than, competitors like WeChat and Kik? Or Google Hangouts, or Badoo, or Oovoo, or Tango, or AIM, or even Facebook's own Messenger app, most of which are more feature-rich and beautiful than WhatsApp. The answer lies partly in design, but not in the way you might think.

Facebook has tried to position itself lately as a place of high design. The new Paper app, essentially a replacement for the regular Facebook app, is beautiful, with flippity-floppity animations and hard edges and soft animated transitions. Timeline, the newish version of your individual profile page introduced in January 2012, is a major step forward from the MySpace era of profile pages: a chronological stream of images and text coming together to represent your Facebook life.

But maybe most useful to look at now, with this monster purchase blocking the sky, is an app that failed. Facebook over the years has repeatedly tried and failed to buy another chat app, Snapchat. A couple years ago, Facebook apparently decided, well, who needs Snapchat anyway? The actual hook of the app, that messages vanish after a few seconds, is the kind of thing that a first-year Facebook engineer can create in an afternoon. So Facebook made its own version, called Poke. Where Snapchat was unreliable and unpredictable, covered in garish patterns and sloppy animations and inexplicably low-res video, Poke was clean, simple, and pretty. It was in every conceivable way a better-designed app than Snapchat.

A couple months after Poke's release, with adoption almost nil and Snapchat's user base continuing to skyrocket unabated, Facebook decided to stop bothering to promote it. Facebook had been beaten by bad design. Which brings us to WhatsApp.

WhatsApp is a fairly simple chat app; its design is meant to be easy to use rather than pretty or innovative. And it succeeds at that! Anyone who's used, like, a smartphone will be able to download WhatsApp, take a look at it, and understand how it works and what it does.

If not for the nice fonts and soothing blue color of iOS7, the iPhone version would look almost bereft of design thought altogether: there are no animations, no innovative icons or artwork, no gestural tricks, in fact no art at all aside from some backgrounds. The default background on my phone is a sort of off-white with a bunch of indistinct pencil drawings of trumpets, chat bubbles, airplanes, chickens, and whatever else the designer could think of in five minutes. It's ugly and I haven't figured out a way to just make it white, for some reason. BuzzFeed's John Herrman says, "It’s a primitive-looking app—maybe even ugly." Felix Salmon of Reuters goes even deeper: "WhatsApp is an ugly, clunky product with a juvenile name; there are dozens of prettier, smoother, more elegant mobile messaging apps out there."

But it's the functional design, not the aesthetics, that matter here. Along the bottom of the screen, WhatsApp has simple, clear icons for your favorite contacts, your status, your list of contacts, your list of currently open chats, and settings. Within a chat, you tap one button to record a voice message, or another to upload a photo or video. Everything works exactly as expected; whereas in Paper I sometimes find myself unsure of how to navigate or what to do, no such problems come up in WhatsApp. It's not pretty, but the design is incredibly solid.

As with the Snapchat/Poke debacle, what Facebook's discovering (and why I think, despite the ludicrous amount of Monopoly money involved in this deal, that it's a very smart move for Facebook) is that as often as not, aesthetics are irrelevant.

What's relevant is that WhatsApp has 450 million users; that it runs simply and easily on iPhones, Android phones, BlackBerrys, Windows Phones, and platforms Americans may have never heard of, like Symbian; that in developing countries, WhatsApp runs on phones that have never entered a Facebook office; and that chat is perhaps the single most important, most essential thing a smartphone can do.

In apps, design is a tool to get users—a means to an end, rather than the end in itself. Is WhatsApp ugly? Yeah, sure, sort of. But it's phenomenally well-designed in that anyone can use it, on almost any platform, without getting frustrated or confused. It's successful because, frankly, it's one of the best designed apps I've used. 450 million people aren't wrong about that.

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  • The reason Facebook overpaid for WhatsApp has nothing to do with the tens of articles written about it. The real reason is because millions have been caught in their mousetrap. WhatsApp literally sequesters your mobile with peoples' consent without them fully realizing the extent of the hijack. NSA is little brother compare to these guys.

  • Sebastian Quevedo-Busch

    Facebook is not paying for the app it self, but for the 450mio user.

    Now IMO they could have done better with spending WAY less money!

  • Sebastian Quevedo-Busch

    So when 90% of the western population though that slavery was ok, does it mean it still is?

    I know, kind of extreme, just going to the point that just because it's 450mio doesn't mean they have to be right, specially considering that they might be using different apps at the same time like my self, who in addition to whatsapp use FB msg, Viber, Skype, google chat, ....

  • If any transaction of acquisition intellectual property there is an element of risk involved this is more based upon qualitative risk versus quantitative and less risk than they took in the past with other technology startups and creating their own app.

  • The parameters you are using to call this App ugly and whatever are baseless. What you need to understand is that, there are markets beyond USA where FB needs to make investments to grow on a long term. This App has about 450 Million people using it, and they are apparently adding about 1 million users a month. Most of the smart phone users in countries like China & India dont use iPhone and hence need to rely on App's like WhatsApp for their communication needs. So, this is a right strategy for FB.

  • Also the company transaction cannot take place unless the government approves of it and there are quite a bit of audits that are done in between. The valuation is reflective of the growth potential of users into the global footprint from the current state of 450 million users worldwide( it could be 20x this amount by xyz date)

  • It is based upon a Rrr revenue run rate. X a multiple = valuation of a tech startup. That equation has to make sense.

  • Agree with the statement in terms of acquisition valuation based upon users and smartphone footprint but I still think it's a high valuation of 19 billion but Facebook tends to be a highly publicized company with intensive PR

  • FB did very big mistake to bought this app. FB waste money, because this app won't generate money, to make happy investor. FB bought only access to people. For such big price!

  • What? .....FB bought an app that opens up its services to people who FB would not otherwise be able to access. The current market is saturated with options. Capturing an emerging market of low end and obscure phone OS users can equal lots of exposure and potential marketing.

    I think the price is absurd but the simple concept behind the purchase is solid.

  • Andrei Tache

    yeah, the primitive design comment sounds like the reaction of an arrogant designer who thinks his flat UI UX helvetica is all that matters to the world.

    in fact I'd argue Facebook is better than g+ for that precise particular reason. it's not beautiful in that graphical museum-like way. it's just perfectly functional. with all the colorful 8bit group logos and all. it doesn't try to look good, it's just good whatever the looks. is the hegemony of image is on the edge of the cliff?

  • You're clearly an Apple fanboy. The App is not ugly at all and far superior in design and functionality to iMessage. They bought it because not only for the 450 million user, but because you need your phone number to use it. there's no corny user names to deal with. Its all based on your phone number. So Facebook just bought 450 phone numbers to match with user profiles. If you're going to write articles - know what you're talking about, fool.

  • One part of the app that is extremely frustrating is adding new contacts from another country. It's a pain in the ass, until you google search and discover that international numbers need a "+", no where is it indicated within the app. Also, without the number stored you don't know who is messaging you.