WhatsApp famously reached 450m users around the world without spending so much as a dime on marketing. Facebook bought the instant-message service for (ahem) 190bn dimes not long afterward.
Old-fashioned valuation is scarily irrelevant in the world of chat apps. The game is conquering a world of millions of smartphone users. Such petty details as actually earning money off these users are left for the distant future by anyone buying Facebook’s stock at 50 times forward earnings.
Still, the bet assumes barriers to entry will exist to protect future earnings in the app market. That seems weird for a business built on flighty electrons. But hope lies with the sheer network effect of lots of users. Zero marketing costs at WhatsApp feeds this hope.