How to Compete in a World of $19 Billion Acquisitions Completed in 11 Days

If you are the CEO of a mobile telecoms firm, last night the future got a whole lot closer to the present: Facebook acquired Whatsapp for $19 billion. There were many drivers for this acquisition; one had to be that Whatsapp was growing towards a billion users on the phone, enabling Facebook to reach its second billion of users. These Whatsapp users also bypass the traditional telecoms industry who are milking SMS revenue. The free instant message app that Whatsapp developed created a frictionless environment for it to grow like a rocket.

Facebook & Whatsapp will grow even more quickly now. This is exponential growth in action. Whatsapp will reposition Facebook as a mobile-centric platform, stealing revenue from the telecoms world which is more effective than Google’s attempt to do this by buying (and then selling) Motorola Mobility. Why buy the infrastructure is you just buy the userbase and the apps which bring revenue?

This deal exemplifies a number of the important forks in the road for the non-tech firms who have to figure out how to play in this highly-charged game of poker and power with people who have more money and balls than they have.

If you are Vodafone, Telefonica, Deutsche Telekom etc, you have to deal with the infrastructure, regulation, taxation of buying an established player. Facebook or its cohorts Apple, Google and Amazon, the quintessential platform players, will use your investments and sunk cost, and ride right over you.

How do you compete in this world? You need to have a new model for building exponential growth. That starts by recognising that the world has gone network due to the impact of digital business models. Think of yourself as providing scale, audience, reach, distribution to the digital application firms like the Whatsapps who need it. You are the highway; they are the car. If you can become a preferred highway, you can create clear economics for the use of your road.

And then you need a new model for making decisions as it was rumoured that Facebook first started to think about the acquisition 11 days ago. That’s faaaaaaast. It means that they were seeped in what Whatsapp were doing already, and didn’t have to be sold on the strategic value.

There won’t be another Facebook, Google, Apple or Amazon as those platforms will accelerate now due to the exponential network effects they’ve embraced. The world awaits businesses from the real world who figure out how to open the door to an exponential future by opening themselves up to become a platform and engaging with the global digital enablers (start-ups and apps) who will help to build the Digital P&L’s of these firms’ futures.

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Photo: Shutterstock

Posted by:Julie Meyer