WhatsApp

**Ben Gilbert** (0:00)
I do have to say that based on all the other companies we analyze, I was expecting to see Gross Margin highlighted in their financials and talked about in the presentation. But Facebook's actual operating margin is so good that that is what shows up everywhere because they actually make money and they make a ton of it. It's like a dramatic departure from a lot of the episodes we've done in the last year.

**David Rosenthal** (0:21)
That's insane.

**Ben Gilbert** (0:22)
I mean, the way to think about that status, for every dollar they bring in house, they keep 45 cents even after paying for everything, all their fixed costs, all their employees. It's just a cash machine.

**David Rosenthal** (0:34)
That's why it's a $630 billion market cap company.

**Ben Gilbert** (0:50)
Welcome to Season 6, Episode 1 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert.

**David Rosenthal** (0:58)
I'm David Rosenthal.

**Ben Gilbert** (1:00)
And we are your hosts. Today, we are talking about WhatsApp, an app that Facebook paid $22 billion for and has done virtually nothing in the six years since. And in fact, it was reported last week, they are, that's right, David, abandoning near-term efforts to enable advertising in WhatsApp, which of course, is Facebook's core business model.

**David Rosenthal** (1:21)
Do we just, you said $22 billion, right?

**Ben Gilbert** (1:24)
Billion.

**David Rosenthal** (1:25)
Just to make sure we're on the same page.

**Ben Gilbert** (1:26)
That's right. That's 22 Instagrams right there. So today, we will decide, was this one of the worst acquisitions of all time, or did Facebook make a genius move even for this insanely, insanely high cost?

**David Rosenthal** (1:40)
I'm super looking forward both to telling this story, because it's an amazing story, but also to debating that question, because I think they're really good arguments to be made on both sides.

**Ben Gilbert** (1:51)
This is as classic as a classic Acquired episode gets. We have more than five years of hindsight. We've got a big price tag. We had lots of reporting around the time of the sale, and frankly, not a ton of follow-up since. So it's going to be fun to tell the WhatsApp story from the very beginning, and as you said, debate that very question. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (2:13)
So, Crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. NVIDIA is one of their major partners, and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (2:39)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (2:44)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (3:02)
Yep. Obviously, it's a huge benefit for the environment and for customers on costs since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (3:19)
It's super cool that they can put their data centers out there in these remote locations where, quote, unquote, energy happens, as opposed to the other hyperscalers, such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the internet happens because they are doing everything in their clouds.

**Ben Gilbert** (3:35)
Yep. If you, your company, or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusoecloud.com/acquired, that's C-R-U-S-O-E cloud.com/acquired, or click the link in the show notes. If you're a fan of the show and you want to go deeper on company building topics, the nitty gritty of how companies today are solving problems in real time, you should consider becoming an Acquired Limited Partner. In recent episodes, we interviewed the founder of fast growing Chicago startup Cameo, and we did another episode that turns the tables and interviewed us on the business strategy behind Acquired. You can get started with a seven-day free trial and listen right here in the podcast player of your choice by clicking the link in the show notes or going to glow.fm slash acquired. David, I think it is time to dive in.