The Anti-Snapchat: WhatsApp's nosebleed price is a lesson for Silicon Valley's hype addict brogrammers

By Sarah Lacy , written on February 20, 2014

From The News Desk

In the last eight years that the consumer Web has been in a full-fledged $100 billion-plus resurgence, some unfortunate myths have grown around what it takes to be a Valley success.

You have to be young.

It's the norm to be a total asshole and screw over business partners.

You need press and hype to succeed. Founders are the new celebrities. You are winning if you are showing up in People Magazine. Double points for carefully planted rumors about being spotted making out with Taylor Swift!

Of course most of these "must haves" are bullshit -- when was the last time you heard about Reid Hoffman, or Reid Hastings for that matter, overturning a table or saw him on the cover of US Weekly? But poorly reported press stories, largely fictionalized movies, and "tell all" books written with an eye to a movie deal, have helped create a false template for success. That template is then seized on by wantrepreneurs looking for an easy pattern to follow to become successful in an industry that's all about breaking patterns.

At the D conference a few years ago, Larry Ellison mocked entrepreneurs who dressed like Steve Jobs hoping to channel some of his genius. The very point, as Ellison explained, of the black mock turtleneck and jeans was that Jobs didn't want to spare a second of thought on what he was wearing. So someone going to the effort of dressing like him everyday is not only silly but violates the entire intention.

The great thing about Facebook's $16 billion acquisition of WhatsApp is that it clearly, and hopefully permanently, explodes the false narrative.

Several features have been rushed out today by those who've spent deep amounts of time with the co-founders, Jan Koum and Brian Acton, most notably this piece on Sequoia's Tumblr and this preview of a feature coming out in in Wired UK.

Both of those pieces show a pair of entrepreneurs, north of 30 years old, who eschewed hype, scaled a team slowly, and worked hard to do the right thing for users. Culturally, the contrast to Snapchat is... well, astounding.

Now, that pious version of entrepreneurship may not be 100 percent true either (these stories are rarely ever so neat) -- but I'd much rather live in a Valley where an exaggerated reality of hard work and humility was being mimicked than the exaggerated reality of "The Social Network" or the cautionary tales of Mark Pincus. Sadly, of course, examples of the former aren't so widely known: the very fact that WhatsApp wasn't focused on hype, ego, and public valuation games -- the fact that, as far as we know, they never stood on a Y Combinator stage, proudly holding up a hockey stick graph with unlabelled axes -- meant most people didn't know their story until that shocking $19bn price tag landed on the front pages.

About that price tag: $19bn was the price Mark Zuckerberg had to pay. In the wake of the deal, reporters have unearthed all kinds of previous negotiations, with Google and others. But why didn't we hear about those previous bids that were turned down over the time everyone was groaning about a $3 billion Snapchat bid? The simplest answer is WhatsApp saw no value in that nonsense.

I'm hard pressed to think of a consumer company that's had this large of an exit with almost no magnifying glass on it.

Now, I'd be shooting myself in the foot if I advised any entrepreneurs to avoid press. WhatsApp was something of a special case for this kind of company: bigger internationally than in the US. Had WhatsApp not sold, it most definitely would have needed to build a big US brand at some point, and press is the most cost effective way to do that. Every great company has a different pattern to billions, and in the case of Twitter it was the opposite: A huge media brand that a business and user base had to grow into. Twitter handles on every TV shows and news network is certainly not an albatross around the company's neck.

But WhatsApp should at the very least act as a warning to entrepreneurs thinking of putting hype first. As I wrote a year ago, the posterchild companies of any tech wave are rarely the biggest winners. Or as Fred Wilson put it at a PandoMonthly last year: "Hype is a drug."

To its credit, WhatsApp never got hooked.

[illustration by Brad Jonas for Pando]