Facebook bought Whatsapp – I have mixed feelings


I don’t exactly know what to make of Facebook’s acquisition of Whatsapp for about $19B . Like many others – it was a jaw bropping moment for me. And since then, I have been trying to rationalize it in my mind, with limited success.

There are some things that work in favor of this deal for sure

1. Facebook has a big inflated market cap. So it is a good time to buy someone if part of the investment is in stock.

2. What is the biggest risk for Facebook? I guess it is the scenario of growth stagnation and a loss of stickiness. On both counts , Whatsapp is THE new facebook . They would have hit a billion users one day soon with their growth rate.

3. If Facebook didn’t buy them – it is possible that Whatsapp might have ended up with a competitor like Google. In fact I cannot believe that there is no indication so far of anyone else bidding up the price for this $19B valuation to make sense.

4. Facebook is smart in looking for inorganic and risky moves to grow and keep potential competitors at bay. That is admirable for such a young company , especially one that has so many bright engineers working for it.

5. The only financing the company took was $8M from Sequoia. They got a VERY good deal – but it makes it easy for Facebook to not have to deal with a lot of deal complexity and negotiations.

6. Whatsapp shows that you can support 450 Million users with 32 engineers. I don’t know any enterprises or consumer companies who have that kind of ratio. It is unheard of – and something Facebook can hopefully learn from as they grow.

There are also some things I don’t quite like about the deal

1. Historically, there are many such big acquisitions that have not worked out quite well for the acquiring company – like Microsoft buying Skype for about $8B or so. And skype does have a model to make real revenue unlike Whatsapp

2. Facebook doesn’t make revenue to match its market cap. How exactly does adding a very pricey Whatsapp that makes very little money on top make economic sense beats me. Especially since the impression is that Whatsapp will continue to not get into monetization via advertisements.

3. How much of competition can Facebook buyout ? at some point – it gets very expensive, and the share dilution for Mr.Z might not make it attractive .

4. What is the rationale behind this valuation? Will more low revenue startups now use this to convince the market of higher valuation? Will be constantly be jumping from one bubble to another ?

In general , I am none the wiser. But of course what I think doesn’t matter – it is Facebook’s money – they can do whatever they please 🙂

Is there anything more broken in HR than recruiting ?


I am not an HR expert – can’t even make a stretch claim to be one . Few months ago , I was convinced that performance appraisals were the most broken part of the HR realm . I wrote a few posts on my views on talent management and several readers joined the discussion . Eventually my conclusion became “Performance appraisals are evil , but the winner of the most broken HR process is recruitment”.

In hindsight , this is quite simple and something I should have known a long time ago . Guess I took it for granted somehow and didn’t realize the scale of bad consequences it has on a company .

Here are half a dozen random thoughts

1. Who owns the hiring process ? A line manager or HR ?

This should be a rhetorical question , and the problem is that it is anything but . If the hiring manager is not actively involved , HR in most cases cannot be effective . But HR is hardly empowered in any organization I know of in pushing back when hiring reqs are thrown over the wall mechanically . If you throw the req over the wall and wait for action – better not expect to find candidates you would like to work with .

If I am a candidate looking for a job – I will have amber lights flashing in my mind all the time if I don’t see the hiring manager actively involved in the process . I know from experience that it is a sure shot sign of a poor experience for me on the job , should I get it . My instinct is to walk away when I am in this situation – I learned it the hard way.

2. Can you read the hiring req with a straight face to a colleague ?

I recently read the job posting for an entry level admin job that pays $10 an hour with no benefits . If I didn’t read the title – I would have thought they are hiring a head of HR in a 1000 person company . This req was from a very successful manager who would fight tooth and nail to remove features from products because most customers don’t need it .

Some managers hire for talent – not for a given job opening . This is a double edged sword . On one hand – it is really hard to find good people and hence it makes sense to hire them when you find them and then figure out a meaningful job for them . On the other hand – these candidates need work that is worth their while (and lower patience levels to sit around) and you as manager might have other pressing issues once the hiring is done . So think very carefully about next steps if this is the route you take

3. Is salary such a taboo topic ?

I don’t know it for a fact – but I often have wondered if HR bosses give recruiters a KPI on how much money they can negotiate down for a given candidate .

Candidates get dragged through a lengthy interview process and then they get a shock when they hear the offer is a complete low ball . While money is not everything – for most candidates it is a deal breaker . Why not ask candidates if they are comfortable with a range you can afford ?

4. What about retention ?

Hiring is one half of the problem – the other half is retention . Hiring is a costly process for the company – and it involves the risk of screwing over someone else’s life and career .

Yet , with maybe one exception – I have hardly seen long term incentives for managers to retain their best talent .

5. Will they join if they really knew you and the team ?

One of the things I am very particular about is to tell potential candidates about everything that I think can go wrong for them when working in my team , and only then explain the good stuff . I also insist that they talk to everyone else currently in my team to make sure they are fully comfortable in taking forward the process . It is also important that everyone (or most people) in the team feel comfortable with their potential new colleague .

About 3 out of 4 times , people choose to not join when I do this . For many of them – I was able to find them other jobs that I thought would fit them well . But almost without exception – they are happy to still help me and work with me when I need a hand with something . And the few who choose to work with me – these are folks I can go to ANY battle with .

This didn’t come naturally to me – I learned it over time that hiring fewer right people is always better than hiring a lot of people who may or may not be right for you . A big reason for bad hiring process is the inflexible corporate budgeting policies that mandate across the board hiring freezes , not allowing managers enough freedom to handle their budgets and so on . I will go on a limb to say that impact on hiring is perhaps the biggest evil of planning and budgeting in companies .

6. The best time to plant a shade tree was a few years ago , second best is today

Everyone tells candidates to build a network . But what about managers looking to hire people ? Just like sales people need a pipeline , so do hiring managers

The worst solution is putting up job reqs at random and saving every CV that comes from applicants . That does not make a qualified pipeline . You need to get out and know the up and coming players outside your team – internal and external to your company, and win their trust . At executive levels – this is common practice . But this is usually not the case for non executive jobs .

For some weird reason – companies tend to put a higher bar for internal candidates . I have fought this almost all my career – and I think treating your internal candidates as sub par is one of the biggest hiring mistakes one can make .

There are many jobs where similar jobs in a different industry might be just as good . One of the best project managers I know of was a nurse before she shifted to IT . I never had the chance to meet the manager who hired her , but he surely saw the potential despite it not being a conventional hire . World needs more of such managers

Enterprise and UX – is it the classic “dog chasing its tail” ?


My pal Jon Reed posted a 2 part series on the topic of User Experience for enterprise software. Part one is http://diginomica.com/2014/02/13/enterprise-user-experience-overhyped/ and Part two is http://diginomica.com/2014/02/14/enterprise-consumer-grade-ui-part-2/ . You should read both – in fact you should read pretty much everything Jon posts. If it is not worth reading, Jon would not post it.

Since mid 90s – I have been fighting the good fight on UI and at some point after that, I have been fighting the fight on UX too. And I have not won that battle other than for short periods in time. This is true for packaged software as well as custom development projects I have worked on. However, solutions I helped create in late 90s are still used by customers in some shape – which honestly amazes me. If they went by the social media wisdom on UI and UX – there should be no such solution alive, and customers should be chasing me with an axe in their hands 🙂

All that said, I readily admit that my own first hand experience should not dictate anything given I have not worked with a statistically significant number of projects. And while I appreciate good design, I know that I am not a good designer. So what follows is strictly my personal opinion at this point in time. My opinion on UI and UX have changed with time – and it probably will change again.

Design philosophies have changed over time. When I started – the idea was that you offer every possibility to the user in an application – and let the users choose what they want to do. Now that pendulum has swung the other way – make it as lean as possible, and don’t give the user more than the absolute minimum required. There is one thing that I find fascinating in this swing – users of enterprise software are pretty smart people who can think for themselves and use most software. These are people who have figured out the deepest functionality in Excel and Access that most people would not know it even existed. They don’t need dumbing down – they just want things straightforward.

How big of a deal is UI in the overall UX? It is not everything – but it is significant. But of all things that change in technology – UI takes the cake when it comes to speed of evolution. Roughly every two years – there is some new UI thingy that is the “best ever”. Underlying technology changes just about as fast too – remember flex, silverlight etc? We barely knew them by the time they got obsolete. HTML5 is the new cool kid – but for how long ? Will we ever see an end to HTML vs native ? This is the dog chasing its tail scenario – you cannot catch up and take a lead for very long.

Stellar UX always comes at a cost. Either the vendor will charge for it – or a customer will pay contractors or internal IT to do that. So where exactly will we draw the line on how far we chase the ultimate UX at any given point in time ?

There is an additional aspect of UX that one needs to consider – not everything about UX can be controlled. I have one of the better global data plans available in US – and I can’t even get email in some parts of the country. And this is a crippling problem when I travel abroad. And I am talking about email – nothing fancy one would think. What about OS updates on mobile devices? I have not had a single upgrade where some app I use daily would not get screwed up. So how exactly does one fix something one has no control over?

Lets fast forward into prediction territory. IT moves to and from Suite to best of breed and again to suite with time . Now the swing is to best of breed – which means users will again have more than one app to deal with for a given business process. Even if every app has stellar UX when taken in isolation, all of them daisy chained together will have limited consistency. And by the time people get to know the new experience, world would have moved on to a new paradigm. Such is life in the wonderland of enterprise software.

So that was my long winded way of answering Jon Reed’s original question on whether UX in enterprise is over hyped. The short answer is – yes it is, and needlessly so. Good UX is a must to get work done without trouble. But when people move beyond “good enough” – they tend to approach the “diminishing returns” area very quickly. No one wins there – not vendors, not customers, nor spectators.