NEW YORK (TheStreet) -- There's an interesting post by Albert Wenger of Union Square Ventures on his Tumblr blog. It's about WhatsApp and Facebook (FB). Albert thinks Facebook "massively overpaid" for WhatsApp.
That's not the interesting part to me. I disagree, although I think he's got some interesting points to consider such as his line: "How many times can you take out a threat at 10% of your market cap?" (And there are lots more threats coming to Facebook, to be sure.)
I think the most his interesting point is a discussion of the switching costs of phone-based messaging apps vs. identity-based messaging apps. This hasn't been discussed at all -- from what I've seen -- in any articles or blog posts in the wake of the WhatsApp deal.
For those not aware, WhatsApp and many messaging apps are based on your mobile phone number. You are identified through that number in the WhatsApp service. Identity-based messaging apps include China's WeChat and Kik. They ask you to pick a name to identify yourself, instead of using your phone number. I guess you could also include BlackBerry's (BBRY - Get Report) BBM in this group because it identifies you through your PIN and not your phone number.To some, it might not seem like there's much difference between the two approaches. I use my name (or PIN) for one type of app while I use my number for another. So what? Wenger says: Let me repeat the key point: The switching cost for users on a phone number based messaging services is at or near zero (this is different for identity based services and even more so if they are a platform that third parties can integrate with such as WeChat and Kik -- the latter is a USV portfolio company). He also discusses how the Telegram Messenger app has exploded in popularity in the last few days since the WhatsApp deal was announced. It's a messaging app started by two Russians behind Russia's version of Facebook who decided to start a messaging app that put a big emphasis on security. The other day, Telegram tweeted that it had signed up five million users in one day.
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