When Facebook (NASDAQ:FB) initially announced that it will be purchasing WhatsApp in a deal valued at $19 billion, the valuation seemed ridiculous. While a number of analysts and journalists have offered up reasonable ideas as to how WhatsApp may really be worth a multibillion-dollar figure, WhatsApp's pricey valuation in and of itself could potentially reveal one of Facebook's greatest threats: other Internet start-ups.
If a 55-employee start-upcan launch an incredibly valuable service to connect half of a billion people in just five years, then perhaps the barriers for competing social networks are lower than investors initially thought. Perhaps it's not so difficult to scale a network to levels at which the network effect has the ability to disrupt other networks. If all it takes is 55 employees and five years to build a game-changing network of connected people, is Facebook's business as sustainable as its premium-priced stock suggests? Watch the following video for more.