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First Take: Silicon Valley Became Downright Silly With WhatsApp Deal

Can it possibly get more absurd?When Facebook said it would plunk down $16 billion for WhatsApp, I thought the folks in Menlo Park, Calif., had committed a serious typo. It must be a jaw-dropping $1.6 billion, not an earth-shaking $16 billion.

Silicon Valley became downright

But Facebook didn’t err — mathematically, at least. In the largest acquisition of a venture-backed start-up, Facebook paid the equivalent of three BlackBerrys (the company, not the device) to purchase the mobile-messaging company, which has 450 million monthly users.

NEWS: Facebook to buy WhatsApp for $16B

It is Silicon Valley’s biggest tech deal since Symantec landed Veritas Software for $13.5 billion in 2004.

Facebook’s dalliance with WhatsApp says a lot about the current state of The Valley, which becomes less numb with each mega-deal. Months after Yahoo gobbled up blogging service Tumblr for $1.1 billion, Snapchat — a tiny, photo-messaging app company — spurned Facebook’s $3 billion offer.

Venture money is flowing into tech start-ups, and hot IPOs are spilling out of the Valley. Twitter’s stock offering got most of the attention last year, but others like Box and King.com are on the way. If you don’t quite believe in a bubble and crazy market valuations — Google is on the precipice of passing ExxonMobil as the second-most valued company in the world, after Apple — a $16 billion deal can be awfully persuasive.

There is method to Facebook’s madness. A vast majority of its 1.2 billion members access the social network through mobile devices — and a spike in mobile-related ad sales has as much to do with the company’s lofty stock price as anything else.

But my, how money changes everything. Two months ago, WhatsApp CEO Jan Koum told The Wall Street Journal he had no intention to sell. “We’re trying to build a sustainable company that’s here for the next 100 years,” he said.

Today, he had 16 billion reasons to rescind his comment.

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