Probably some variant of the 10x rule
WhatsApp sold for $20 billion by the time the deal closed, and at that point, was on a a perhaps $40m-$60m revenue run rate: WhatsApp’s First Half Of 2014 Revenue Was $15M, Net Loss Of $232.5M Was Mostly Issuing Stock
It was still a start-up at this point, albeit one growing quickly, from $10m in revenue the year before to 5x run rate that the year it sold.
That’s pretty good, and the user growth was insane. So conceptually, there are very strong arguments in favor of not selling.
OK now if you can get to $200 billion in market cap (10x the final closing sale price) … maybe selling isn’t worth it.
Snap turned down $2b – $3b from Facebook … and it looks like they will IPO at ~10x that.
But 10x $20b is a lot.
There are just a handful of tech companies worth > $200 billion. Like. 5.
Could WhatsApp have been as big as Facebook? Half as big as Apple? Three times bigger than Netflix?
If the founders weren’t sure … then …
Selling at $20 billion sounds like the right call.