Valuation & Investment Math: ROI, ROIC, and Returns That Matter
WhatsApp acquisition by Facebook: $19 billion. Everyone thought Zuckerberg overpaid. The numbers at the time: 55 employees $20M annual revenue Minimal profits $345 million per employee $40 per user The critics calculated: $$ \text{Revenue Multiple} = \frac{$19B}{$20M} = 950x $$ “Insane valuation! Facebook wasted billions!” But Zuckerberg saw different numbers: 450M daily active users (growing 20% annually) Network effects getting stronger WhatsApp replacing SMS globally Engagement higher than Facebook Messenger He calculated the NPV (Net Present Value) differently: ...