David Rubenstein, CEO of The Carlyle Group LP (NASDAQ:CG), joined Bloomberg Television’s Cristina Alesci to discuss WhatApp, Facebook Inc (NASDAQ:FB) and the tech sector at the SuperReturn International Conference in Berlin.
Rubenstein told Bloomberg TV: “I don’t think that they made a big mistake. If that price hadn’t been paid by Facebook Inc (NASDAQ:FB), it would have been paid by Google Inc (NASDAQ:GOOG) or somebody else in my view.”
David Rubenstein on Facebook’s purchase of WhatsApp:
“I have spent with my partners 26 years building Carlyle and we have a lower market value than this company which is only three years old, so I thought I was in the wrong business. So I wish I had started WhatsApp, but I didn’t even know the company. So, I’m a little out of it in respect to text messaging.”
“It shows what’s great about America and what’s great about capitalism. People can start a company with a great idea and very quickly they can get economic reward out of it. Whether it’s the right price or not, time will tell. But Facebook buyer seems very happy with the price.”
“I would say they are probably more robust then they were a few years ago. But time will tell whether you overpay for something. But right now, given what Facebook Inc (NASDAQ:FB)’s valuation is, of roughly ten times the price they paid for this company, and given the fact that this company has 450 million users, I think it’s probably a reasonable price. Now I don’t really know the details of it to evaluate it as carefully as they did, but it doesn’t strike me as the same thing as paying a billion dollars or two billion dollars for a company that has virtually no revenue, and of course no earnings, hardly any employees. That isn’t what this is. This has a lot of opportunity.”
“Obviously it wasn’t very profitable yet, because that wasn’t their main concern, but it has a lot of users. So, it may turn out to be a great acquisition. Remember when Google Inc (NASDAQ:GOOG) bought YouTube for about a billion and a half dollars years ago, people laughed at Google Inc (NASDAQ:GOOG). How could you pay a billion and a half dollars for a company that has no revenue, that has nothing. And yet today, that seems like a cheap price.”
“If you’re dealing with companies that have revenue, that have earnings, you can use some traditional measurements to kind of figure out what you’re paying, whether it’s worth it or not. That was an unusual situation. Sometimes you have to be very bold and while I’m not a Facebook user or a shareholder, have no connection with it really, I don’t think that they made a big mistake. If that price hadn’t been paid by Facebook Inc (NASDAQ:FB), it would have been paid by Google Inc (NASDAQ:GOOG) or somebody else in my view.”