Today, WhatsApp was acquired by Facebook for $16 billion, with another $3 billion of RSUs going to retain the employees. That's an unreal amount of money, for sure, and the price will be debated to death for the next few days/weeks/months. Cost-per-user, Snapchat, bubble, messaging is the wave of the future, they did it for international presence, blah blah blah. There are several dozen engineers who now have more money than they know what to do with -- in other words, they can now afford a house in the bay area. Maybe.
The more interesting story, in my humble opinion, is the effect that this kind of deal has on every other engineer / would-be entrepreneur / hacker outside of the deal. They see this $16 billion price tag and think -- "if I had just gotten in on that, I'd never have to worry about money again." (Perhaps that's just me) Or on an even more basic level, "should I be doing something different with my time?"
There are plenty of regular people who buy lottery tickets when the jackpot gets large enough. Admittedly, I'm one of them. Despite the incredibly unlikely odds of ever winning, I convince myself with the "expected value" argument to buy Powerball tickets when the jackpot is like $400 million and up. For those who haven't spent too much time in probability and statistics classes, expected value is the probability-weighted value of a choice.
The expected value of not playing the lottery is $0. However, if you do play, there is a very high likelihood you will lose, and an infinitesimal chance of winning. So, the expected value of playing powerball when the jackpot is $400M, assuming no other prizes, is positive given a 1 in 175 million chance:
(1-(1/175,000,000)) * -$2 + (1/175,000,000) * $400,000,000 = $0.285.
By playing the lottery, you are expected to make $0.285. Even if we get really nitty-gritty and say 50% of that money goes to taxes, the next expected value is still fourteen cents. I understand that I'm more likely to be attacked by a shark than win, but I can have a shot at it (just as if I started swimming in seal blood in shark-infested waters). If it doesn't work out, and I don't win, I go to work the next day. Some non-players would call me stupid for playing a game so obviously rigged, and "throwing my money away", but I have a better shot of winning than they do, don't I? What happens in a black swan event?
So what do lottery tickets have to do with WhatsApp? It's really, really important to have proverbial lottery tickets for innovation to thrive.
Most jobs at typical 'large' companies don't have a lottery-ticket scenario. You do your job, you get an X% raise/bonus. If you really work hard and do well, you get a little more. And if you invent the next iPhone and make billions of dollars and change people's lives forever, you get even more and perhaps a promotion (if you got credit for it). And that's at a good company that rewards its employees -- how many would simply not give raises or bonuses at all? Maybe you get a small plaque with your name on it and a pat on the back...but you still have to show up on Monday.
But shouldn't the intrepid, visionary, hard-working innovator in the shoot-the-moon scenario get a lottery ticket level of reward? You took the risk, endured unspeakable politics by those who want to shoot your idea down, made the company billions, shouldn't you take more share of the reward? Typically, the answer in almost every company is no -- innovation is an expected job function that never happens at all. Throw in that in most companies, failure is punished not rewarded, and the third scenario will never happen because the expected value of doing so is negative.
Large companies can't really support the lottery ticket scenario either. If they give an enormous payout to a select group of people, anyone outside it will be completely demotivated ("they care about that project and not my project!"). Moreover, those people who 'won' have few reasons to hang around anymore, and possibly be paid more than the CEO and likely just piss off shareholders.
Instead, if you really have a bee in your bonnet to do this world-changing project, you have to start something entrepreneurial. You have a low chance of success, since 90%+ of startups fail, but you have a shot, and that shot has a better chance of success than a remote lottery ticket. In almost every working-9-to-5-for-the-man scenario, you have to buy your 'lottery ticket' somewhere else because of the big company problems above.
The massive WhatsApp acquisition is important, because it's a grinning average Joe with an oversized $16 billion check with confetti falling all around it. It reminds us, sitting in our cubicles and unproductive staff meetings, that there is a lottery, and only those who play it have a chance to win it. And for most people, to buy their lottery ticket, they have to walk away from what they're doing now.
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