Office Hours: The Future of WhatsApp Monetization, Should I Renovate My Home or Move? and How Scott Approaches Giving Money to Family and Friends

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1:04Welcome to the Prop 2 Pod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehours at prof2media.com. Again, that's officehours at prof2media.com. First question. Hey, Prof. This is Anthony from Atlanta, now living in Italy. My question is about your 2024 predictions of Meta's growth through WhatsApp. Now living outside of the U.S. myself, I see that WhatsApp is used pretty much everywhere, And I love it. I use it every single day.

1:34But when I go back to the States, I notice that basically half the people don't even know what it is and nobody uses it. In the U.S., we're still so tied to iMessage and just SMS. I wonder if the growth of WhatsApp is going to be limited despite the fact that there's 3 billion users. I imagine most of that is outside of the U.S. Will that growth be limited to outside the U.S.? Or will Meta make a push to have WhatsApp grow within the U.S.? Which I hope so, because I love it, as long as they do it in a non-nefarious way. Love to hear your thoughts. Thank you. Happy New Year. Ciao from Italia. Anthony from Atlanta, congratulations on the lifestyle arbitrage.

2:10I'm fascinated by this notion of arbitraging your quality of life. I invested with this guy who helped me buy some claims against bankrupt crypto platforms, specifically FDX. And he's a super intelligent, smart guy. And he moved his family to the small town in Italy. And he said, OK, imagine a really nice life for 60 percent off. And I'm just fascinated by that. And I think the two cities that are going to register the biggest lifestyle arbitrage are Mexico and Madrid. I think I'm meeting a lot of people that are moving to both those nations and with remote work. And it sounds like I'm curious if that's what you've done in Italy.

2:44And Italy's economy has been so stagnant that it really hasn't had the same sort of price appreciation in real estate that some of the other nations have registered. Okay, back to WhatsApp. As a reminder, Meta acquired WhatsApp for$19 billion in 2014. I don't think we should be talking about whether or not it's a growth issue. I think the issue here is that not that it's not about growth, it's about monetization. With 3 billion people, you don't need growth. I mean, you've kind of got everybody. Effectively, the way I think of WhatsApp is it's the world's largest telco. And when you look at AT &T and Verizon trading, and I don't know if they trade at$70 or$100 billion, you think, okay, shouldn't this company be worth more?

3:23But what it needs to show is revenue growth. The head of WhatsApp, Will Cathcart, is that his name? Cathcart? Cathcart? I think of catheter. I think of catheter anyways. By the way, my dad constantly tells me that whoever invented the catheter should get a Nobel Prize. And also, speaking of my father in 93, he has a new friend, new friend, a guy named Max. Send me a picture. Never too old to make more friends as a dude. Although it gets harder for us, And that literally made my weekend. Anyways, he told the head of WhatsApp said, the goal is to make WhatsApp a household name. The conversation has moved from WhatsApp as the app I use outside the U.S.

3:59when I travel. It's becoming significantly more mainstream. And I agree with that. How has the app evolved? Features, including channels, let people follow status updates from influencers and stay on top of news from organizations, including The New York Times. Businesses now have access to paid tools to communicate with customers through the app. And WhatsApp also has one of the world's most used stories products called Status, which allows users to post temporary text, photo, and video updates. The amount of users continues to grow. Now more than 2 billion people use WhatsApp, up from 450 million when the app was acquired.

4:30Is it 3 billion or 2 billion? I don't know. I don't know. I thought it was 3, but no, this says 2. Meta hasn't reported exactly how much revenue WhatsApp generates, but in their Q3 earnings report, they said the family of apps' other revenue was 293 million in Q3, up 53%. But still at$1.2 billion, that's just nowhere near what they get from Instagram and the core platform. And that was driven by revenue growth from their WhatsApp business platform. So I just think you're going to see, I think they're going to figure out advertising and new features and they're going to start charging for it. And there'll be an outcry from this vocal minority of people who want to keep WhatsApp free or get sick of the ads.

5:05But I would imagine the data and the GPS location and if they implement AI and basically they find out that you're using WhatsApp on your way to Italy and they can start sending you ads for cool Italian hotels and yeah, it's an evaluation of your privacy. But so what? People have voted with their activity, their time and their wallets that they're willing to give up a certain amount of their privacy in exchange for utility. And WhatsApp, I would argue, I would argue as a function of utility to lack of monetization or lack of tax on you, that WhatsApp is the mattress in a box company that's giving you a thousand dollar mattress for 300 bucks or when Uber was letting you take an escalator to the airport for 18 bucks and it was costing them 100.

5:48WhatsApp right now, in my view, is the most under-monetized technology platform in the world. And they're going to start to bring that utility in line with its monetization. And I think this is going to be one of the fastest growing revenue lines in technology. WhatsApp is the juggernaut largest telco in the world. It's not about growing the user base. It's about monetization. And I think they're about to turn on those jets. And Mark Zuckerberg is arguably, there is no one better in monetizing attention than Mark Zuckerberg. He is the attention wizard, if you will. Thanks for the question. Question number two.

6:24Hi, Professor G. I heard your call to action for questions related to things besides career advice. So I have a question about home renovation. I've been in my home for about seven years now. My husband and I bought it off foreclosure. It had holes in the ceiling and missing plumbing. We did a lot of that renovation work ourselves to fix those things, but the house still needs a lot of work. The kitchens and some of the bathrooms are over 20 years old, and the siding and the roof probably need to be redone within the next five to 10 years. We are, however, in one of the best areas for public school in the country, and the house is worth over a million dollars, probably even in the state it's in.

7:16But I'm wondering whether it makes sense for us to put the money in to renovate this house or to move somewhere else that is already done. It's going to work better for our family. Thanks for the question. I love this. I don't talk about this a lot, but one of my investment strategies, I just didn't know where to put my money last year. And And for a few years now, I've had such a run-up in tech stocks that I think I'm trying to be smarter. I'm trying to not be as concentrated in kind of eat my own cooking or take my own advice. And I'm trying to diversify. I'm at a point in my life where if I lose 90 % of my net worth, which I have done twice before because I was so over-invested in tech because that's what I know, I just don't want to go back there.

8:03And I'm running out of time to make it back. So I'm trying to diversify. And one of the ways I'm diversifying, and also my second objective is I really want to enjoy my remaining time on this planet. I am 49, 59, we're just going to say 49. Nancy Reagan here, Nancy Reagan. But I read obituaries. I'm a bit obsessed with death and macabre, but it is sort of a point of inspiration for me, realizing that I believe our time here is finite. So one of my investment strategies is I have been buying homes in really wonderful places. specifically, and this is not great, but I think income inequality is only going to get worse around the world.

8:41As someone who studies economics and likes to think they understand trends and demographics, I think governments all over the world have been weaponized by rich people. Rich people have sort of run away with the amount of power they have. We were talking about Bill Ackman as an activist investor going after social issues and how rich people are now filling the void of government simply because lower taxes mean less power to governments and more power to people. but I just see it continuing to get worse. So what does that have to do with real estate? I have bought homes in London, Palm Beach, New York, and Aspen, kind of what I call a 0.1 % real estate strategy, because I think the crazy rich people are only going to get crazier and richer.

9:21But what I do is I buy homes that need to be renovated. And I take advantage of another flaw in our species, and that is these homes take... My home in Palm Beach took three years to renovate, and it takes capital. I have capital, and also I have patience. One of the best ways to build wealth for a family and a couple, if you have some capital, is to buy a place, fix it up, sell it. And because if you're married, you get up to$500 ,000, the first$500 ,000 in gains are tax-free, which is incredible, as long as you own it for two years, and then wash, rinse, and repeat. So I go, I'm doing what you do.

9:56I'm doing, I buy homes, I fix them up, and then I get to enjoy them for a little while, and then ideally I'm going to sell them. Generally what I have found, generally what I have found is it goes to specifically your question, that you are better off staying and fixing it up and making it buyer-ready, and then either selling it or staying there and enjoying it and enjoying your life, if you will. Why? Because$100 ,000 of well-spent renovation will usually get$150 ,000 to maybe even$200 ,000 in incremental value. And that is there are a lot of people out there, people have more money than time right now across America, especially at a home that's a million dollars.

10:31And that is people would rather pay 100 or 200 grand more than do that shit themselves. They don't want to wait a year or two years to fix the plumbing. Typically, the best return on investment, the best return on investment is investments in kitchen and bathrooms. But you should absolutely, unless I'm missing something here, maybe even take out a second if you need the money. Interest rates are starting to come down. and be on site, actively manage, hire and fire those contractors and show up and ask why the tile and the seam on the soapstone on your kitchen counter isn't perfect. Be on site, be all over your vendors, price them out.

11:09You're just, there's nothing like an owner at the home managing vendors and service people to get good work at a good value in my view. We have one quick break before our final question. Stay with us. What do walking 10 ,000 steps every day, eating five servings of fruits and veggies, and getting eight hours of sleep have in common? They're all healthy choices. But do all healthier choices really pay off? With prescription plans from CVS Caremark, they do. Their plan designs give your members more choice, which gives your members more ways to get on, stay on, and manage their meds. And that helps your business control your costs, because healthier members are better for business.

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13:08Welcome back. Question number three. Hey, Prof. G. My name is Amir. I live in New Hampshire. I don't recall if you have any siblings. I think you've spoken about a sister once or twice, but my question is about the obligation of siblings to each other financially. You've been eloquent and open about your relationship with your mom and your dad, and your views on them are quite clear. What is your point of view about the obligation to look after your less fortunate siblings financially? My wife and I are both successful and financially secure, but have siblings who have not been as fortunate. We often feel torn in terms of having more versus our siblings.

13:47We do help them, but probably not to the extent that we could. Would love to hear you think about this issue. Thanks. Big fan of the shows, all of them. I love this question. People talk about sex now very openly. People talk about political rifts. They talk about mental illness. I mean, there are very few taboos anymore. One taboo, people don't talk about money. They don't talk about openly and honestly how much they have or don't have, how it's impacting their relationships, their marriage. And I think it's important to talk openly about money. This is a deeply personal question, and I think it's something that I don't think there is a right way.

14:26I think there's just got to be your way and what you and your wife feel comfortable with. My drive for money, it's all about women. When I was younger, I figured out that guys with money were able to attract a broader selection set of mates. And I wanted to be one of those people. I wanted to find someone more interesting and better looking than me. And that meant as a guy, you had to make money. And then the real motivation for making money and the requirement and the sacrifice required to make a lot of money was I wanted to take care of my mom. And I financially support my father. Not because he doesn't have money, but he has such a weird relationship with money that the idea of him telling him he's now spending money on his assisted living facility would just freak him out so much.

15:16It would cost him so much stress and agita that it's easier for me just to pay for it. And my relationship with my sister, my sister is very successful financially. Her and her husband are successful. But on occasion, I have given, I don't want to say help them because they never ask and they don't need help, but I will do stuff for them that involves money. And I do it for me. I just find it so rewarding. It makes me feel strong. It makes me feel masculine. There's probably a power dynamic there, which is, I don't think I demand any. I don't think I use it for control. But I'm doing a lot of virtue signaling right now here.

16:03But anyways, I'm going to. I spoke to a former employee of mine that used to work with me at L2, and she's going through a lot, dying mother, new job, two kids, you know, typical sandwich generation that kind of falls to the woman who's both working, taking care of aging parents and kids. And she was just the star at this company at L2. And just in the middle of the conversation, I said, would it help if I gave you some money? And I know how crass and weird that sounds, but I find that money is nothing but the transfer of work and time to people. And what more wonderful thing to give to people you care about than work and time and money and make their life a little bit easier.

16:50So I'm blessed in that my sibling is really successful, so she's never needed money. but I like on occasion having the opportunity to give money. I think it's incredibly rewarding. And to have money and financial security in our society is to have people want to help your kids. It's to give you health care. It's to create more options for you. So to a certain extent, to have money in America is to be loved. So to a certain extent, if you can give money to people and help them, you know, you're sort of, I think it's sort of an expression of love, if you will. They say don't lend money to friends or whatever.

17:25I think that's total bullshit. But just some best practices are what I'll call my practices. I don't loan money. Actually, is that not true? A friend of mine just brought a million bucks from me. That's not true. But this was to renovate a house. I'll get it back. He lent me a million dollars about 10, 15 years ago. So it was just the right thing to do. In general, though, when my friends are not doing well or I have an opportunity, I don't loan it. I give it. I don't give them money that would have an impact on my life. None of this money. I assume I will never get it back. I don't want to resent them.

17:57I don't want them to feel, I don't want it to strain the relationship. So if you're in a position, and this is a position of privilege, but if you're in a position to help your siblings, what I would suggest is you come up with a reason to give them the money. You know, you can give away up to, I think it's$15 ,000 to$16 ,000 as a gift with no taxable ramifications to them. So to say to them, look, we've had a great year. Would it help if we gave you, and you could give up to, if there's four of you,$64 ,000, I believe, tax-free to them? What I would not do is start giving them money regularly because you don't want them to become dependent upon it.

18:33I'm not even saying do it for them. Do it for yourself. It feels just fucking awesome. Thanks for the question. That's all for this episode. Again, If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com.

18:56This episode was produced by Caroline Chagrin. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show. The pumpkin spice latte is back at Starbucks. Crafted with our signature espresso and real pumpkin sauce. Then topped with whipped cream, cinnamon, and nutmeg. The PSL. Get it while it's hot or iced. Only at Starbucks. Support for this show comes from Ollie. Dogs deserve the best, and that means fresh, healthy food.

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