What's Up with WhatsApp? - Start-up Week

ADDITIONAL CONTRIBUTORS Tanya Silverman

By Tanya Silverman

“It’s a pretty interesting space,” Marcos Sanchez, VP of Global Corporate Communications at App Annie, says about today’s mobile messaging start up sphere, “and of course it all got a lot more interesting with the WhatsApp acquisition in there and their large price tag.”

Headlines exploded last month when Facebook bought WhatsApp for $19 billion. A popular application for smartphones, WhatsApp users can send texts and photos without paying for SMS. The service is free for a year and then charges a $1 annual fee thereafter. WhatsApp also prides itself on not selling annoying ads.

In terms of the company’s competition, other big players that Sanchez mentions include Viber, WeChat, Line, and Kakao.

“And you’ve got Tango, which is one of the latest 280 million dollar mega round,” Sanchez says. The Albibaba Group–a Chinese company not familiar to most in the states but is internationally recognized as the world’s second biggest tech company, only behind Google—recently invested that hefty sum into Tango, a free service that offers mobile users messages, video & voice calls, games, music, photo-sharing, and friend-finding opportunities.

Recently, Sanchez was featured in a USA Today article about the Alibaba’s immense investment in Tango. Another interviewee for this piece, SOSventure Investment’s Sean O’Sullivan, was quoted as saying “It’s a bubble when three-person start-ups with no revenue are getting valuations of $10 million.”

Sanchez reacts to the “bubble” metaphor–to describe big companies investing in messaging services–as an oversimplification.

“These aren’t three-person companies, these are more established companies with large user bases,” he tells BTR. Plus, we should consider that each company has a distinctive user base that distinguishes it from the other.

Sanchez compares the current investment and acquisition tech trend more to a cyclical model, explaining it’s on an upswing as of late.

That’s now, but what’s up for WhatsApp’s future? Will Mark Zuckerberg’s bold speculations about the “extremely high-quality product with incredibly strong engagement and rapid growth” prove legitimate?

Considering WhatsApp’s significant user base–currently 450 million–Sanchez sees promise, as that adds to Facebook’s “significant strength” and existing base with over one billion people.

“They’ll of course be adding to the product and doing quite a bit to market it,” Sanchez tells BTR. “The WhatsApp you see today might look different than the WhatsApp you see in six months.”

Zuckerberg also explained last month that while WhatsApp hasn’t taken off so much in the United States, it’s already successful in several places internationally, like India, Latin America, and Europe.

Perhaps Zuckerberg did not mention marketing prospects of WhatsApp over in Asia–the continent that holds the largest mobile an online population–because other local companies have thus dominated the mobile messaging scene. Chinese-based WeChat (which is modeled after WhatsApp) is very popular within its home base, and the same goes for Kakao in South Korea, and Line in Japan. While all four of these companies are battling over who will be the big player for Indonesia, Line is successful in Taiwan, while WeChat just established an office in Malaysia.

It seems like WhatsApp, at least initially, wanted to keep things simple, marking their platform with the slogan, “No Games, No Ads, No Gimmicks.”

However, simplicity is not the ideal that all these companies are after. Kakao offers “An endless galaxy of games,” to appeal to its South Korean audience, for a culture that’s famously receptive to video games. Line, which also offers games, is chock full of thousands of different spazzy emoticons and cartoon stickers.

WeChat experiments with ways to stimulate the burgeoning Chinese consumer culture, like partnering with Burberry to offer users fancy custom virtual plaques, or work with McDonald’s or PepsiCo, figuring out ways users can utilize mobile voice capabilities to format jingles.

Sanchez mentions some other functions that messaging apps might seek to attract customers in their lifestyles, for instance, connecting to their bank accounts or paying for restaurant bills.

Like any communications advancement, WhatsApp, and all other players, will have to learn how to filter through the successes of past platforms while adapting to new circumstances for consumers.

“Fundamentally, we still want to talk to each other and we still want to write to each other. Those are the two most important things,” Sanchez reasons. “Whether we’re doing that via a phone conversation or… in a walkie-talkie like version, whether it’s phone via voicemail, via text or instant messenger, [they are] all ways that are molding together.”

For more, check out the interview with Marcos Sanchez on this week’s episode of the Third Eye Weekly podcast on BreakThru Radio.

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