What would life be like without WhatsApp? The Internet communication service, founded only eight years ago by Jan Koum and Brian Acton, has already vastly replaced old-school SMS communication as well as non-Internet calling and is nowadays among the under-18 generation the preferred alternative to Facebook and by corporate employees higher valued than Email messaging for informal communication. Whatsapp’s user growth rates are astonishing, increasing somewhat linearly from 500m in April 2014 to 1.2bn in January 2017 (Source: Statista). Facebook’s acquisition of WhatsApp in October 2014 was initially scrutinized by investors, sending the stock down by 6.7% within two days of the deal announcement (Source: Yahoo Finance) – but investor sentiment about the strategic fit seems to have changed 180 degrees, boosting Facebook’s stock price to new all-time highs month after month. Mark Zuckerberg and Jan Koum have expanded Whatsapp from a 55-men organization in 2014 (Source: BusinessInsider) to a global Facebook subsidiary service with nearly 500 employees in 2017(Source: Linked) – however, considering the lack of innovation and updates in the app, I was wondering: what are WhatsApp employees doing all day?
Startups dominantly hire employees for one of three roles; sales, IT specialists, and business development. Considering the immense user growth and the expansion to many new markets, Whatsapp’s sales force must be up and running. Yet, selling and expanding the most popular social media network is highly scalable and requires much less manpower than doing door sales for hoovers or charity funds. The tech team continuously needs to maintain and improve the IT infrastructure, so that the server capacities can sustain the demand from an increased user base. However, this task is largely overlapping with the duties of Facebook’s teach team and cost synergies from a reduction of the tech workforce were a dominant rationale for the Whatsapp acquisition (Source: Fortune). This leaves us with business development. Indeed, Whatsapp has a high and pressuring need for filling such positions with skilled and innovative characters, since it has yet failed to report a positive bottom line. The company’s newest strategy is to establish Whatsapp as a corporate messaging tool and to charge companies for a business-optimized version. Even though this may be a very reasonable step to finally monetize the social communication service, I highly doubt that it requires a team of 100+ employees to implement this strategy.
Personally, I consider it intuitive that a company in the stage and environment of WhatsApp has a large business development team – however, I am doubtful whether a complete focus on monetization is the appropriate strategy. Given its role as market leader and its power through very positive networking effects, WhatsApp seems to underestimate the threat of new entrants – but advancing technology and new business models do challenge WhatsApp’s dominance. To give you two examples, the team communication application Slack has continuously improved its customer value propositions and recently achieved an increased valuation of $790m and the LA-based startup Dust, advised by Mark Cuban, offers a blockchain messaging platform that brings data security to a new level and allows its users to delete messages from the communication history. In order to stay ahead of its competition, WhatsApp should not only work on monetization strategies but also continuously improve its functionalities in order to keep its user base satisfied. Since sharing is caring, I want to use this occasion and propose two ways to augment my user experience: first, allow me to set reminders and calendar entries for my friends; second, enable the copying of chat histories that can be sent as a scroll-down item in lieu of several screenshots of a chat that you want to share with friends. These ideas represent no big innovation, but signify the main message of this blog post: In order to make monetization work, it needs both a good strategy and a large network. While WhatsApp currently searches for the first item, it should watch out to simultaneously maintain its exiting. In that sense, I suggest WhatsApp to direct a larger fraction of its workforce to maintaining and improving customer relationships – then I may eventually also understand what its nearly 500 employees are working on all day.
Hi David, I really like your blog, and I was really surprised their current strategy is to invade corporate message system, and I simply consider that the current WhatsApp app does not fit as a corporate message tool at all. Even though it could be used on laptop webpage, the fact that it is a mobile-based app is very inconvenient for employees to communicate daily. It is also not secure or privacy-protecting enough to be a corporate message tool. They still have a long way to go even just as a individuals message app.
Here I also want to share some of my thoughts with my own experience. As a user on both WhatsApp and WeChat, I could really say that WhatsApp is still a market leader in the west world mainly because of the network effect it gained, as there are much more advanced functions that WhatsApp can still involve.
For example, simply introducing a search function enabling users to search some specific history conversation will make my life much easier when I don’t remember my friend’s address she told me on WhatsApp a year ago. Also, it is very inconvenient that users always need to back up the conversations and contacts somewhere, otherwise if the phone is lost or broken, the user simply loses all historical data. And if a user changes his phone number, all his contacts have to change the number on their phone in order to have him as WhatsApp contact. These are just some disadvantages compared to WeChat. Not to mention some other small gadgets and customised emoji that WhatsApp could introduce, there are still so much WhatsApp could improve.
Hey, thanks for the interesting and thoughtful comment. You definitely mentioned several good points 🙂
David, good point on the competitors of Whatsapp. In my opinion Whatsapp will have to do extensive research on data security and end-to-end encryption, in order for their messages to be secure. Apparently undelivered messages can be read. This even got a greater issue when Facebook took over Whatsapp, as together they know an tremendous amount of information about their users (Guardian 2014). Therefor, there might come a time the for a new entrant to make its way into the free messaging and calling market, especially as Whatsapp does not really take this option into account. Especially as you mention Whatsapp wants to establish a corporate messaging tool, security is of fundamental importance.
A safer alternative to Whatsapp is using Apple’s iMessage, as it uses end-to-end encyrption. Both Facebook Messenger and Google Allo do not use this either (Guardian 2017). Therefor I think iMessage should start tapping into the market and developing a feature that makes it easy to make communication groups. As this is one of Whatsapps most preferred features and selling points (Whatsapp 2017).
Therefor having an option tin Whatsapp to delete your sent messages like you said David, seems like a great idea to increase Whatsapps security. Being able to delete a message you sent in a flash of lunacy, would be a compensation for the lack of end-to-end encryption of safety to the users.
References:
Gibbs, S. (2017). Six alternatives to WhatsApp now that Facebook owns it. [online] the Guardian. Available at: https://www.theguardian.com/technology/2014/feb/20/six-alternatives-whatsapp-facebook [Accessed 4 Oct. 2017].
The Guardian. (2017). Should I be worried about WhatsApp security?. [online] Available at: https://www.theguardian.com/technology/2017/jan/13/should-i-be-worried-about-whatsapp-security [Accessed 4 Oct. 2017].
WhatsApp.com. (2017). WhatsApp Features. [online] Available at: https://www.whatsapp.com/features/ [Accessed 4 Oct. 2017].