Neeraj Arora, Vice President of Whatsapp, was interviewed at the World Government Summit by Lubna Bouza. Lubna did a great job putting Neeraj on the spot several times. Though not the most interesting interview with a VP at a startup, we recommend the talk.
At a time when heads of multi-laterals are spending time with technology innovators -World Bank President Kim spends time with head of Amazon web services and interviewing Airbnb Co-founder Joe Gebbia- there is a role for WhatsApp in assisting small businesses and promoting economic development. Would have been good to see such topics discussed in the interview with Neeraj.
- Gallagher, Billy, How to Turn Down a Billion Dollars: The Snapchat Story
“The manner in which Facebook decided WhatsApp’s value was equally worrying. In 2013, Facebook acquired a Tel Aviv– based mobile-analytics company called Onavo. Onavo made a free app called Onavo Protect that creates a virtual private network, or VPN, to encrypt internet traffic. Because Onavo Protect handled users’ internet traffic, it could create a log of users’ action on Facebook’s servers; Facebook’s product teams could then look at detailed information, like how frequently and for how long people are using specific apps, from this aggregated data. If apps didn’t encrypt their data, Facebook could see user behavior as granularly as the number of photos the average user likes per day.
Apple and Google can monitor user activity in a similar way because they own the mobile platforms in iOS and Android. This is just one of the major advantages that comes with owning the platform, which is why Facebook and Amazon have both tried to make phones. With Onavo, Facebook managed to capture this data advantage without owning the operating system. From Onavo’s data, Facebook saw that WhatsApp was installed on 99 percent of Android phones in Spain; this unique data helped drive its aggressive pursuit of WhatsApp, and promised to inform its acquisitions and product strategy in the future.
I was at the Tuck School of Business at Dartmouth, talking about the difference between price and value. I built the presentation around two points that I have made in my posts before. The first is that there are two different processes at work in markets. There is the pricing process, where the price of an asset (stock, bond or real estate) is set by demand and supply, with all the factors (rational, irrational or just behavioral) that go with this process. The other is the value process where we attempt to attach a value to an asset based upon its fundamentals: cash flows, growth and risk. For shorthand, I will call those who play the pricing game “traders” and those who play the value game “investors”, with no moral judgments attached to either. The second is that while there is absolutely nothing wrong or shameful about being either an investor (No, you are not a stodgy, boring, stuck-in-the-mud old fogey!!) or a trader (No, you are not a shallow, short term speculator!!), it can be dangerous to think that you can control or even explain how the other side works. When you are wearing your investor cape, you can be mystified by what traders do and react to, and if you are in your trader mode, you are just as likely to be bamboozled by the thought processes of investors. So, at the risk of ending up with a split personality, let me try looking at Facebook’s acquisition of Whatsapp for $19 billion, with $15 billion coming from Facebook stock and $4 billion from cash, using both perspectives.
On a typical day in January, more than 18 billion messages were sent through its network, two billion more than in early December — and a whisper away from the 19.5 billion sent daily via SMS.
Because some messages went to multiple recipients, that amounted to 36 billion daily messages received. Some 450 million people are active monthly users (including a quarter of the UK population), up from 400 million in December, 300 million last July, and 200 million last January. That “active” sets WhatsApp apart from many big-number competitors: as Koum huffed on Twitter last May, “Comparing total registered users and active users is like comparing Ferrari 250 GTO with a skateboard.” And most of them are paying a pound, a euro or a dollar as an annual fee.
How did an avowedly non-technical founder build a product that, at current growth, is on track to cross a billion users early next year? How, in a market saturated with mobile-messaging apps, has it stayed ahead of Apple’s iMessage,Tencent’s WeChat, Facebook Messenger, Snapchat, LINE, Kik Messenger, Kakao-Talk and more — and all with a staff of just 50?
THE FOUNDERS’ INSISTENCE ON FOCUS “The F-word here is focus,” Koum says. “All software bloats to the point when it sends and receives email. Jamie Zawinski said that. The difficult part for us is adding features without making the product more complicated.” Acton adds: “People ask for a desktop version, for user names — but we focus on the utility of the app, its simplicity, the quality of the service.
Ads, games, gimmicks — that stuff gets in the way. We don’t want to build a hookup app so you can find someone weird to talk to.
It’s not what we’re about. We’re about your intimate relationships.” When they add new features, it is only after intense discussion and experimentation, and a conviction that execution will simplify rather bloat the service. For the recently rolled-out push-to-talk voice messaging, it takes a single tap to record and send a voice message; to play it, a phone will automatically switch from speaker-mode to soft volume when its proximity sensor detects that it’s being held near an ear.
When Facebook acquired WhatsApp for $19 billion in 2014, the companies said they wouldn’t put ads in WhatsApp because it would degrade the experience. But it also ditched its $1 annual subscription fee, leaving few monetization options beyond charging businesses for tools. The introduction of display ads and sponsored messages to Facebook Messenger may indicate a relaxation of WhatsApp’s stance against ads.
With over 1.3 billion monthly users and 1 billion daily users, WhatsApp has reached the massive scale necessary for it to earn significant revenue even from light advertising. Its Snapchat Stories clone WhatsApp Status now has 250 million daily users, and could host vertical video ads between friends’ content the way Instagram does. It could also insert display ads into the inbox like Facebook Messenger.
9. Galloway, Scott. The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google
Any firm that begins to show the potential to bother the Four is acquired — at prices lesser companies can’t imagine. (Facebook paid nearly $20 billion for five-year-old, fifty-employee instant messaging company WhatsApp.) Ultimately, the only competitors the Four face are . . . each other.