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Facebook’s New Message to WhatsApp: Make Money

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Re: Facebook’s New Message to WhatsApp: Make Money

#201

Post by storgendibal »

russellbeattie wrote: post #78

Whatsapp had a great business model: $1 a year. With their current 1.5 billion users, that's nothing to sneeze at. It doesn't cost them $100M a month to provide the service. I wish more companies were like Craigslist - happy to make an great profit and a lasting business by providing basic information services for a reasonable price. Instead, a bunch of MBAs want to rule the world by focusing on growth at all costs,…

Engineer with an MBA here. My two cents: Back when I was writing code, my worldview was that if engineers ran every company, then the world would simply be a better, more rational place. Because engineering is hard and everything else is easy/squishy/learnable.

During my b-school classes, it dawned on me that things are much more complicated than I had thought. Marketing and sales are very hard, very quantitative, and can make or break a company. Corporate planning from a cost / revenue perspective is super critical. Steering a large organization and navigating personalities and power structures in such a company is difficult and squishy.

Certainly, some MBAs are full of sh but I've also run into plenty of engineers who are full of sh. I think it's hard to stereotype. When I first started business school I thought everyone would be the stereotypical investment banking jerk. Instead, I was pleasantly surprised that most people were fun, very sharp, pleasant, intellectually curious, and they really respected folks with a technical background. Exposure to them broadened my own worldview in a number of different ways. Sure, you don't need an MBA to run a company. But you also don't need a CS degree from MIT to be an awesome engineer.

Re: Facebook’s New Message to WhatsApp: Make Money

#202

Post by kikoreis »

russellbeattie wrote: post #78

Whatsapp had a great business model: $1 a year. With their current 1.5 billion users, that's nothing to sneeze at. It doesn't cost them $100M a month to provide the service. I wish more companies were like Craigslist - happy to make an great profit and a lasting business by providing basic information services for a reasonable price. Instead, a bunch of MBAs want to rule the world by focusing on growth at all costs,…

To me there was always a fatal flaw in WhatsApp's original business model, namely, lack of a viable payment method that could scale to the userbase they were targeting. Most people using WhatsApp don't have a credit card. Telcos obviously have a way to charge their customers but beinf an OTT service meant they wouldn't be incentivized to help WhatsApp kill SMS revenue. An exit to FB ended up being the obvious decision.. but it had to be clear at that point that the plan has to be monetize users through ads.

Re: Facebook’s New Message to WhatsApp: Make Money

#203

Post by downandout »

russellbeattie wrote: post #78

Whatsapp had a great business model: $1 a year. With their current 1.5 billion users, that's nothing to sneeze at. It doesn't cost them $100M a month to provide the service. I wish more companies were like Craigslist - happy to make an great profit and a lasting business by providing basic information services for a reasonable price. Instead, a bunch of MBAs want to rule the world by focusing on growth at all costs,…

Nearly all users got in during "free for life" periods. Whatsapp was never making anywhere near $1/user/yr. To give you an idea of just how few users were paying, in the first half of 2014, they had 450 million users and generated only $15 million of revenue [1]. Even if you annualized that to $30 million, that means about 6.7% of users were ever paying a fee to use it.

[1] http://time.com/3545911/facebook-whatsapp-earnings/

Re: Facebook’s New Message to WhatsApp: Make Money

#204

Post by Thiez »

jethro_tell wrote: post #182
wlesieutre wrote: post #86

Earlier quoted context omitted.

Glossing over the fact that they probably wouldn't have all of those 1.5 billion users if it had stayed a paid service. Even at $1, having to pay money pushes people off to other free platforms.

You, could do tiered models as well. At a billion users they were running 11 servers. Free with ads and data sharing, .25 targeted ads no data sharing, .50 geolocated ads only. $1 privacy + the standard. 1.50 premium extra storage or w/e

Those tiers wouldn't fly under the GDPR, at least not the free one.

Re: Facebook’s New Message to WhatsApp: Make Money

#205

Post by totalZero »

kikoreis wrote: post #202
russellbeattie wrote: post #78

Whatsapp had a great business model: $1 a year. With their current 1.5 billion users, that's nothing to sneeze at. It doesn't cost them $100M a month to provide the service. I wish more companies were like Craigslist - happy to make an great profit and a lasting business by providing basic information services for a reasonable price. Instead, a bunch of MBAs want to rule the world by focusing on growth at all costs,…

To me there was always a fatal flaw in WhatsApp's original business model, namely, lack of a viable payment method that could scale to the userbase they were targeting. Most people using WhatsApp don't have a credit card. Telcos obviously have a way to charge their customers but beinf an OTT service meant they wouldn't be incentivized to help WhatsApp kill SMS revenue. An exit to FB ended up being the obvious decisio…

I first started to use WhatsApp at the recommendation of a Paraguayan friend who lives in a small house outside of Asuncion. Her father drives a taxi and she drives a beat up car from the early 1980s. No idea if she paid for the app using a credit card but at least in Latin america, lower middle class people do tend to have access to such payment methods. My understanding has always been that WhatsApp encountered its first and biggest success in the third world, where mobile connections are spotty and average people at the time didnt want to pay for data plans and SMS packages. WhatsApp allowed people to pop into a wifi hotspot to check messages without any fees beyond the $1 for the app.

Re: Facebook’s New Message to WhatsApp: Make Money

#206

Post by rhizome »

xkjkls wrote: post #91
TillE wrote: post #89

Earlier quoted context omitted.

Apple and third-parties have obviously seen value in selling those stickers and crap. I think there actually would be a decent market for premium emoji. It's not too difficult to imagine all sorts of fun bonus features in a chat app.

For whom is that the primary business model, instead of an addition though?

Lots? Woudn't it fundamentally be a DLC strategy?

Re: Facebook’s New Message to WhatsApp: Make Money

#207

Post by concretethrow »

drb91 wrote: post #190
Smirnoff wrote: post #115

Earlier quoted context omitted.

Ok, I agree that some MBAs can be full of it but can we already stop this MBA hate on HN? I feel like lots of people here think that if you build something then customers will surely come. I've got a huge surprise for you. You will have to sell your product and some of the MBA's are really great at that. In B2B a single sale can make or break your company when you're low on cash. You do your job and let them do their…

> You will have to sell your product and some of the MBA's are really great at that. I'd bet that this is true of any degree. Not saying MBA providers don't teach useful stuff, but the degree is a terrible signal of quality--after all, it is by far the most popular graduate degree. I'd much rather work with someone who can state business options articulately and intelligently than someone with degree X; if this artic…

Here is a good example of what MBA's can do.

First, go to Disneyland and look at the ticket prices. They're really high, right? On a per-day basis?

So next you price out the season passes. You do the math and you find that if you are going 6 or 7 days in a year or less, you are better off without the season pass. If you are going 8 or more days ( for instance ), the season pass makes more sense.

So you do the math and think about it some more. 7 or 8 days sounds reasonable, my family will enjoy it, right?

The next thing you know, you are happily shelling out $1000 per family member, thinking of all the happy times you will have and all the money you are going to save.

Re: Facebook’s New Message to WhatsApp: Make Money

#208

Post by s73v3r_ »

Smirnoff wrote: post #115
russellbeattie wrote: post #78

Whatsapp had a great business model: $1 a year. With their current 1.5 billion users, that's nothing to sneeze at. It doesn't cost them $100M a month to provide the service. I wish more companies were like Craigslist - happy to make an great profit and a lasting business by providing basic information services for a reasonable price. Instead, a bunch of MBAs want to rule the world by focusing on growth at all costs,…

Ok, I agree that some MBAs can be full of it but can we already stop this MBA hate on HN? I feel like lots of people here think that if you build something then customers will surely come. I've got a huge surprise for you. You will have to sell your product and some of the MBA's are really great at that. In B2B a single sale can make or break your company when you're low on cash. You do your job and let them do their…

You're completely ignoring that them doing their job often means promising features that do not exist on a timetable that is nowhere near reasonable, thus forcing me to bail their ass out by working ungodly amounts of overtime, punishing me for no good reason.

"Finally, it's not MBAs who decided to focus on growth at all costs. It's the nature of the game."

It became the "nature of the game" because of them in the first place.

"Either you get to the top or your competitors will do that."

So what? In just about every field out there, there is room for more than one entrant.

Re: Facebook’s New Message to WhatsApp: Make Money

#209

Post by QML »

xkjkls wrote: post #163
sonnyblarney wrote: post #101

Earlier quoted context omitted.

Square and Whatsapp are basically not comparable business entities.

If WhatsApp decided to move to payments, it is the closest analog.

Wouldn’t the closest analog be WeChat? Square isn’t a messaging platform.

Re: Facebook’s New Message to WhatsApp: Make Money

#210

Post by rezashirazian »

anuragbiyani wrote: post #66
danirod wrote: post #14

Remember when WhatsApp required a subscription? One of the first changes made by Facebook after purchasing WhatsApp was to make it available for free. And now they're complaining they can't milk it enough? Oh dear. I know that a percentage of WhatsApp users would stop using the app if they started requiring a payment again –because apparently paying $1 per year for using an application on your $999 phone is outrageou…

You are completely mistaken if you think adding a subscription-only would not reduce usage of WhatsApp by 10x at least. I am an Indian (WhatsApp's biggest market by far), and know for a fact that hardly 1% of people using it right now in India would be able/willing to set up a payment system AND willing to pay $1 for it (which is not as inexpensive as you think) when there are so many free alternatives. And then it i…

How valuable is that type of market to advertisers anyways.
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