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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

#241

Post by secfirstmd »

storgendibal wrote: post #201
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, an…

Personally I just wish less of our world class minds were working at huge, de facto advertising companies thinking about how to monetise/track the flow of information, sneak an microsecond advantage on the stock market etc and more were solving more important stuff like climate change, disease and democracy/human rights being under retreat.

Lets be honest here, Whatsapp gathered hundreds of millions of users with a tiny team. Signal and Signal protocol made Whatsapp secure with less than 10 people on the team full time. So less than a hundred staff, 1.5 billion per year is more than enough resources to add get most of the benefits of Whatsapp to humanity. Leaving plenty of engineers, MBAs and who ever is left to go do more useful stuff.

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

#242

Post by ian0 »

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…

It didn't have to get everyone to pay $1 a year. It just had to get enough to pay the rent and know that eventually with improvements in payments it could get most on board a paid plan. I presume thats what they had in mind at the time, the billing was very loose, I cant recall anyone being blocked for not paying, at least here (SEA).

And its feasible. Back in the day there were carriers open to chat apps (eg BBM) and google play is one of the first merchants on direct carrier billing, despite every telco trying to control app marketplaces.

Fast forward to today and there are dozens of agent networks and wallet platforms for underbanked users and improvements in banking and DCB across the board. They wouldn't have had anywhere near 100% paying customers but entirely possible to get a majority.

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

#243

Post by richardw »

JumpCrisscross wrote: post #116
freyr wrote: post #111

Earlier quoted context omitted.

Not really, if the amount of disposable income is the deciding factor.

> if the amount of disposable income is the deciding factor That's a big if, though. I wouldn't pay $1/year for WhatsApp messaging as a consumer. But I have a lot of disposable income. When you have a free substitute, these signals get mixed up.

There are massive variations in what people get from it and what they'll pay.

I live in South Africa and I'd pay $50 a year. Throw in a few paid-only features and I'd be quite happy.

All my friends use it. We use it at work for many teams. Video call with family in Australia. Audio with friends in Toronto or Chicago via Bluetooth while driving. That feels like magic. Better quality audio then the cellphone network and just works.

I have Skype, messenger, telegram, had Viber, tried WeChat. Barely use any. WhatsApp is like SMS, focused on my phone contacts, but has groups, audio, video, photos. That's all I want.

Here's an article discussing a local cell data bundle. It's still $1-3 per month. Poor people are willing to pay that because of the better value compared to SMS and voice call costs.

https://www.iol.co.za/business-report/technology/mtn-hikes-u...

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

#244

Post by sangnoir »

bredren wrote: post #234
nickthemagicman wrote: post #217

Earlier quoted context omitted.

They're an outlier by not being greedy.

Craigslist is a benevolent dictator, but it is no saint. Craigslist is greedy in a strange way. Craigslist is greedy over their the simplicity of their product and desire to hold on to their turf. The company makes more than enough money to offer all kinds of improvements that need not markedly change how the marketplace behaves. These features would not exploit the user or the user's experience. (In the spirit of th…

> When someone comes along and tries to ship the same thing, improved, and break TOS to get exposure to CL users

Well, that's an incredibly euphemistic take on it, if nothing else. Let's see someone try to "get exposure to" (scrape) Facebook's user graph for a competing product and see how long that attempt would last. I don't understand how people can feel entitled to data that CL gathers: obviously they'd be protective of it as it's their secret sauce/crown jewels.

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

#245

Post by kikoreis »

totalZero wrote: post #205
kikoreis wrote: post #202

Earlier quoted context omitted.

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…

I'm from Latin America, and I can't agree with that: lower middle class people don't tend to have access to credit cards. Besides, even for people who do have credit cards, the friction of using one for payment is non-trivial.

The reason everybody uses WhatsApp is that they never paid for it -- in fact neither I nor anybody I asked can actually recall ever seeing payment UX on the app.

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

#246

Post by kikoreis »

ian0 wrote: post #242
kikoreis wrote: post #202

Earlier quoted context omitted.

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…

It didn't have to get everyone to pay $1 a year. It just had to get enough to pay the rent and know that eventually with improvements in payments it could get most on board a paid plan. I presume thats what they had in mind at the time, the billing was very loose, I cant recall anyone being blocked for not paying, at least here (SEA). And its feasible. Back in the day there were carriers open to chat apps (eg BBM) an…

Your post made me wonder whether I'm missing something obvious: what sort of global wallet platforms exist for underbanked users?

Credit cards are the only platform I know to work reliably, but most people don't have them, and they are horrible to use online. If you don't have a credit card, what online, global alternatives exist? Paypal I guess, but using it is even harder than using a credit card..

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

#247

Post by 1k »

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,…

IIRC for me it was a one time fee of 1 USD.

They implemented this fee whenever they were growing too fast and needed to slow they growth to keep their servers in check. At other times it was free.

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

#248

Post by akchin »

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,…

I don’t understand the MBA hate here. The WhatsApp founders don’t have MBAs and sold their company to Facebook for 19 billion. They wanted to be that rich. Nothing to do with MBAs.

Also let us be clear. Engineers are no saints either. Case in point Anthony Levandowski of Otto. Orchestrating one of the shadiest acquisitions to make a quick buck.

Folks have pointed out below that the issue of growth is not necessarily an mba or maximizing shareholder thing. In some competitive environments if you don’t do it, you will die. That said one can always do what DHH did with 37 signals...that was a specific choice. Nothing to do with having an mba or not.

One has to look at things with nuance, not just be black and white.

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

#249

Post by yalph »

baddox wrote: post #215
concretethrow wrote: post #207

Earlier quoted context omitted.

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 an…

That calculation sounds extremely obvious to someone with no MBA or sales/marketing experience whatsoever. I’m confident that MBAs or experiences people in those roles do a heck of a lot more than calculations like that.

I am not that confident.

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

#250

Post by yalph »

pishpash wrote: post #147
rm_-rf_slash wrote: post #126

Earlier quoted context omitted.

It could very well be the engineers looking to make a lot of money with their stock options after all their hard work.

It could very well be the MBA's who designed the incentives program.

It is the Boardroom === MBAs.
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