WhatsApp is Different

It has been over a week since Facebook announced its intentions to buy WhatsApp for about $19 billion (all told.) The news obviously generated a lot of debate and a lot of commentary filled the airwaves. The stock market more or less approved of the deal, giving Facebook stock and market capitalization the requisite bump it needed. I argued that it was an irrationally rational deal.

Since I started a new gig, I sort of ignored most of the published commentary. A couple of days ago in a conversation with my new colleague at True Ventures, Keila Fong, we started talking about how different really is WhatsApp that it is worth $19 billion to Mark Zuckerberg. So we ran some numbers and compared WhatsApp’s numbers to some of the other social applications.

These charts show that not only WhatsApp is different, but it is exceptional and did well to capture the moment (i.e., rise of the mobile broadband) near perfectly. They are also not just exceptional, they are a standout with highest rate of growth and getting to that point the fastest.

1. Peak Number of Monthly Active Users: This shows the peak number of monthly active users for a number of services/products over their lifetime. The data is from official sources when possible, otherwise the numbers are reported in press coverage; the methodology for calculating these numbers varies significantly and is often misreported (e.g., total users will be called MAU), but even only with directional data, the differences in scale are still clear.

2. Monthly Active Users by Product Age: The x-axis shows the age of the product (years since company founding or product release). What you can see is that mobile is like rocket fuel — volume and growth are just massive.

3. Monthly active users per employee: WhatsApp is just phenomenal compared to its rivals. Our takeaway: companies are reaching scale faster and more efficiently.

4. For context, Internet and Mobile Users: This shows the growth of total internet users, total mobile cellular subscriptions in the world, and total broadband subscribers. The data is from the International Telecommunication Union (an agency of the UN) aggregated by the World Bank. The trajectory of growth of WhatsApp pretty much mirrors the growth of mobile data.

Other observations:

  • Mobile broadband is just on a hockey stick type trajectory and will be for a while.
  • The growth of mobile data is one of the reasons we see faster growth for some of the newer companies. Historically the gradual growth of fixed line broadband was a reason we saw a more gradual increase in the monthly active users on various old services.
  • Mobile + broadband has made time-to-big shorter and shorter. WhatsApp crossed the 200 million MAU line in just over three years, while YouTube took over four, Facebook took around 5, Twitter took around 6, and Skype took around 8. Instagram and Snapchat have yet to reach that scale.
  • Surprisingly few companies have made it beyond ~300 million monthly active users. WhatsApp had only just crossed that line. Just check out how low the numbers were for some of the much “hotter” companies.
  • WhatsApp reached an unprecedented level of operational efficiency, but there are similarities among the three most efficient companies (Whatsapp, Instagram and Snapchat); mobile has enabled lightweight scaling. Facebook has made a run at all three and succeeded in two of its three attempts. These three companies are also the youngest in this comparison and are/were on a comparable growth trajectory to the current big companies (e.g., Facebook.) Perhaps it isn’t very surprising that Facebook wanted to nip the threats in the bud.
  • These high growth apps and threats to Facebook’s core have come from the great unbundling of Facebook, something I pointed out in my Fastcompany column, Facebook Backlash.
  • Their growth trajectories weren’t shown, but Facebook mobile is also notably fast-growing. Facebook and YouTube are similar ages and have followed parallel high-growth trajectories.

Addendum:

A reader emailed and point out that WhatsApp initial success was because it “spent time building for platforms that were not sexy – Blackberry, j2me, Early android OS” and it “grew internationally once SMS fees started creeping up and first set of cheap prepaid data plans showed up.” Since Whatsapp uses very little bandwidth, “carriers started taking notice and instead of pitching full data packages, started unbundling data and started offering WhatsApp packages.” Reliance in India being a prime example, mostly as a result of growing penetration within each country. These were usually promoted very heavily within each country. At one point, people in india were paying 15 rupees per month for unlimited WhatsApp instead of spending more on data. That is incidentally what Facebook is trying to do — unbundle Facebook from flat-rate data plans for everything.

The post was created with Keila Fong.

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