WhatsApp is among the most popular messaging apps worldwide, with over 1.5 billion active users. So how did a company founded by two former Yahoo engineers become one of the most valuable startups ever? The answer lies, in part, in WhatsApp’s early focus on simplicity. WhatsApp’s founders understood that smartphones would eventually enable people to send text messages and photos from anywhere. Still, they also saw an opportunity for a service that could help users reliably send messages to each other without having to worry about fees or dropped calls.
The smartphone has been around since 2003, but the app ecosystem only took off much later.
The smartphone has been around since 2003, but the app ecosystem only took off much later. Why?
In 2003, there were only four apps in Apple’s App Store: calculator, calendar, clock and iPod. None of these apps were game changers or even inspired any excitement — they were just basic programs that were useful to have on a phone.
In 2009 when the first iPhone was released with an App Store, people started creating more advanced smartphone applications. The first popular gaming app was Angry Birds which made millions of dollars for its creators in one week after launch (and continues to do so today).
Designed by a former engineer at Yahoo!, the company was initially launched as a status-sharing service.
WhatsApp was designed by a former engineer at Yahoo!, Brian Acton, who worked there between 1999 and 2005. While working at Yahoo!, he created an instant messaging service called Status. This service allowed users to share their status messages with other users in their contact lists. In 2006, Brian launched WhatsApp as an independent project with his friend and former Yahoo! engineer Jan Koum. The company was established initially as a status-sharing service, allowing users to exchange text messages through phone numbers or email addresses without creating accounts on the app or paying any fees or charges for using it. However, in 2009 when Google Voice came into operation, they decided to develop new features such as voice calling and video calling to differentiate themselves from other similar platforms available on Android and iOS operating systems (which were released commercially later).
WhatsApp’s competitive advantage comes from its focus on simplicity, which drove massive adoption.
WhatsApp is a messaging service that allows users to send and receive text messages, images, and video and audio media files. WhatsApp’s simple interface removes many of the complexities of other messaging applications such as MMS or SMS. With WhatsApp, users can send messages to anyone else who has installed the application on their device. This means it is unnecessary for two people exchanging messages to be on the same carrier network, nor do they need to use a specific mobile device (e.g., iPhone). This helps explain why WhatsApp has become so popular—it works across all carriers and devices in an integrated way that makes it easy for users to communicate with others over the Internet.
The simplicity of WhatsApp also plays into its appeal as a marketing tool because companies can create ads that are delivered through this single channel without worrying about whether or not they will get lost among other communications channels (email newsletters versus social media pages versus SMS/MMS). The fact that most people have access to smartphones means they can easily download apps like WhatsApp regardless of where they live or work; this increases its usefulness if you want your message delivered directly into someone’s pocket without filtering through emails or other methods first!
Facebook acquired WhatsApp in 2014 for $19 billion.
If you’re unfamiliar with WhatsApp, it is a mobile messaging app that allows people to send text messages and photos to other users. WhatsApp has over 1 billion monthly users; Facebook only has around 1.5 billion monthly users (Facebook). WhatsApp had more daily active users than Twitter.
Facebook acquired WhatsApp for $19 billion in February 2014 (TechCrunch). At this point, WhatsApp had about 450 million monthly active users—more than double the number from two years earlier when the company raised $8 million in funding from Sequoia Capital at a valuation of $52 million ($8/user × 450M = $35B)
A new market entrant can topple the entrenched competition
We will analyse WhatsApp as a case study for new market innovation and how it demolished the entrenched competition.
New market entrants can be highly successful without being better than the incumbents. However, they can also be disruptive, even to their benefit. To do this, they need to understand that specific characteristics of their businesses (the business model) set them apart from the incumbents. These include:
- Their ability to operate differently from competitors’ business models;
- The degree of change caused by changing their business model compared with what’s already happening in their industry;
- How customers respond (or don’t respond) when presented with alternatives; and
- The importance of being first-to-market/having a first-mover advantage
Bottom Line
WhatsApp is a textbook case of disruptive innovation. It almost single-handedly ushered in the era of mobile messaging apps. Its success has driven many competitors to rethink their strategies. In addition, the company’s unique focus on simplicity gave it an edge over more feature-rich alternatives like Facebook Messenger or iMessage, which have since made significant changes to better compete with WhatsApp’s simple interface.
Who am I?
I am Dotun Adeoye, a Business Growth Strategist & Author of the 5 Pillars of Business Growth.
I’ve built up my experience via serial entrepreneurship, consulting leadership roles in business growth, business development and product innovation in large companies worldwide in the last 29 years.
Today, I consult with large businesses on how to sustainably grow their businesses, sustain infinite growth, ensure business continuity and achieve a legacy.
Hire Dotun Adeoye to Speak Virtually or In – Person at your company’s event to cover this or other topics. You can also get in touch via +44 203 097 1718
