Currently, WhatsApp is the world’s most popular messaging app. WhatsApp has around 2.78 billion monthly active users. This implies that 34% of the world’s population uses one app: WhatsApp. But, given that WhatsApp is absolutely free to use, have you ever wondered what its business strategy is and how it all began? So, let’s look at WhatsApp’s business model.
Beginning Story
Jan Koum and Brian Acton had previously worked together at Yahoo! for nine years. When they departed Yahoo, they applied for jobs at several kinds of companies. They even applied to Facebook, but were refused. They also applied to Twitter but were refused. Brian Acton famously tweeted in 2009. He said that he had applied for a job at Twitter but was turned down. But he was not too disappointed. He tweeted something similar after being rejected by Facebook. Ironically, just five years later, Facebook paid $19 billion for WhatsApp.
Idea
But first, it’s interesting to know where they got the idea to create WhatsApp. Jan Koum used to frequent gyms, and there he realized he wouldn’t be able to accept calls from his friends. He kept skipping calls. That inspired him to consider creating an app that would display a status indicating that he was now at the gym so that his friends could see the status and understand that because he was in the gym, they should not contact him. He built the application WhatsApp on this basic idea. It’s important to note that this application did not support messaging. At the time, you couldn’t send messages to anybody.
Word : WhatsApp
The word WhatsApp is derived from the phrase ‘What’s up? You ask people, “What’s up? “How are you doing?” On this application, You could just tell others what you were up to. This means that you may easily update your status on this app. You may write that you were at the gym or something. And the app would inform the rest of your friends that you are at the gym. When you change your status, this app will notify your friends and contacts. Initially, this application was created for doing merely this.
Development
Eventually, Koum realized that some of the users of this app were using the status as messages. When one would change the status to doing something, their friends might update their status with whatever they were doing. So, the first person would respond by updating their status once more. Similarly, people started using these as messages. Then, they thought making the app a messaging service would be better.
And this idea was a huge success.
Competitor & Popularity
BBM
Back in 2009, there was only one other app to message others for free. That was the BlackBerry’s BlackBerry Messenger (BBM). The problem with it was that you had to have a BlackBerry phone. So, only the users of BlackBerry phones could use BBM. And WhatsApp filled in a gap here. The users of other phones felt the need for a free messaging app, and WhatsApp became that app. Within days, it was downloaded over 200,000 times.
WhatsApp began getting money from investors. WhatsApp’s popularity soared on its own, with no marketing or advertising. Because people like it so much, they informed their friends about it. Those friends informed their friends, and WhatsApp saw organic growth. As you may remember, around 2009, these telephone providers used to charge a lot of money for sending each SMS. Calling charges were determined by the number of minutes spent on each call. They were costly. And there was a clear free choice, so people began using WhatsApp.
Telephone Company
Within the next two years, the application rose to the top ten in the AppStore.This was true for nearly every country. Except for America. In 2009, the majority of American telephone companies offered flat charges for SMS and free calling minutes. So this wasn’t a fantastic reason for Americans to use WhatsApp.
They continued to use SMSs. Even now, the United States remains one of WhatsApp’s worst-performing markets. Could you imagine it?
WhatsApp had growth in European, Asian, and African countries. Talking about money, initially, there weren’t many expenses to run WhatsApp. They had a small team, they had built a simple app. They were not spending money on marketing or advertising. So the most expensive part of running WhatsApp was the cost of sending SMS messages. The verification text that WhatsApp sends when a user joins it, as well as the one SMS per user that needed to be sent for verification, was their greatest expenditure at the time.
