WhatsApp, an early mover in the messaging app space, has racked up 430 million active users to date. But despite the influx of new competition from the likes of Line, WeChat, KakaoTalk and Snapchat, WhatsApp says it will be sticking to its guns: avoiding advertising; staying away from “gimmicks” like disappearing photos and games; and continuing to request its users to keep paying to use the service as its basic business model.
The app, which used to be paid, is now free to download and costs $0.99/year to use after the first year.
The comments were made by co-founder and CEO Jan Koum, who was speaking at the DLD conference in Munich, Germany. “The important thing is focus,” he said, not disappearing photos — a reference to the ephemeral messaging service Snapchat.
Of WhatsApp’s 430 million users, some 30 million started using the app in the last couple of months (it only announced 400 million in December). WhatsApp now sees some 50 billion messages sent and received daily — rivalling SMS volumes.
“No ads, no games, no gimmicks,” Koum said today. It’s a credo that is written on a Post-It note from co-founder Brian Acton (who first worked with Koum at Yahoo). Koum keeps that note, which he got Acton to sign, on his desk as a reminder of where WhatsApp would like to remain anchored.
“We just want to focus on messaging. If people want to play games there are plenty of other sites and also a lot of great companies building services around advertising,” he added. It’s a “free market” with apps, so the beauty is that people can get those features elsewhere, Koum said.
Koum declined to talk about whether the company is profitable or any other financial metrics. “We make money, but the important thing [now] is not monetization,” he said simply. Someday the company will focus on it, but today the main aim is to to make sure WhatsApp has a service that works.”
We have heard reports of companies like Snapchat rebuffing acquisition overtures from the likes of Facebook and Google for $4 billion, and similarly Koum and WhatsApp remain bullish on staying independent to grow, as they have before when acquisition rumors surfaced.
“When we started the company we wanted to build something for the long term and sustainable,” he told interviewer David Rowan of Wired. “It’s not hard to sell a company, but if you look at [leading online] companies today like Facebook, Google, Yahoo and Twitter, they didn’t sell. They stuck around and built a great offering for users.” Koum acknowledged that these are all built on advertising, while WhatsApp is not, but the main idea remains: “For us it’s about [building] a company that is here to stay.”
Although WhatsApp is now pushing half a billion users, the company has remained very light and has tried to keep its startup mentality. The company currently employs 50 people, 25 of which are engineers, and another 20 that focus on multilingual customer support. “We’re extremely small,” Koum said. And its business model is pretty atypical. “We’ve always thought that advertising would be the wrong thing to do,” he said. By people giving us money, “we’ve always had a direct relationship” with users.
Koum’s upbringing in Soviet Ukraine, he says, has played a large part in how WhatsApp’s business model has developed. That extends from the no-ads policy and the ability to offer reliable and inexpensive communications, through to how the startup handles privacy.
On the subject of pricing, Koum recalled how, when he first moved to the U.S., it was expensive and difficult to phone family long distance, with the need to sign up to long distance phoning plans — a challenge for immigrants with limited resources. “With WhatsApp you don’t have to pay [exorbitant] fees,” he said.
The lack of advertising, meanwhile, is a throwback to his life before the U.S. Advertising, he said, is emblematic of the kind of information clutter that he did not know. ”I grew up in a country where advertising didn’t exist and I had a remarkable childhood,” he said. “Looking back it was an idealistic environment. Even though there were thousands of problems, the joy of growing up in an uncluttered lifestyle [meant] you could focus on other things.”
On the other hand, WhatsApp’s approach to privacy is a response in the opposite direction. “I remember my parents having no conversations on the phone. The walls had ears and you couldn’t speak freely,” Koum recalled. “It is extremely important [for us] to provide a level of security and privacy…. We don’t collect people’s personal information. We just know your phone number and those of the people you want to message with.” He said WhatsApp makes a point of knowing “as little as possible” about users.
Covering a wide range of topics, Koum also was upfront about his preference for Android as a platform over iOS. “Android is a lot more open. We are able to build new features and prototype faster on Android, not to mention that we have a lot more users on Android,” he said.
Longer term, it doesn’t look like WhatsApp plans to turn away from smartphones for its core experience any time soon. “Our goal is to be on every smartphone.” Quoting a projection of 5 billion total smartphones down the line, he said their goal is to be “on every single one of them.”
Photo: AFP/Getty Images