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WhatsApp – The power of product focus "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs 27 February 2015 True Facebook, Focus, WhatsApp, Mind the Product Mind the Product Ltd 494 Product Management 1.976
· 2 minute read

WhatsApp – The power of product focus

whatsappWith today’s news that Facebook has acquired group messaging app WhatsApp for over $16 billion one of the quietest companies in Silicon Valley has proven the value of extreme product focus, and upset a few cardinal rules along the way.

Product Focus

WhatsApp is a tiny startup, with only around 50 employees, yet has managed to take their simple, basic messaging product to huge scale. It has over 450 million monthly active users, 72% of whom are active every day. Staggeringly, their messaging volume rivals the global SMS volume – estimated at 7 trillion messages per year. And with over 1 million new users per day they’re still growing like mad.

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.” Jan Koum, WhatsApp co-founder and CEO

Unlike most start-ups, this incredible growth has been achieved without any marketing – they have spent exactly $0 on user acquisition and don’t have a PR or marketer on staff or even a sign outside their office. 35 of their employees are engineers and the rest are in customer support.

This makes WhatsApp perhaps the clearest example of the success of single-minded product focus. From day one they have focused on making the best messaging app and every feature and improvement that has followed has been in service of that goal. When they introduced voice messaging in 2013 it was a simple extension of the existing messaging tools, with a supremely simple one-click implementation that bested the combined efforts of google, facebook and twitter.

“The number of taps matters. People want to send a message and be on their way.”

Free isn’t always good

WhatsApp has managed to achieve their staggering growth in part because they’ve eschewed the traditional free or freemium model in mobile apps. Their app is free to download, and costs just 99 cents per user after the first year. This has meant that they’ve been able to avoid monetising their app through advertising – something that would have detracted from the user experience of the product.

“Utilities get out of the way. Can you imagine if you flipped a light switch and had to watch an ad before you got electricity? Can you imagine if you turned on a faucet and had to watch an ad before the water came out?” Jan Koum, WhatsApp co-founder and CEO

What does the future hold?

It will be really interesting to see how this integrates into the Facebook ecosystem over time – will it replace messages and their dedicated messaging app? Will it serve as a bulwark against other chat apps like Snapchat to ensure that teens who grow up on chat apps move their social graph onto Facebook itself once their social networking use changes?

Either way Facebook just paid over $40 per user because they believe WhatsApp will continue to grow to a billion users or more – and that’s all thanks to that single-minded product focus.

Do one thing, and do it well.

Comments 6

We were chatting about this when the news broke just after ProductTank last night. I agree with you that a well-executed, focused app, and a large, engaged and paying user base are all very attractive aspects of WhatsApp. And although reports of Facebook’s demise are premature, this looks partly like an expensive attempt to stem their user churn, particularly in countries outside their usual stomping ground.

But as one person asked last night, was WhatsApp worth 16 Instagrams? Does this vindicate SnapChat’s decision to hold out for more money? And is this another indication that we’re in another tech bubble, as some commentators reckon?

I don’t have the answers myself, but time will certainly tell – and what interesting times they are.

Valuations are always a tricky thing – at the end of the day a company or product is worth whatever the market will pay for it.

There are two factors playing into the valuation here I think – growth and defense.

WhatsApp is still growing by leaps and bounds with a million new users per day, so put another way WhatsApp has twice the users of Twitter and 3 times the growth of Twitter, for half the price (Twitter’s market cap being about $30B).

Defensively I believe this is less about stemming churn than making sure that new users who start using social networks for messaging come up through the facebook ecosystem and move into that ecosystem as their needs broaden and change. As I wrote in my facebook demise post I don’t buy that teens aren’t using facebook or that it’s even a problem for facebook as they cover a completely different use case than that which teens need.

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