How WhatsApp earns Money? | Secret Business Model of WhatsApp | Dhruv Rathee

Summary

WhatsApp, a messaging app with over 2 billion monthly active users, was initially a status update platform without messaging capabilities. Founded by Brian Acton and Jan Koum, it evolved into a messaging service after users began to communicate via status updates. The app grew organically, fueled by the high costs of SMS and calling rates. Initially funded by investments, WhatsApp later charged users $0.99 annually but became free again in 2016 to expand its user base, particularly in regions where credit cards were uncommon. Facebook acquired WhatsApp for $19 billion in 2014, aiming to eliminate competition and leverage user data. After the acquisition, conflicts arose between WhatsApp's founders and Facebook over data privacy and business models. The founders eventually left, and Facebook introduced the WhatsApp Business app and API, allowing businesses to interact with customers and generate revenue through a fee structure based on response times. WhatsApp Pay was also launched, offering P2P payments and charging businesses a transaction fee. Despite the potential for ads on WhatsApp, its total revenue remains undisclosed as part of Facebook's financials. The future of WhatsApp's data usage remains uncertain, with recent controversies surrounding its privacy policy.

Takeaways

• 📲 WhatsApp is the most popular messaging app with over 2 billion monthly active users, representing 25% of the world's population.
• 💡 The idea for WhatsApp came from Jan Koum's experience of missing calls at the gym, leading to the creation of an app that could show his status to friends.
• 🚀 Initially, WhatsApp only allowed users to update their status, but it evolved into a messaging service after users started to use statuses like messages.
• 💸 WhatsApp's business model started with charging users $0.99 per year, but it became free again in 2016 to expand its user base, especially in countries where the fee was a barrier.
• 🛒 WhatsApp Business App allows businesses to create profiles and interact with customers, with the Business API providing advanced features for a fee.
• 💼 Facebook acquired WhatsApp for $19 billion, integrating it more closely with its own services and using it to bolster its advertising and data collection capabilities.
• 📈 WhatsApp's revenue comes from the Business API, where businesses pay a fee for responses outside a 24-hour window, with rates varying by country.
• 💰 The introduction of WhatsApp Pay aimed to facilitate P2P and business transactions, with Facebook earning a fee on each business transaction.
• 🌐 The user base and popularity of WhatsApp led to organic growth, without the need for traditional marketing or advertising spend.
• 🤝 Brian Acton and Jan Koum, the founders of WhatsApp, became billionaires after the Facebook acquisition but later left due to disagreements over data privacy and business direction.
• ⚖️ Post-acquisition, conflicts arose between WhatsApp's founders and Facebook over issues like data privacy, leading to the founders' departure and questioning of WhatsApp's original principles.

Q & A

What is the significance of WhatsApp having over 2 billion monthly active users?

It signifies that WhatsApp is the most popular messaging app in the world, with a user base that represents approximately 25% of the world's population.

How did the founders of WhatsApp, Brian Acton and Jan Koum, come up with the idea for the app?

Jan Koum conceived the idea when he frequented gyms and missed calls from friends. He thought of an app that would show a status update to indicate his unavailability, which eventually led to the creation of WhatsApp.

What was the original purpose of WhatsApp before it evolved into a messaging service?

Initially, WhatsApp was designed as a status update platform where users could post their current activities so that their friends and contacts could see what they were up to.

How did WhatsApp gain popularity without any marketing or ads?

WhatsApp's popularity grew organically through word of mouth. Users who liked the app recommended it to their friends, leading to exponential growth.

Why did WhatsApp initially charge its users a fee of $0.99 per year?

The initial fee was introduced as a business model to cover the costs of sending SMSs for user verification and to maintain the app without relying on advertising or external investments.

What was Brian Acton's stance on the philosophy of WhatsApp's business model?

Brian Acton was adamant about keeping the app free from ads, games, and gimmicks. He wanted the app to remain simple, focused on messaging, and to excel at that single function.

Why did Facebook purchase WhatsApp for $19 billion?

Facebook aimed to eliminate significant competition by owning both Facebook Messenger and WhatsApp. Additionally, WhatsApp's access to vast user data was seen as a valuable asset for Facebook's data-driven business model.

What was the reason behind WhatsApp removing its annual subscription fee in January 2016?

The $1 fee was removed to expand the user base, especially in countries like India where many people did not have credit cards or could not afford the fee.

How does WhatsApp Business API generate revenue for the company?

The Business API allows businesses to interact with customers on WhatsApp and automate responses. Businesses can send messages for free within 24 hours of a customer's query, but after that period, they must pay a small fee.

What is the current status of WhatsApp Pay in India?

WhatsApp Pay was launched in India in November 2020, but it has only reached a small fraction of the market share of UPI due to UPI's lower transaction fees for businesses.

What is the future of advertising on WhatsApp according to the script?

Facebook is considering running ads on WhatsApp, potentially within the status feature, to generate additional revenue.

What is the WhatsApp Business app and how does it contribute to the concept of WhatsApp Commerce?

The WhatsApp Business app allows businesses to create profiles and interact with customers on WhatsApp. It is contributing to the growth of WhatsApp Commerce, where businesses sell products and services exclusively through WhatsApp.