It was not a very bright idea !! a messaging platform for connected phones to communicate with each other and I still remember when I downloaded this app on my phone some four years back I was a bit skeptical to register as it was asking for my phone number 
however I did that and started using it to communicate with friends. I believe Whatsapp gathered momentum after 2011 when more and more phone platforms started using whatsapp and people realised the true value of a cross platform communication application. As stated earlier it was not a very tempting idea to begin with, prior to whatsapp there were and even now there are text (SMS) messages to communicate with others however the biggest pain point was the cost of sending text messages. All the Telcos have made Text messages as a milking cow and one was being charged Re1 here for sending a text message till the emergence of internet based messaging platform. So there definitely was a merit in the idea of building a cross platform messaging application and it fortunately coincided with penetration of smartphones !! Such kind of App couldn’t have proved its metal in absence of affordable smartphones and increasing use of internet on them.
What Lessons I would like to draw as an Entrepreneur from this acquisition ?
1. Notice the change in consumer’s usage patters very early:
Try to understand whats going to be useful to the consumers ? Founders of Whatsapp realised that messaging cross platform is going to grow big and they can do this using Internet. Mind it they may not be the ones who thought it first but they were definitely ones who implemented it first.
2. When you do something which adds immense value to your users you don’t have to invest an iota in market promotions:
I have never seen any marketing promotion of whatsapp on any platform. It just went viral and spread like a wild fire. Users who started using it clearly understood the importance of the App and they spread it with their families and friends. Whatsapp grew to its present 450 Million user base with a very little expenditure on customer acquisition.
3. Keep it Simple and working !!
Whatsapp is a very simple application to use, the moment you install it scans all your address book and then shows you who is already using this app. You don’t have to add your friends and then wait till they accept your request. Whatsapp provided platform to share images, photos and videos again with simplicity of use. There were bombastically costly MMSs introduced by all the Telcos however they were very difficult to use so the simplicity of just attaching an image or a video won over the complexity of Telco’s native MMS service. The most important fact is they kept it working even after such a bombastic growth the service hardly failed to deliver.
Value added features like Groups, location sharing, contact sharing:
Whatsapp brought the idea of ‘Groups’, ‘Broadcast Lists’, and brought yet another innovation in messaging, now friends could create their groups and stay in touch ( I am member of a very active group of my X and XII batch mates) groups gave a simplistic approach to stay connected over e mails and text messages. Other features of being able to share location and contacts also added lots of value. Earlier as well one could send address cards however most of the time there were compatibility issues in phone platforms that was resolved by contact sharing in whatsapp.
Forcing you not to change your online status and last seen timestamp:
Some of their features like getting locked into the App and not been able to log off or the last seen timestamp was a little annoying but it helped whatsapp to build their user stickiness. It meant once you are on whatsapp you are forever on whatsapp. Sometimes you need to betray your users by locking them in in a smarter way 🙂
The first mover advantage:
As I said earlier Whatsapp may not be first cross messaging platform to do think of doing something like this however they did it at a very early stage. This early mover advantage gave them access to untapped urge of users to communicate with each other. This particular aspect reinforced my belief on starting up early even with no perfect product. You can perfect the product later on but you won’t get the early mover advantage if you waited for the product eco system to get better.
Lack of foresight by the competing services:
I remember BBM was considered as one of the USP of Blackberry and at one time youths in India were hooked up to BBM just because of its instant messaging however Blackberry could never think beyond using their platform only for their users. Though did it after a while to salvage however that time it was tool late and whatsapp literally started ruling the cross platform messaging application marketplace. Even Google came out with its google hangout app for other phone platforms however they still needed a google account to communicate which was again a limiting factor. Facebook started their Facebook Messenger service which is also cross platform however they soon realised its tool late for them to make users change their habits.
I am sure with this acquisition Mark Zukerberg has become a ‘Numero Uno’, player in social network and personal messaging space. It would be interesting to see whether he and if yes how does he integrate both these services and whether he keeps Whatsapp ads free ? However at this point in time its one of the important news for all Techies and one of the major acquisition in the history of start ups. The valuation this deal has got of $ 19 Billion will always keep on motivating investors and start ups to work on innovative ideas which can create value for people.
Originally published at https://www.mandyisgreat.wordpress.com
Gaurav Dharmwani
Super… Liked the way you have kept it simple.
asha chaudhry
happy b’day mandar! love how you penned this down early morning 🙂
wishing you a whatsapp moment in the near future!!!
Aparna
great article! the other side of the story.. is it just one of facebook’s acqusitions? I don’t know but looking forward to the transformation
Mandar Joshi
Thanks Gaurav !!
asha chaudhry
aparna – facebook had acquired instagram in 2012!!!
https://www.therodinhoods.com/forum/topics/the-5-lessons-entrepreneurs-must-learn-from-the-instagram-deal
The 5 lessons Entrepreneurs MUST learn from the Instagram deal
This a reproduction of the article I wrote for the Sunday Economic Times for the 15th April 2012 edition.
The ‘Instagram Moment’ is here.
Last Monday, at ten thirty p.m., the world changed. The globe shifted on its axis. Planet earth spun a bit faster. The moon blinked. The Seven Seas parted. Tech entrepreneurs like me, saw the light!!
Facebook bought Instagram for 1 billion US$!
Cough, cough. Are you saying you’ve never heard of either of these Companies? Okay, you’ve heard of one but not the other? Well don’t worry, keep reading!
First, let’s talk numbers.
1 billion dollars, is approx. Rs. 5200 crores.
So let’s assume that you had Rs 5200 and wanted to buy a Company on the Mumbai Stock Exchange. Fancy a solid engineering business? Just pick up Thermax for Rs. 5300 crores. Wanna be ‘super cool’? Buy Voltas! It’s available for Rs. 3900 crores. Don’t feel like working anymore? Wanna retire? Well, choose The East India Hotels (aka Oberoi) for Rs. 4800 crores or The Indian Hotels (aka Taj) for Rs. 4700 crores!
Having tempted you with these splendid buys, would you allow me to force you instead to buy a business that is less than two years old, has no revenue (yeah, you read right), has no plans to make revenue, and employs just 13 people? Let me add, a business that doesn’t even have a real business plan?!
Well, I am not drunk (or hungover) on a Sunday morning. I am in my senses when I tell you that Facebook has bought a little known Company called ‘Instagram’ (the puny company I was pushing at you), for Rs 5200 crores!!
Now that we’re on the same page, allow me to circle back. Back to my cave. Back to when I saw the flash of light.
There, I saw the Goddess of Internet herself, smiling and shining! She blessed me and said, “Son, your tribe of Internet entrepreneurs has prayed to me long and hard. Your time has come. Now and forever, remember the five stars that will always show you the path to glory. She pointed to five stars that shone like mini suns in a still dark sky.
The Goddess disappeared, but the stars remained, shining bright. In these few days, this is what the five stars have started teaching me:
1. The Zero Revenue Star
Instagram is an ‘app’. (Silly young people make acronyms of everything; during the good old British Raj it was called an ‘application’.) Now, the Instagram app is free (like fresh air and love) that mobile phone users all over the world can use to ‘dress up’ their otherwise banal phone photographs. Users simply use Instagram’s amazing filters and effects on their dull photos and then publish the new ‘polished’ photos on Facebook, Twitter, etc.
Instagram makes you look like Atul Kasbekar or RaghuRai, even though you are really a tax embezzler who doesn’t even know how to use your phone camera.
Now, if you are a Marwari accountant (like me) and are trying to figure out how much you are charged to become an ace photographer, you are in for a shock. Instagram does not charge its users anything. And yet it’s worth 1 billion dollarzzz! [p.s. when the amount is 1 billion dollars, you are supposed to pronounce it as “dollarzzz”, as the Goddess said.]
The Zero Revenue Star teaches me that my meditation should be to delight people, to make them feel special, to make them do things they could never do before – all this, without charging them. In doing so, I in turn, will become very valuable!
2. The Lean Star
Instagram has 13 people. Hmmm. Now, while these folks dress in tees and sneakers, they aren’t ‘lafangas’. Nor are they smart coders or programmers. They are Gods! Remember ‘Ocean’s 12’? Well, these guys are the ‘Instagram’s 13’ and they created a Company worth 1 billion Dollarzzz!
The Lean Star teaches me that you do not need massive manpower to create massive value. You need massive brainpower.
3. The Scale Star
Instagram went from serving 1 lac users to 3 crore users in just 18 months. They grew 300 times in 18 months! Because their service was awesome, their consumers went crazy and the apposphere (atmosphere in which apps live) bent backwards to help Instagram.
The Scale Star teaches me that on the Internet, I can go from Zero to Hero, if I deliver an extremely easy, elegant and exquisite service. That’s it. Remember the 4 Es –Extremely Easy, Elegant, Exquisite
4. The Zero Marketing Star
Instagram did not advertise its product. Instead, it used sheer genius to create a product that advertised its consumers! By making consumers feel and look good, Instagram created a massive ‘word of mouth tsunami’ that made people to clamor to sign up for its service. Instagram is close to proving that ‘Viral’ marketing is bigger than Television, Radio and Print advertising, all put together.
The Zero Marketing Star taught me that great products sell themselves. No help required there.
5. The Acquisition Star
Facebook has bought Instagram for 1 billion Dollarzzz. The fat lady has sung and burped.
The Acquisition Star teaches me that if I remain fanatically faithful in creating what I think is ‘delightfully helpful’; then someone else will believe me, my product and buy me. And at that time it will not matter if I have revenues or teams or brand gyaan.
In the past 96 hours, the Five Shining Stars have begun to redeem me. A struggling Internet entrepreneur, long shunned as someone who burns VC money, dreams of castles in the air, creates companies with zero revenues and demands heft valuations, has seen the light!.
Yes. The Instagram Moment has arrived.
asha chaudhry
here’s another one on instagram by alok!
https://www.therodinhoods.com/forum/topics/what-would-have-happened-to-instagram-if-it-wasn-t-acquired-by-fa
Mandar Joshi
Thanks Asha !!! Its you who prodded and literally at times forced me to keep writing 🙂 Thanks for being there for all of us. Yes and lets everyone from our community find their whatsapp moment in near future. The good thing about Entrepreneurship is when everybody wins no one looses 🙂
Mandar Joshi
Thanks Aparna !!! Many people are wondering about this big valuation lets see what comes out of it !!!
Sirisha Ravuri
Those are some really good learning points out of this acquisition! Mark Zukerberg has created history today. But was it worth it? For Facebook I mean… Is Whatsapp really worth $16 billion (plus the $3 billion in restricted stock)? This is the question on my mind since morning!
Sahil
Some interested things floating around. My Fellow rodinhooders. Patience and persistence always wins..
Darshan Bhambiru
Wish You Many Happy Returns of the Day!! Mandar 🙂
A Date of the year 2014 That you would remember always 😀 Historically Time STAMPED!
Smit Ganatra
Nice read!
This really shows that if you build what people want,everything else more or less falls into place
Mandar Joshi
Thanks Darshan Bhai !!!!!