India Runs On WhatsApp
America might run on Dunkin, but India runs on WhatsApp. Period. I don't think there has been any other application or platform that has had as large an impact in the Indian Internet Economy as WhatsApp has. And while Jio launching in 2016 provided the catalyst of bringing Indians online, WhatsApp has conquered a majority of that user base. Staying touch with family & friends - WhatsApp, getting a prescription from your doctor- WhatsApp, workplace communication- WhatsApp, you get the picture. WhatsApp is so ubiquitous that it has more or less replaced SMS communications in India and WhatsApp has transformed into a verb in people's daily lives ("WhatsApp kar do"). And this isn't limited to just personal communications, WhatsApp is used by businesses of all sizes in India, from your local kirana wala to the Sabyasachi store in Delhi, sab WhatsApp par chalta hai (everything runs on WhatsApp).
So the origin of WhatsApp is pretty well known at this point. Jan Koum & Brian Acton were traveling around Europe after quitting their jobs at Yahoo in 2009. Jan bought an iPhone and was immediately blown away by the impact he thought the device would have. He originally set out to build an App where people could update their statuses and that pivoted into an Instant Messaging service, and were shocked by how fast the service started growing (they even made the iPhone version paid to cover SMS phone number verification costs), and it still continued to grow. The company did raise a couple rounds of Venture Funding ($8M Series A & $52M Series B both by Sequoia) but found PMF very early on and didn't have to spend much to grow the company's user base. Then in 2014, 5 years after starting the company, they agreed to acquisition terms from Facebook which valued WhatsApp at a whopping $19B
I'm going to talk about this from my personal viewpoint of WhatsApp growing in India because I wouldn't do it justice from a macro-perspective. When I had just started 9th grade in 2010, BBM was all the rage and a good percentage of my (privileged private Indian school) friend circle had Blackberrys. Having BBM was definitely a social status, but SMSes still worked great. Until they didn't, when the TRAI decided to limit the number of SMSes one could send in a day (100). They did increase that limit to 200, but this did not cut it for teenagers who were spending an increasing amount of time on their phones. Android smartphones also started getting cheaper in 2011 and an increasing amount of my network had them. Within 3 years, BBM was dead and everyone was chatting on either WhatsApp, Kik or Facebook. WhatsApp was the most popular because of the network it had, if all your friends were on WhatsApp you would rather be on WhatsApp than a different service. And this network kept growing & growing & growing. While WhatsApp was getting popularized in my network, it was simultaneously happening all over the country bringing millions to the platform. India is sometimes called the "MAU Factory" so it makes complete sense why a popular free messaging service like WhatsApp gained traction, but the extent of it is unparalleled. By July 2019, WhatsApp had 400M Monthly Active Users on the platform and it's estimated that number is close to 450M now (which is 1/3 of India's population). Think about that for a second, one in every three Indians uses WhatsApp at least once a month. I was talking to one of my friends from high school a couple of days ago about how we literally grew up using WhatsApp (said friend and I have been talking on WhatsApp for 9 years at this point with over 75k+ messages back & forth, which is just so wild to me). And the number of Indians on WhatsApp is going to keep going up, with more Indians being able to get smartphones and get access to data, WhatsApp will probably be one of the first apps they download.
I think it's relatively fair to say that WhatsApp = Internet in India at this point. Of all mobile internet users in the country, 95%+ probably have WhatsApp and use it with some frequency. Which is why it makes sense to bundle services/products into the platform to test out the viability before unbundling and building the service/product out based on user behavior on the platform. This is also a strategy many Indian entrepreneurs have used over the years, including the likes of Dunzo, ShareChat & even Digi-Prex (will go in depth in each of these cases). But the first instance (that at least I can think of) was this company called "Rocket Sandwich" in Bombay. All you had to do was WhatsApp the restaurant your order & delivery address, and within 30 minutes a delivery person would bring over your food. This was before Swiggy even existed, Zomato still did discovery only, Dominos & McDonalds were some of the few places that delivered food, and Faasos had just started getting popular. And while the company did not end up working out, it (along with others) definitely paved the way for ordering food on your phone in some sense (WhatsApp → Separate platforms). Dunzo, the hyperlocal delivery service, also began in a similar manner. Users would send tasks to Dunzo's WhatsApp number ("pick up laundry", "buy products X, Y, Z", "deliver documents to A", etc). And while the service saw great customer stickiness & viral growth (despite inherent problems i.e no tracking or online payments) they then decided to unbundle & build out the Dunzo mobile platforms (for task-runners & consumers). ShareChat had a different origin story as it started off as an online debating platform, and while trying to pivot ended up creating several WhatsApp groups where people ended up sharing jokes, pictures, videos but interestingly mostly in vernacular languages where they realized that there was a lack of content in vernacular languages. They soon launched their own app called ShareChat and it too has seen absolutely viral growth in India. And lastly, Digi-Prex (YC S19) is an online pharmacy where you send your doctor's prescription (as an image) through WhatsApp to the service and they deliver it to your door stop. It's somewhat different from the likes of 1mg & PharmEasy which force you to download their apps/browse their website to find & buy your medicine.
This really depends on Facebook/WhatsApp and what their plan for the platform is. Once WhatsApp Pay is finally rolled out to a majority of the Indian consumer base, we're going to see an explosion in P2P payments in India, and I predict it will rapidly unseat the incumbents (Google Pay, PhonePe & Paytm). It could also open up an ecosystem of applications & services to be built on the WhatsApp application, turning the messaging app into more of a platform (like WeChat in China). This would likely mean also expanding the capabilities of the WhatsApp Business application & API, which currently seems limited to transactional messages & notifications. On the other side if Facebook completely opens up the ecosystem to let anyone send programmable messages on WhatsApp, the platform might start to look a lot like SMS which WhatsApp probably wants to avoid. WhatsApp has been very cautious about expanding the ecosystem but I do think they will be able to find a good balance at some point. Until then, people will keep building products & services on WhatsApp initially for the instant distribution to 400M+ consumers and unbundle to their own platforms once they've validated the idea.
Other relevant readings:
What the Mary Meeker 2016 report tells us about the India Opportunity
[WeChat] When One App Rules Them All: The Case of WeChat and Mobile in China
[Paywall] WhatsApp it to me: Facebook’s push to use chat for commerce
[Paywall] Step by step: how the NPCI nod brings WhatsApp closer to unshackling its super-app ambitions