WhatsApp : 450 million users; no clear monetization strategy. Gets acquired for $19Bn.
What’s cool about it? Is it the ARPU [Average (potential) Revenuer Per User] or the value that the service created (they almost killed telcos’ SMS revenue]?
Is it about technology? DEFINITELY NOT.
Is it about profitability (from day one)? For Indian investors, maybe yes!
Why is it difficult to build a WhatsApp from India?
I don’t mean ‘another’ WhatsApp, but another business which creates tremendous value (and almost kills a traditional/mediocre industry, which is SMS in case of WhatsApp), but is extremely slow in monetizing the value.
That is, profitability is not the main focus. Value creation is.
I have two things to share:
WhatsApp charges $1/user/year & very few pay. Even if 100% did, it'll take Facebook 20-40 years to make back acqui cost.
— Mahesh Murthy (@maheshmurthy) February 20, 2014
It’s about the mindset.
And I am not just talking about investor mindset (don’t blame them – you and I are no different), but an average consumer mindset – which flows through the entire system. We want to know the RoI, without understanding the ‘long-term value‘ being created.
Ofcourse, there is no right or wrong answer here (Mahesh/Seedfund has got one of the best Returns on Investment so far, especially with redBus); but maybe, Indian consumer startups are better off talking to Silicon Valley VC?
