How WhatsApp earns Money? | Secret Business Model of WhatsApp

How WhatsApp earns Money? | Secret Business Model of WhatsApp | Sohail Saleem

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From 'Good Morning' messages of the family, to the fake messages of WhatsApp University,today, WhatsApp has become the most popular messaging app in the world.They have more than 2 billion monthly active users.Meaning that 25% of the population of the world use this one app.But have you ever wondered since this app is completely free to use, and there are no ads on this app, so how does this company WhatsApp earn money?In today's articles, come let's understand the Business Model of WhatsApp. This video is powered by Vested Finance.WhatsApp was founded in the year 2009, by two people: Brian Acton and Jan Koum. Before this, the two had worked together at Yahoo! for 9 years. And when they left Yahoo! they were applying for jobs at various companies they applied to Facebook but were rejected.They applied to Twitter but were rejected from there as well. In fact, in 2009, Brian Acton had famously tweeted, in it, he had written that he had applied for a job at Twitter,but he was rejected, but he wasn't too disappointed because the commute would've been too long. He tweeted something similar after being rejected from Facebook. Ironically, just 5 years after this, Facebook purchased WhatsApp for $19 billion. But before this, it is interesting to know where did they get the idea of creating WhatsApp? Jan Koum used to frequent gyms, and there he realised that he wouldn't be able to receive the calls of his friends He kept on missing calls. That made him think that there should be an app, that would should a status that he was in the gym at the moment, so that his friends could see the status and understand that since he's in the gym, they shouldn't call him then. On this basic idea, he created the app

WhatsApp.

It's interesting to note that this app didn't have messaging. You couldn't send messages to anyone. Like you can do so now on WhatsApp. This app was simply WhatsApp. The word WhatsApp came from the words 'What's up?' Like you ask people, "What's up? How are you doing? On this app, you could simply let others know what you were up to. Meaning that you could simply post your status on this app.You could write that you were in the gym.And the app would notify the rest of your friends,that you're in the gym.When you change your status, this app notified your friends and contacts.This app was created for doing merely this, initially.But eventually, he realised thatsome of the users of this appwere using the status as messages.When one would change the status to doing something,their friends might update their status with whatever they were doing.So the first person would update their status yet again, in responseSimilarly, people started using these as messages.Then they thought thatit would be better to make the app a messaging service. And this idea was a huge success.Because back in 2009,there was only one other app on which one could message others for free.That was the BlackBerry's BlackBerry Messenger (BBM).

The problem with it was that you had to have a BlackBerry phone. So only the users of BlackBerry phones could use BBM.And WhatsApp filled in a gap here.The users of other phonefelt the need for a free messaging app,and WhatsApp became that app.Within days,it was downloaded over 200,000 times.WhatsApp started receiving funding from investors.WhatsApp's popularity skyrocketed on its own.Without any marketing or ads.Because users liked it so much that they told their friends about it.Those friends told their friends,and WhatsApp saw organic growth.As you'd remember, around 2009,these telephone companies used to charge a lot of moneyfor sending each SMS.Calling rates were based on minutes per call.They were quite expensive.And here was a clearcut free optionso people started using WhatsApp.Within the next 2 years, this app became one of the top 10 apps in the AppStore.This was true for almost every country.Except for America In America, in 2009,most of their telephone companies had flat rates for SMSs,and free calling minutes.So this wasn't a great incentive for the American to use WhatsApp. They continued with using SMSs. And even today, the USA is one of the worst performing markets for WhatsApp. Can you imagine it? WhatsApp saw its growth due to European, Asian and African countries. Talking about money, initially, there weren't many expenses to run WhatsApp. They had a small team, they had built a simple app. They weren't spending money on marketing or running ads. So the biggest expense of running WhatsApp was actually the cost of sending SMSs The verification text that WhatsApp sends when a user joins it,so the one SMS per user they had to send for verification,was their biggest expense at the time.Where could they get money for this?They had received some investments.With their success, more companies wanted to invest in them.They would give them money in exchange for their shares.But the investments weren't exactly pouring in.So they came up with a new business model.WhatsApp started charging its users $0.99about $1 per yearthey started charging their users to use this app.You heard it right, WhatsApp wasn't a free app anymore.They started charging $1.But despite that, the user experience of their app was so good,and the app worked so smoothly,on top of it, new features were being added,like you could now send photos over WhatsApp.Their growth continued.By 2011, their app had become the top app in the AppStore Acton was clear about one thing.He had stuck a note on his table."No Ads! No Games! No Gimmicks!"He didn't want to run any ads on WhatsApp.Nor did he want to add features that had no greater purpose.He wanted to keep the app simple and to the point.The app built for messaging.He wanted the app to be so good at that one thingthat no other app could compete with it.And people keep on using it.Their $1 Business Model was very successful.Within 3 years,WhatsApp became a profitable company.All the money they earned was spent on their small team.So that new features could be added to WhatsApp.The problems in the software could be rectified. And a reliable messaging app could be created. They claimed that their product was their passion. And that the users' data wasn't something that interested them. That they had no interest in taking users' data. But after this, Face book makes an entry in our story.And this Model started crumbling apart from here.Mark Zuckerberg was trying to buy WhatsApp since 2012.But this deal was finalised in February 2014.And WhatsApp is taken over for $19 billion by Facebook.And the employees working in WhatsApp,now became Facebook employees.WhatsApp founders had a meeting with Google CEO Sundar Pichai as well But