Whatsapp Is Irreplaceable

A bit of WhatsApp's story, and why it will be the next actual platform and super app.

I think one of the very few consumer technologies that is probably irreplaceable nowadays is WhatsApp. WhatsApp is so ingrained in how some societies communicate that it triumphs over phone calls, sms, and any other form of digital communication. Its rise explains this a lot. The app found a few great attributes to perfectly position itself and have the rare network effects it needs to grow, and oh, boy, did it grow.

Act 1 – the beginning

A few things happened at the same time in developing countries that just shot WhatsApp to the top – smartphone availability increased, the blackberry dominance, the iphone was a couple of years in, SMS was expensive, data packages were introduced to the masses. WhatsApp came in paired with your phone number, free, simple to use, and it was released just two years after the first iphone. Developing countries were the last piece in the puzzle.

The WhatsApp team doubled down on the blackberry with a version, Symbian version, then an Android right after. They even had a Windows Phone version (remember windows phone, what a shit show that was). It was a perfect moment right after the blackberry release for them to have the right set of network effects working together. In less than 4 years, it grew to 200 million active users. 

Today WhatsApp is the go-to communication method to many regions of the world with complete dominance. It is not just an app. It is the communication medium. My mom, back in Egypt, uses WhatsApp to get some orders from the grocery shop down the road, or do a takeaway order or order a medicine from a nearby pharmacy. You can’t tell my mom to use Telegram instead. She won’t. This is the new mom test but for people's preferred communication medium. If your mom doesn't know how to use any other messaging app or platform except the one, you know that app made it.

Act 2 – it is just business

So naturally Zuckerberg swooped in and bought it in 2014 for a staggering US$19 Billion and it only had 55 employees. He very well knew what he was doing. He didn’t just buy the users. He bought the irreplaceability factor. He knew very well that while there is still a ton of work to be done to reap the rewards, the harder work has been already done in the sowing. Most importantly, the sowing work is not copyable, or else he would have.

It took 4 years to start unleashing the actual plan. In 2018, Zuckerberg went in with the WhatsApp Business offering. This changed things, and we will have a day when we say, forever. Small businesses first – he has a plan, he starts from the bottom, all the way to the top. 

The premise is simple. Everyone is talking to everyone over WhatsApp in a certain region. When the penetration is so high for a communication method, it slowly extends to small businesses communicating with customers because small businesses are made up of, well, people too. But it's less of them so the switch is natural and is almost unnoticeable. Think about it, I run a small grocery store, I have 1 person working with me. My neighbor has my WhatsApp number, he sends me a message asking if I can send him over a few grocery items or even prepare it for him to collect after he is back. I, as the grocery owner, won’t be infuriated that his neighbor wants business. On the contrary, I will welcome that and attribute that to how easy it is to do business over WhatsApp. Then more and more small businesses talk to customers over Whatsapp, so this becomes an expectation when the next customer talks to another business, this time a bigger business, and so it goes. It is a beautiful adoption cycle.

This is precisely what happened. Bigger businesses started opening up more to using WhatsApp to talk to customers. Not just the slightly-bigger-than-small-business businesses, NOPE! You got all kinds of big businesses. Think big ecommerce websites, big B2C stores, big pharmacy chains, big travel agencies, and many many more.

Act 3 – problems = opportunities

When matters involve serious money, opportunities appear. So here is what happened – and I am a bear witness to this. In late 2018, big businesses in regions of the world like India, Brazil, Indonesia, Mexico, Russia, Philippines and a few other countries now talk day-to-day over WhatsApp to their customers. This became the norm. It is an everyday thing for businesses, and things were looking very good. Transactions are happening faster, customers are happy, businesses are happier, WhatsApp is growing and establishing its dominance even more and to quote Michael Scott, “With win win win, we all win!”. 

Problems started to come up though with conversation volumes ramping up. Because things got done faster, scale was possible, and the transaction volumes increased. The more volume a business has, the more problems start to appear. Businesses were using WhatsApp in the most rudimentary way. The WhatsApp Messenger at the time could only be installed on one device, even the WhatsApp Business app. You can connect a few more through WhatsApp Web. It was 2, then it was upgraded to 5 devices at a time. There were major connectivity issues, and you can only imagine how limiting, disorganized, and unscalable. Chats were dropping, managers didn’t know which person on the team were assigned to which chat, you couldn’t access the whatsapp chats unless you pass the phone, literally, to your colleague right beside you in the next chair – and worse, you can’t tell customers that WhatsApp isn’t scaling for you anymore and they are now angry.

Luckily, with every problem in tech, there is an opportunity. Problem solvers, and hackers swoop in. The problem was simple. Find us a way to scale our operations over WhatsApp, or we lose our business. Was it that drastic? YES! Remember what we said about expectations? People now expect to talk to businesses over WhatsApp. There is no going back.

Hackers managed to come up with several ingenuine solutions to the problem. I witnessed 3rd party providers running hundreds of, if not thousands, headless android emulators with the whatsapp app installed, or reverse engineered versions of the whatsapp web protocol – heck, we even did some work on reverse engineering the whatsapp web protocol when it was allowed to help our users connect whatsapp to Intercom.

This scaled well at first. Then the connectivity issues started to occur, the volume was just, even with the best engineered solutions, too much for WhatsApp. Facebook, at the time, started to crack down on all 3rd party or reverse engineered versions. Facebook even updated their WhatsApp policy to anti the widespread usage of all the reverse engineered versions.

This was obviously not going to scale. Something else was needed. Something reliable, scalable, and democratized. Fortunately, WhatsApp has been brewing something up! It was time to act on scalable solutions, and think about money.

Act 4 – the answer!

Around the end of 2018, and mid-2019, WhatsApp finally released an API. The WhatsApp Business API was born. Finally a solution that works. This was the moment where Facebook finally had their first shot at reaping the rewards. Monetisation of the WhatsApp world started. 

The WhatsApp Business API was gate kept at first with what was called, now in the relics of time, the Business Solution Providers. WhatsApp went for old school telecom providers and newish CPaaS platforms plus they were opportunistic with a few startups in certain regions. This is probably the strangest API play I have seen in my career. Due to the nature of how the WhatsApp app works, there is actually no server storage of messages – your WhatsApp messages (even in the older versions) were never stored on the servers, only the metadata. The phone was the server, kind of. So WhatsApp worked with the Solution Providers offering an on-premise, invite-only API where the solution providers will be resellers.

I remember Twilio was probably one of the very first few companies that got access to the WhatsApp Business API.

It took weeks to register a business on the WhatsApp Business API and the whole process was hell on earth. But things changed pretty soon. Facebook learnt that the Business Solution Provider model just doesn't work, doesn't scale, and is a bottleneck to achieving the big numbers.

WhatsApp steered away completely from the Ads business model, and focused on charging for messaging fees, at first, then conversation fees later on after a few lessons learnt. 

If a customer starts a conversation with a business, or a business starts a conversation with a customer over WhatsApp, a charge is incurred by the business depending on who starts the conversation. Users still use the WhatsApp app for free.

The next wave of businesses built over WhatsApp in just 4 or so years after the API availability was … just … insane. All kinds of businesses, in all kinds of verticals, in all kinds of use cases have unlocked their WhatsApp powers in some way. Existing companies started to support WhatsApp, incumbents like Zendesk acquired smaller companies and new companies were built around WhatsApp. I was in the midst of this, twice.

Businesses also noticed something different and powerful. Customers actually open their WhatsApp messages. A staggering open rate of 90% – compare this with Email which is between 17% to 28%. Yet another strong use case around WhatsApp-based Marketing opened up, and that began the focus of WhatsApp to charge more and up their revenue.

Act 5 – the SUPER man app

So what’s a super app? read here. Basically, it is one app to rule the daily digital activities and transactions of a consumer. You got communication, shopping, payments, transportation, accommodation and so on. Every app nowadays wants to be a super app – and that ain’t going to happen. The reason it isn’t is that to be a super app, you need to have control and dominance over the user’s attention or time daily in at least one category before you offer more. You can’t be the 3rd or 4th most popular messaging app in a certain geo and expect that you can just add one more use case bundled within your app and make it – that’s not going to cut it.

WhatsApp got that dominance over the user's attention or time attribute with their messaging as the core. They earned the right to take the very next step and sell you homemade strawberry jam supplied by Pam's Jams (Pam's Jam isn't a real brand – it is a "fig"ment of my imagination). They can connect you to small businesses around you, they can enable payments for 3rd party builders to innovate, they can collect data using a mini-apps framework inside of the app. The possibilities are endless.

If you want to know Meta’s focus and direction for WhatsApp, take a look at the events in 2022 and 2023. Meta sold back Kustomer after just a year of acquiring it. The WhatsApp team shipped the basic building blocks that’d make it a platform to allow builders to build on top of it and double down on the dominance. They shipped plenty of platform-focused features. Interactive buttons, and lists, better WhatsApp Business APIs, the Cloud API offering, a plan to sunset the On-Premise API, all kinds of interactive message templates, catalogs, carousels, payments in Singapore and India, and alot more. This is a clear message that Meta’s focus for WhatsApp is to build a platform that will attract and incentivize builders to build, big businesses to build relationships, and tight workflows. Workflows are the hardest to uproot. Ask any enterprise SaaS.

WhatsApp’s platform has the potential to be as big as or bigger than any of the big platforms out there – Salesforce, Shopify, Slack, you name it. There is much more to say here, more on the overlap with AI. But that’s for later time and another story.