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Business lessons from founders of WhatsApp

Think big, start small, then scale or fail fast. — Mats Lederhausen:

Sme’s Chat with Phillip Chichoni

When Facebook acquired WhatsApp for US$19 billion last week, eyebrows were raised in the investment and business world.

First, the amount is staggering. US$19 billion is nearly twice the value of Zimbabwe’s annual income (GDP). Second, WhatsApp is a small company, with only 50 employees. However, there are many lessons business owners can learn from the instant messaging service provider. In fact, by looking closely at what WhatsApp did to achieve this level of value, we can all make our businesses better and achieve greater levels of success.

Think big, start small
When Jan Koum bought an iPhone in January 2009, he saw a big opportunity for selling applications (Apps) through the Apple App Store. Together with colleague Brian Acton, the former employees of Yahoo decided to develop an instant messaging service that worked on smartphones. Seeing that smartphones were becoming cheaper and accessible to most people, the WhatsApp founders targeted the global market with their service. Today, more than 450 million people are on WhatsApp worldwide. And with a low subscription fee of 99 cents per year, the service is very affordable even for those of us in the developing world. To entice customers, WhatsApp was made free for the first year. Zimbabwean entrepreneurs should learn to think big and aim at the global market and not just on the small and shrinking domestic market.

Keep on persevering
Entrepreneurship is a risky business. Chances of failure are greater than those of success. Before starting WhatsApp, co-founder Brian Acton was turned down for jobs at Twitter and Facebook. Staying positive minded, he and colleague Jan Koum decided to start their own business, thus the birth of WhatsApp. You meet many obstacles and setbacks in business. These should not make you give up. You are not doomed to failure. Keep on pushing ahead and you will find success in one way or another. Success may not come in the way that you expect, so don’t give up. Push through the tough times. Keep on building your business and one day you will reach the success you desire.

Keep refining your business model
WhatsApp makes money from the 99 cents annual subscription fee paid by users. By cutting the costs of messaging to fractions of a cent, the service is very affordable and continues to attract new customers. Facebook probably saw its own service attracting less and less new users and decided to acquire WhatsApp. I don’t think I am the only one who is annoyed by the increasing level of advertisements and promotions on Facebook these days. It is just like reading some of our daily newspapers online. The sheer amount of advertisements really puts one off. Jan Koum and Brian Acton made it clear after the Facebook acquisition that they would not allow advertisements on their service. Users are happy to pay just less than a dollar per year for a commercial free service. Does your business model please customers? Or does it annoy them? Keep on refining it to make your customers happy and attract new prospects. WhatsApp’s model shows that users are willing to pay money for valuable services that makes their lives a bit easier and faster.

Frugal marketing
Do you know how much WhatsApp spends on marketing their service? Zero! The company hasn’t paid a penny on advertising itself. Because they have a reliable and easy-to-use product, word of mouth sells it. Who introduced you to WhatsApp? A friend or contact most likely.

In these harsh economic times, you need to think guerilla marketing. This is low-cost marketing which reaches your target customers very efficiently. My upcoming book, Startup Smart Lean and Fast details the tactics of frugal marketing that you can use in your own business to get effective results on a low budget. The book will be released on March 13 and those on my mailing list will be notified. You can join my mailing list by simply sending me an email at the address shown at the bottom of this article.

Move with technology
Mobile is the new technology. With the majority of people owning smartphones, it is clear that if you are not found on mobile online, you are not moving with the times. WhatsApp founders saw the growth of mobile and thus developed this application. Is your business’ website mobile compatible.

You can easily check by accessing it via you phone. If it is not mobile accessible, then you are losing lots of potential customers. Many people Google for products via their phones. The PC era is over, as evidenced by falling sales of desktop computers and laptops worldwide. So keep up with technology by having a mobile presence, that is where the future is.

WhatsApp is an example of a lean startup, which provides a highly desirable product and which aims at the global market. I hope Zimbabwean entrepreneurs can learn a thing or two from Jan Koum and Brian Acton and create high performance enterprises. Please feel free to email me your thoughts. Until next week, keep on accelerating your growth.

Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. You may contact him by email, chichonip@smebusinesslink.com.

You can also visit http://smebusinesslink.com

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One Response to Business lessons from founders of WhatsApp

  1. Sly March 10, 2014 at 3:27 pm #

    Your message did not reach some or all of the intended recipients.

    Subject: mailing list
    Sent: 3/2/2014 3:13 PM

    The following recipient(s) cannot be reached:

    ‘chichonip@smebusinesslink.com.’ on 3/2/2014 3:13 PM
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