WhatsApp chief sets course for 1bn users

February 24, 2014 9:10 pm

WhatsApp chief sets course for 1bn users

By Daniel Thomas in Barcelona and Tim Bradshaw in San Francisco

Just days after selling WhatsApp for $19bn to Facebook, Jan Koum arrived at a Barcelona mobile industry conference to deliver a further shock to a telecoms industry already nervous about the strengthened competition from its low-cost messaging platform.

From next quarter, the company’s 465m users will be able to make calls to each other, opening a new threat to the traditional revenues generated by telecoms groups that have seen their SMS cash cow slain by the rise of messaging platforms such as WhatsApp.

And WhatsApp will not stop there, according to Mr Koum, talking to the Financial Times after his keynote speech at Mobile World Congress. He wants to have a voice service bigger than any of the existing mobile players, with a goal of 1bn users. The company is adding more than 1m customers a day, and has needed to double its servers every year to keep up with “insane” demand from emerging market economies such as Russia, India and Brazil, said Mr Koum, as more people owned smartphones.

But it is not all bad news for mobile operators – WhatsApp subscribers will need mobile data access, which means revenues for telecoms groups and the potential to move customers to tariffs based purely around data rather than voice and SMS.

Mr Koum said carriers were keen to work with WhatsApp to drive customers on to data plans, and pointed to a deal it had struck with KPN’s E-Plus service to a co-branded mobile service in Germany.

“The world is moving to data,” he said. “Carriers partner with us to drive usage of data plans. The core of the partnership is data plans. The world is going to data, bits and bytes, zeros and ones. Not just us, all these apps are using data not just for communications, to watch a movie or tweet news. We are a small part of it.”

The deal with Facebook has already helped WhatsApp, which does not publish its revenues, to add 15m new users in less than a week.

Mr Koum rebuffed reports that this contributed to an outage of its service. “We have a lot of capacity – it was a network router that had a glitch. We had to go through the recovery process our end,” he said. “We usually don’t have outages that last so long so [it] was unfortunate given the timing of the Facebook announcement. It was unrelated. Every December we double our sever count and that lasts us a year.”

Several rival messaging apps such as Skype and Line already offer voice calling but Mr Koum said that WhatsApp would be more efficient in its mobile data usage.

WhatsApp is the world’s most popular mobile chat app but some smaller competitors have seen an increase in uptake, perhaps from people nervous that Facebook’s acquisition will change the service.

Telegram, a Berlin-based chat app that has trumpeted its privacy-friendly encryption capabilities, said it added more than 1m new users a day over the weekend.

The world is going to data, bits and bytes, zeros and ones. Not just us, all these apps are using data not just for communications, to watch a movie or tweet news. We are a small part of it

– Jan Koum

Mr Koum does not regard the popular chat apps from Asiasuch as Kakao as credible global rivals, however, saying that these groups have “not been able to succeed” outside their markets.

“We are a global company. We don’t pick a market. We work in every country. We don’t see the competition. There is a lot of press, and talk of total registered numbers which I see as misleading. Globally we don’t see competition – just in a couple of local markets in Asia.”

He insisted that there were “no plans to change” WhatsApp’s handling of personal information after the Facebook deal closes in the coming months.

He played down fears that Facebook would use data held by WhatsApp on its customers.

“We don’t know your name, your address, your email, a photo, what you spend on . . . we know nothing about you. When people say that you are going to share your data with Facebook my first reaction is: what data are you talking about? People should just be rational and realise that there is no data to share.”

Mr Koum said there was no intention to open the app to third parties, or to branch into supporting the hardware of mobile phones using its voice service. “Our product road map doesn’t change because of the Facebook deal – we continue to be independent on the development of our product.”

Mr Koum has personally experienced the benefits of a much discussed boom in tech valuations through the $6.8bn he is said to have received from the sale of WhatsApp. Even so, he insisted that the rise in tech valuations was justified, in particular in the mobile sector, where he saw the opportunity for continued growth.

“People talk about bubble but I want to talk about potential – 5bn people with an always-on device with all the world’s information at their fingertips. You can talk about bubbles and economics, but that’s not interesting. It’s interesting to talk about how the world is changing because of the smartphone.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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