How WhatsApp Acquired 1.5 Billion Users: 5 Growth Takeaways

How WhatsApp Acquired 1.5 Billion Users: 5 Growth Takeaways

What if your business could regularly add highly engaged users without paying to acquire them?

Sounds improbable, but WhatsApp did just that.

WhatsApp grew from 450 million monthly active users in 2014 to a mind-boggling 1.5 billion users (and growing) by the end of 2017.

What’s more interesting?

It acquired this massive user base without relying on “ads, games or gimmicks.” (More about this later.)

This is an astounding growth in user base for any business, let alone a mobile messaging app with huge competition from numerous me-too versions.

How did WhatsApp grow its users by 233% within three years and without spending a penny on marketing?

History of WhatsApp

Conceived in early 2009 by ex-Yahoo employee Jan Koum, WhatsApp is a reliable and affordable alternative to regular SMS and MMS for which telecom carriers usually charge customers on a per-message basis.

Koum’s friend and another former Yahoo employee, Brian Acton became the co-founder in October 2009 after he was successful in rounding up $250,000 in seed funding for the company.

Acton started working on WhatsApp after being turned down by Facebook.

A month later, the app was officially released for the iOS App Store and adapted for release on all major operating systems.

By 2011, WhatsApp had become a top seller on iPhone, Android, and Blackberry. In April of the same year, it raised $8 million in a Series A from Sequoia Capital. By October, the app’s users were sending one billion messages a day.  

By February 2013, the company had 200 million users. Sequoia invested another $52 million in July 2013.

Next came a development that surprised nearly everyone in the tech as well as the investment banking world.

In February 2014, Facebook acquired WhatsApp for a whopping $19 billion, making it the biggest venture-backed acquisition that year.

Yeah, that’s right. The company that turned him down later bought his app for $19 billion. I don’t know where Acton’s negotiations broke down with Facebook, but I’m 99% sure he wasn’t asking for $19 billion to join the company as an employee.

By January 2015, the app had hit 600 million active users, making it the most popular messaging app to date.

WhatsApp is now Facebook’s second-biggest property after Messenger and Instagram.

How Did WhatsApp Start?

Legend has it that Koum came up with an idea to solve his problem of missing out on important calls during workouts after his gym banned the use of cell phones.

The initial idea was to build a mobile address book that displayed statuses next to contact names, so that friends could let one another know if they were available or at the gym, in a meeting, in a crowded place or with low phone battery.

This basic idea metamorphosed into a messaging app once Apple launched push notifications in June 2009 and Koum updated WhatsApp so that each time you changed your status, it would ping everyone in your network.

This “pinging-your-status” became a popular mode of exchanging statuses among the early users of WhatsApp, and Koum soon realized that he’d inadvertently created a messaging service.

What fueled WhatsApp’s growth? The 7 Methods of Growth

Let’s explore. WhatsApp founders Koum and Acton both dislike advertising. They view it as an insult to users’ intelligence.

So, they didn’t take the usual route of supporting the app through advertising, promoting games or paying for customer acquisition.

Here are the 7 strategies that WhatsApp used to grow its user base:

1. Create a Simple Product

WhatsApp created a simple tool that allowed people to do exactly what they wanted without any frills or interference.

The app lets users text-chat (individually or in groups), share videos and pictures, make internet calls – all within a secure environment. WhatsApp messages have end-to-end encryption – meaning that no third party including WhatsApp can read or listen to them.  Once messages are delivered, they get deleted from its servers.

2. Innovate on User Login

WhatsApp allows you to log in with just your phone number. This is a great innovation that eliminates the need to remember usernames or passwords that other social media/messaging companies were not doing at the time.

The user is then presented with a list of their phone contacts already on WhatsApp, so they can start chatting right away without wasting time creating new lists or connections.

The app also does not collect personal information like your name, gender, address, or age. So onboarding is easy and quick.

3.Focus on Core Functionality

As its user base grew, WhatsApp continued to focus on building a clean and fast chat service that worked flawlessly. Unlike its competitors, WhatsApp did not deviate into promoting games, adding stickers and animation or building different functionalities into the app.

Any feature they added, including voice messaging that could be made with a simple one-click implementation, was a simple extension of the core function of a text-chat app.

4. Go Multiplatform Quickly

When WhatsApp 2.0 entered the market with its messaging component in late 2009, it had to compete with BlackBerry’s BBM, also a free texting service.

However, BBM worked only among BlackBerries while WhatsApp had cross-platform functionality. This gave a big boost to WhatsApp user growth, and within months the number of active users increased to 250,000.

The reason?

Convenience. As a WhatsApp user, you could chat with your friend irrespective of the handset, operating system, carrier or country.

As Koum says in this Forbes article: “Being able to reach somebody halfway across the world instantly, on a device that is always with you, was powerful.”

5. Put a Price on the Product

WhatsApp used a free-for-the-first-year and then $1 per year subscription model. The pricing strategy enabled them to keep WhatsApp advertisement free.

Users loved the fact that they had a clean interface and were not bombarded with ads or gimmicks when they were talking to friends and family, and so they invited others to join.

The pricing was also low enough to allow customers to move away from paying high SMS charges to mobile carriers. Another brownie point in favor of using WhatsApp.

Keeping an entire year free is also a great way to make users habituated enough to the product to be willing to pay for it!

In January 2016, WhatsApp moved away from the subscription model but still did not introduce third-party ads.

In January 2018, in its bid to bring revenue without resorting to ads, the company launched WhatsApp Business that will charge large enterprises for advanced tools to communicate with customers.

6. Leverage Word of Mouth

Word of mouth is a strong driver for user acquisition.

WhatsApp provided a better way of communication between any mobile phone using your carriers’ internet plan. This was way cheaper than the exorbitant call rates and cost-per-message plans charged by most carriers.

By creating a tool that solved this one problem faced by millions of users globally, the founders were able to create traction through word of mouth.

Add to this the other features that the app provided like group chat, audio, and video file sharing, and location sharing, made WhatsApp more compelling, and users spread the word.

WhatsApp founders Acton and Brian had decided early on that they will not spend any effort on press coverage. They wanted the app to speak for itself, and it did!

According to this Forbes article, “WhatsApp has just fewer than 200 press mentions – and barely got any coverage until 2011 (two years after it launched).”

7. Stay Lean

When it got acquired by Facebook, WhatsApp only had 32 engineers. The company did not want to dedicate time or resources to hire and onboard new members. Instead, the team focused on building a great product.

Being a small team, in turn, enabled them to innovate and build a reliable, low-latency service at a fast pace. This ‘lean’ strategy has paid off.

Growth Takeaways for Your Business

Here are 5 key takeaways from WhatsApp’s growth story that you can implement in your business to increase user base:

1. Create a useful, user-friendly product

The product should solve a genuine problem simply and cost-effectively. Develop cross-platform functionality early on. This will encourage users to continue engaging with your product.

2. Free or freemium doesn’t always work

Customers never shy away from paying for a useful product or service. You can start with the free route to get your customers to try the product. However, moving to a paid model can allow you to stop bothering about monetization. You can then focus all your energies and resources on building a better user experience.

3. Build to go viral

Great products increasingly sell themselves. Viral is the new face of marketing.

As in WhatsApp’s case, the company built its huge audience without resorting to traditional advertising or marketing. It built an awesome app that made it easy enough (and compelling enough) for people to tell their friends.

4. Use existing and established infrastructure to boost product engagement  

WhatsApp rode on Apple push notifications and mobile internet access via carrier data packages to provide an alternative to expensive SMS. They did not build new technology but adopted the existing ones to solve an existing issue.

5. Know how to use the power of positive PR efficiently

WhatsApp was not pursuing press to plug company updates. Founder Koum used his Facebook page to share products developments or make company announcements. This was later picked up by the press, and they got positive publicity.

This may not have been a strategy, but in this social media age when users hear about new features or increased user base directly from the company, it creates a deeper relationship with the product and adds to customer engagement.

Conclusion

Build a product that’s truly useful and provides great user experience and people will fall in love with. The closer your product is to these attributes, the less it will have to spend on marketing.

Now you know how it’s done!

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