7 ms·

One of the key tenets of Warren Buffett's theory of investment value is based around "moats" - businesses that can't easily be replicated. It's impressive how l

by lmg643 13y ago

One of the key tenets of Warren Buffett's theory of investment value is based around "moats" - businesses that can't easily be replicated. It's impressive how large WhatsApp has grown but it might be more remarkable how quickly another service can grow in its place. Barriers to entry are continuously falling in mobile and tech in general.

diminish 13y ago
for messaging, there may be a rule similar to moore's for transistors; ... every 18 months a new messaging platform will be the go-to place.
- sjtgraham 13y ago
  This is pretty ridiculous. Whatsapp solved two important problems. It was the first non-SMS cross-platform messaging service for mobile (telephone number as address, etc), and carriers were (and still are) price gouging on SMS pricing. Whatsapp quickly picked up initial users because of this and growth accelerated as it benefited from the massive network effects of more and more users joining the service. It's not clear that Whatsapp has any major problems as SMS does that would allow an upstart to make a significant incursion into Whatsapp's user base. Whatsapp also has massive network effect now, the switching cost seems too high.
  - gress 13y ago
    The switching cost being installing a different app?
    - chaz 13y ago
      No. The switching cost is getting all of your contacts to install a different app and use it regularly.
      - Retric 13y ago
        But they don't actually need to use it just have it installed and you can message them. If they respond with a different app or a text message nothing breaks.
        gress 13y ago
        Exactly - I know numerous people who use multiple apps for messaging. Most of my US friends use iMessage and Facebook. But my UK friends use iMessage and whatsapp. It's no big deal to use more than one.
  - anigbrowl 13y ago
    The switching cost is virtually nil. You install another app in parallel, tell your friends you like it so much more, and if it's better they start using it. Eventually you pay less attention to the first app, spend longer before replying to messages on there or not at all, and so on.
    - ronaldx 13y ago
      This used to be true about social networks as well, but Facebook (still) seems to be the end of that.
    - vidarh 13y ago
      You can have the service fallback to sending SMS but with an ad for the service before the actual message.
  - stevekemp 13y ago
    Pricing largely depends on location. Certainly in the UK, and most of europe, receiving SMS is free. Sending them might be 10-12p per message, but in practice contracts allow "unlimited SMS(sending)". That's one of the reasons why I'd be hard pressed to use an application on a phone for sending messages - I already have that with SMS, and I don't need to know usernames, etc, I just use the contact number I already have stored.
    - urethra 13y ago
      youre a humorless retard
  - rwmj 13y ago
    Apart from email, but yeah whatever.
  - CamperBob2 13y ago
    Counterpoint: as long as these trivial services are attracting $19 billion valuations, eventually someone is going to do the obvious rational thing, and pay new users $10 each to switch to their competing service. Lather, rinse, repeat, until equilibrium is reached.
    - lmg643 13y ago
      That's a pretty good idea. You could probably even do it for less, or in a way that guarantees usage over time - pay $1 per month they are active on the service and adding friends, over a year.
      - CamperBob2 13y ago
        Especially since the bulk of WhatsApp users are reported to be in other countries. US $1 a month is likely to be a bigger incentive than it seems at first.
        shutupalready 13y ago
        Asking seriously: How would you pay someone $1 a month, especially to users in third world countries? For that matter, you could you efficiently pay users in the United States a dollar month? To try to answer my own question, how about: - give $1 lottery tickets (in a lottery that is well-known and recognized for each country in which you operate) - give $1 credit that allows the user to buy any iPhone or Android app he wants (Is there a way to actually do that?)
        judk 13y ago
        iTunes gift card, the universal currency.
        deleted 13y ago
        [deleted]
    - robbles 13y ago
      You can pay users to join your service and download your app, but that doesn't mean they'll become monthly active users, which is the metric your business will be valued on. This is a user acquisition tactic like any other - it doesn't get around the network effect that WhatsApp and others capitalize on to stay in the lead.
  - tonypace 13y ago
    Whatsapp was completely destroyed in the Taiwan market about a year ago, simply because Whatsapp offered one year free while Line was free forever. When the year was up, people switched. People here laughed at the announcement - why would anyone pay 3 bucks for every person on Earth for a turkey like that? We weren't even willing to pay 2 dollars for ourselves.
  - sizzle 13y ago
    their popularity was only viable once smart phones and data connections became ubiquitous with everyday life
- deleted 13y ago
  [deleted]
sgloutnikov 13y ago
Viber has also been steadily growing along side WhatsApp. I think they had around 200M users last summer. A great thing they have that was not in WhatsApp is free VoIP calling.
porter 13y ago
messaging has network effects no?
- snogglethorpe 13y ago
  Indeed, but users can easily have multiple apps installed and use them simultaneously, so it's not particularly hard for a user base to migrate over time -- having some friends on app1 and other friends on app2 isn't a huge deal for the most part... [Most of these apps have already done this, by luring users away from SMS]
adnam 13y ago
Except Whatsapp has a very strong network effect that's difficult to replicate (the other person must also have the app). That's why we designed Upptalk to interoperate with standard telephony services like SMS and SIP.
- judk 13y ago
  Installing an app is 2 taps, it's just as easy as opening a text message.
  - ben336 13y ago
    Do all your friends come with 2 taps though?
    - aaronem 13y ago
      With enough practice.
  - 650REDHAIR 13y ago
    Telegram have a bunch of J2ME apps?
- btilly 13y ago
  Network effects are smaller than people think. The best estimate from multiple methodologies is n log(n).
  - adnam 13y ago
    I disagree, network effects are incredibly strong. Since Telegram is only capable of talking to other Telegram apps, its value increases not only in proportion to the number of contacts who have it installed, but also how often you need to communicate with those people.
    - btilly 13y ago
      See http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf for more backing up what I said, based on a variety of arguments from a variety of sources.

by lmg643 13y ago

diminish 13y ago

for messaging, there may be a rule similar to moore's for transistors; ... every 18 months a new messaging platform will be the go-to place.

sjtgraham 13y ago
This is pretty ridiculous. Whatsapp solved two important problems. It was the first non-SMS cross-platform messaging service for mobile (telephone number as address, etc), and carriers were (and still are) price gouging on SMS pricing. Whatsapp quickly picked up initial users because of this and growth accelerated as it benefited from the massive network effects of more and more users joining the service. It's not clear that Whatsapp has any major problems as SMS does that would allow an upstart to make a significant incursion into Whatsapp's user base. Whatsapp also has massive network effect now, the switching cost seems too high.
- gress 13y ago
  The switching cost being installing a different app?
  - chaz 13y ago
    No. The switching cost is getting all of your contacts to install a different app and use it regularly.
    - Retric 13y ago
      But they don't actually need to use it just have it installed and you can message them. If they respond with a different app or a text message nothing breaks.
      - gress 13y ago
        Exactly - I know numerous people who use multiple apps for messaging. Most of my US friends use iMessage and Facebook. But my UK friends use iMessage and whatsapp. It's no big deal to use more than one.
- anigbrowl 13y ago
  The switching cost is virtually nil. You install another app in parallel, tell your friends you like it so much more, and if it's better they start using it. Eventually you pay less attention to the first app, spend longer before replying to messages on there or not at all, and so on.
  - ronaldx 13y ago
    This used to be true about social networks as well, but Facebook (still) seems to be the end of that.
  - vidarh 13y ago
    You can have the service fallback to sending SMS but with an ad for the service before the actual message.
- stevekemp 13y ago
  Pricing largely depends on location. Certainly in the UK, and most of europe, receiving SMS is free. Sending them might be 10-12p per message, but in practice contracts allow "unlimited SMS(sending)". That's one of the reasons why I'd be hard pressed to use an application on a phone for sending messages - I already have that with SMS, and I don't need to know usernames, etc, I just use the contact number I already have stored.
  - urethra 13y ago
    youre a humorless retard
- rwmj 13y ago
  Apart from email, but yeah whatever.
- CamperBob2 13y ago
  Counterpoint: as long as these trivial services are attracting $19 billion valuations, eventually someone is going to do the obvious rational thing, and pay new users $10 each to switch to their competing service. Lather, rinse, repeat, until equilibrium is reached.
  - lmg643 13y ago
    That's a pretty good idea. You could probably even do it for less, or in a way that guarantees usage over time - pay $1 per month they are active on the service and adding friends, over a year.
    - CamperBob2 13y ago
      Especially since the bulk of WhatsApp users are reported to be in other countries. US $1 a month is likely to be a bigger incentive than it seems at first.
      - shutupalready 13y ago
        Asking seriously: How would you pay someone $1 a month, especially to users in third world countries? For that matter, you could you efficiently pay users in the United States a dollar month? To try to answer my own question, how about: - give $1 lottery tickets (in a lottery that is well-known and recognized for each country in which you operate) - give $1 credit that allows the user to buy any iPhone or Android app he wants (Is there a way to actually do that?)
        judk 13y ago
        iTunes gift card, the universal currency.
        deleted 13y ago
        [deleted]
  - robbles 13y ago
    You can pay users to join your service and download your app, but that doesn't mean they'll become monthly active users, which is the metric your business will be valued on. This is a user acquisition tactic like any other - it doesn't get around the network effect that WhatsApp and others capitalize on to stay in the lead.
- tonypace 13y ago
  Whatsapp was completely destroyed in the Taiwan market about a year ago, simply because Whatsapp offered one year free while Line was free forever. When the year was up, people switched. People here laughed at the announcement - why would anyone pay 3 bucks for every person on Earth for a turkey like that? We weren't even willing to pay 2 dollars for ourselves.
- sizzle 13y ago
  their popularity was only viable once smart phones and data connections became ubiquitous with everyday life
deleted 13y ago
[deleted]

sgloutnikov 13y ago

Viber has also been steadily growing along side WhatsApp. I think they had around 200M users last summer. A great thing they have that was not in WhatsApp is free VoIP calling.

porter 13y ago

messaging has network effects no?

snogglethorpe 13y ago
Indeed, but users can easily have multiple apps installed and use them simultaneously, so it's not particularly hard for a user base to migrate over time -- having some friends on app1 and other friends on app2 isn't a huge deal for the most part... [Most of these apps have already done this, by luring users away from SMS]

adnam 13y ago

Except Whatsapp has a very strong network effect that's difficult to replicate (the other person must also have the app). That's why we designed Upptalk to interoperate with standard telephony services like SMS and SIP.

judk 13y ago
Installing an app is 2 taps, it's just as easy as opening a text message.
- ben336 13y ago
  Do all your friends come with 2 taps though?
  - aaronem 13y ago
    With enough practice.
- 650REDHAIR 13y ago
  Telegram have a bunch of J2ME apps?
btilly 13y ago
Network effects are smaller than people think. The best estimate from multiple methodologies is n log(n).
- adnam 13y ago
  I disagree, network effects are incredibly strong. Since Telegram is only capable of talking to other Telegram apps, its value increases not only in proportion to the number of contacts who have it installed, but also how often you need to communicate with those people.
  - btilly 13y ago
    See http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf for more backing up what I said, based on a variety of arguments from a variety of sources.