Mini-Case Study: WhatsApp

Mini Case-Study

The founders of WhatsApp observed a series of developments that led to the founding of some of today’s fastest-growing services. Mobile phone consumers were increasingly using their phones not just for phone calls, but to send a huge number of SMS messages, even when they incurred steep messaging charges. And though early mobile phone plans didn’t make it easy to distribute images, consumers who had access to image-sending features were increasingly doing so, paying even more for the privilege.

The entrepreneurs who developed WhatsApp, which has flourished around the world identified this pattern of behavior through industry research and direct observation. Like the founders of other services like Line, Kik, Viber and WeChat, WhatsApp’s founders saw an opportunity to offer a messaging platform that would cost consumers less and provide them with a more robust service.

The detective approach enabled Whatsapp’s founders to identify a substantial consumer need. The fact that consumers were overpaying for subpar messaging services from mobile carriers showed that a) they cared a lot about messaging and b) there was an opportunity to offer a substantial improvement. That realization, based on data, opened the door for a new, useful, successful startup.

Entrepreneurial Tip

 

The golden pairing of lower cost and better features that WhatsApp developed is a winning solution for many entrepreneurs. Offering a product that is both CHEAPER AND BETTER in some substantial way (speed, convenience, quality, flexibility, etc) makes it hard for consumers or clients to turn you down. It’s often the lack of one or the other that leads consumers to stay with a known product. Either the new product is more costly, or it’s not noticeably better. In either case, consumers are likely to be subject to status quo bias, or the simple pervasive preference for sticking with what’s familiar.