The ShareChat phenomenon

The home-grown social network — part Instagram, part Facebook, part Twitter, all vernacular — has millions of users flocking to it. The hard part will be retaining and monetising them

“How are you?” That’s me.

“Hi,” comes the reply. A few seconds of pleasantries and fake names, “Please send your picture.”

Uh-oh. Two minutes of silence and the chat has been dropped.

In another window, someone asks if I am a girl. As I answer “No,” the window closes on me within seconds.

A third person asks me to text only in Hindi.

These are my first 10 minutes on the “Shake and Chat (with strangers)” feature of the social network app, called ShareChat. Chat without sharing your profile, like a blind date where you are actually blindfolded.

It’s 10 am on Independence Day and I am surfing further on ShareChat. A patriotic post has been seen by at least 177,000 people and shared 6,000 times on WhatsApp. Another image with the national anthem on it has been seen 103,000 times and liked by 1,100 people on my feed, which looks somewhat like Instagram.

I can post anything here — images, audio, video, GIFs or a status that is no less than 50 characters. And I can consume content through two Instagram-style scrolling feeds, one that has posts from my friends and people I follow and another that has “Trending” posts. Immediately below each post are buttons to share it on WhatsApp, like it, enter a comment, flag it as inappropriate or save it to my gallery in the app for later viewing.

Everything on ShareChat is sorted into various categories and subcategories using tags, and I can choose what I want to see by selecting the tag of my choice. ShareChat’s 35-member team usually creates these tags, which are later taken over by the users; there is a separate corner for user-created tags. On I-Day, under the tag “Saare jahaan se acha” are sub-tags like “15 August Special”, “15 August Selfie” and “Agar main Pradhan Mantri hota”.

The average number of tags or genres that ShareChat uses to organize content

It’s an interesting assortment of content. While some of these tags are permanent and broad, like jokes or lifestyle, some like the Independence Day are created for different occasions. Everything from good-morning messages and jokes to romantic posts and adult humour has a tag of its own. For instance, the adult humour or sexually suggestive content is titled “Non-Veg”. “Adult content is only for adult audiences. If you can’t share it with your family, tag it NV,” say the platform’s content and community guidelines.

Not all tags are as euphemistic though; most are pretty straightforward, like Mazedar, News and Politics Corner, Jyotish Shastra, Fitness Mantra and Filmy Duniya.

A little bit of everything

ShareChat, owned by Bengaluru-based Mohalla Tech Pvt. Ltd is more than just an Indian replica of a global social media platform like, say, Facebook. It’s effectively a bunch of different social apps packed into one. And then some.

I can connect and chat with friends, like with Facebook (or pretty much any other social media network). I can also follow other users without personally knowing them and get a never-ending feed of mostly images à la Instagram, I can post short status updates like on Twitter. And the Shake and Chat feature is reminiscent of China-based Tencent’s WeChat.

And getting back to tags, they have a lot to offer. Like catalogues of blouse designs, tattoo and Mehendi art or hairstyles. There’s your Pinterest. Finally, any post is just a click away from being shared on WhatsApp, .

If that sounds a bit much to you, don’t worry. This application is probably not for you — one of the 175 million English-speaking internet users of India. ShareChat is focused entirely on Indian languages — it doesn’t even offer the option of English language content (though you can set the app to display controls in English). You can switch between content streams in any of 14 languages: Hindi, Tamil, Gujarati, Punjabi, Marathi, Malayalam, Telugu, Bengali, Kannada, Odia, Assamese, Bhojpuri, Haryanvi and Rajasthani.

Content discovery: check. Chat: check. Trends: check. Ease of sharing to WhatsApp: check. Local languages: check.

The ShareChat phenomenon is all of three years old (officially launched in October 2015) but it checks all the right boxes.

With nearly 10 million daily active users, ShareChat’s vernacular offering has created a social dreamscape for 234 million Indian language internet users that English-language apps probably never could. But the company is yet to monetise the application in any way and doesn’t plan to do so till it hits at least 25 million in daily active users. “There are at least 10 more languages which have the potential of a million internet users each,” says Ankush Sachdeva, a chief executive officer at ShareChat.

The company’s target is the next 300 million Indian-language internet users. By 2021, nine out of every 10 internet users in the country are likely to communicate primarily in local languages, according to an April 2017 report by Google and consulting firm KPMG. The population of Indian-language internet users is expected to grow at an annualised rate of 18%, compared with a 3% growth rate for English-language users, the report says. KPMG and Google have considered eight Indian languages for projections in the report.

Winning that audience is easier said than done, though. First, the shelf life of such applications is limited and companies often face difficulty in sustaining their fickle user base. Second, social networking applications in India are increasingly coming under regulatory scrutiny, in light of the ongoing debate over the fake news and privacy concerns. How far can ShareChat go before its luck runs out?

Let’s Start Up

It’s the story of every other startup. Three IIT Kanpur graduates Sachdeva, Farid Ahsan and Bhanu Pratap Singh, have been together since college (around 2012) and developed application after application — until one stuck. ShareChat was born when Sachdeva discovered a gap in the vernacular market while operating a WhatsApp group sometime in 2014.

“People were consuming vernacular content either on video or via WhatsApp groups, which are not designed for content consumption. There was no platform where users could upload content and consume it as well,” says Sachdeva.

The first version of ShareChat was a simple chatroom. Soon enough, they realised that this wasn’t an ideal platform for content consumption — the content got buried under general exchanges among users.

Then came chatbots where the users were provided with the content they would ask for. There were content chatbots which answered user queries for things like wallpapers and then there were other bots that recommended products based on what a user asked for. While the content bots generated traffic and queries, the others fell flat. That’s when ShareChat decided to switch to user-generated content. “We realised that users were only interested in such content and that chatbots were a bad way to provide that,” says Sachdeva.

Another insight that ShareChat gathered was that when people picked English as their language of choice (an option back then), they had zero engagement on these bots and were actually more comfortable with vernacular languages. “They were picking English because they didn’t have experience with regional languages on applications,” says Sachdeva.

And so, they hit upon the idea of a “lazy” feed, organised by hashtags, of only local-language content, which users could scroll through instead of submitting specific requests. The concept struck a note with investors and in February 2015, venture capital fund India Quotient seeded the company with about Rs 50 lakh ($71,340).

So far, ShareChat has raised about $23 million in funding from the likes of SAIF Partners, Lightspeed Partners, Venture Highway, ShunWei Capital and Xiaomi. The company, in its series B round in December 2017, was valued at $70 million.

When things get ugly

It hasn’t been easy going through. ShareChat’s members are primarily nascent internet users, typically aged between 22 and 25. The app has had to deal with the dissemination of insensitive content or fake news, or actions that can even threaten the privacy of a user, all common issues when you are catering to new internet users. For instance, a user abusing another user or a certain section of society is routine, going through my conversation with one of the users on ShareChat.

The primary concern, according to its content and community guidelines, posts that are violent, abusive, non-consensual, contain hate speech or are explicitly pornographic. “We have created algorithms and processes to ensure that the community doesn’t experience any content that is disturbing or provocative in nature and doesn’t threaten anyone’s privacy. Our algorithms are getting better,” says Ahsan, the chief operating officer at ShareChat.

Additionally, ever since Facebook’s Cambridge Analytica scandal set the user privacy debate in motion, the government has been wary of social networking platforms operating in India and has been working on framing a data protection law.

ShareChat says it is working to pre-empt this and plans to broadly comply with the European Union’s General Data Protection Regulation, or GDPR, which was implemented earlier this year and has quickly become a benchmark for privacy law.

Currently, the company stores a user’s login data, contacts list (with consent), location data and device details, including what other applications are installed on the phone. The user agreement allows ShareChat to share this data with third parties such as business partners and advertising agencies. The firm’s privacy policy, though, adds that this data will not be shared on an individual basis, but presented in an anonymised, aggregated form to advertisers.

Show me the Money

The big question: Popularity aside, will ShareChat ever make money? While the founders say they have evaluated ways to monetise the product, Sachdeva says these won’t be implemented anytime soon. Definitely not this year.

One of the obvious avenues that ShareChat is looking at for revenue is advertising. Another is micro-transactions where the company can charge users for certain services like horoscopes. It is a strategy notorious for its simplicity. By 2021, the number of Indian-language internet users is expected to be 536 million, making every vernacular application a darling of advertisers. The kind of data ShareChat collects (and can share with advertisers), can easily help them analyse users and plan targeted advertising.

“Data management platforms for advertising brands are always looking for partners who can help provide a target audience, despite the recent scrutiny around data privacy,” says Vidya S. Nath, director, digital media, at consulting firm Frost and Sullivan. “Acquiring a large user base across a fragmented demographic could make such applications a valuable partner for any telco or advertiser.”

But the viability of such an approach is still questionable. First off, revenue per user for the audience ShareChat caters to is bound to be low. Second, most social networks in India have and are facing the challenge of sustaining active usage of their applications. “In a recent study, we found that even for popular e-commerce apps and sites, the percentage of conversion of registered to active users is 10% for the leading two e-commerce apps (Amazon and Flipkart), while the majority of them have less than 2%. Users of social media communication apps can be even more fickle,” says Nath.

Take the example of Hike. Till 2016, the Tencent-backed startup was one of the fastest to enter the unicorn club. But since then, the company’s daily active users have dropped by about two-thirds, from 23 million to 8 million. Over time, Hike’s key features lost relevance when WhatsApp launched similar propositions. Today, its edge is gone and Hike has fallen way behind its competitors.

ShareChat, unlike Hike, has a first-mover advantage over its competitors. But that may not end up counting for much, as none of its features are too unique to not be copied. Moreover, the app is operating in a space that is shaping up to be the next battleground for content applications in India. Toutiao, one of the most valuable startups in China, in July launched a social networking app called Helo — and it looks and works exactly like ShareChat.

I spent a few days with both ShareChat and Helo; I am still confused as to which is which.

A picture of ShareChat (left) and a screenshot of Helo (right).

For now, ShareChat is basking in the glory of its popularity, and its success relative to other tech companies that are attempting a foray into the Indian language space. The company says that it’s preparing for competition and adding more users, and maintains that it has the advantage of being the first mover and a home-grown company which understands its community.

The experiences of the ones that came before it shows that the company needs to move fast and safe. Fast enough to beat rivals before its propositions are no longer unique enough for it to survive. Safe enough to be not beaten down by regulation.

Clarification: An earlier version of this story had incorrectly mentioned the number of monthly users as 10 million. The correct figure is actually 20 million. The article has been corrected to reflect the same.

PS: Original article Published in “The Ken”