The Race to Become the WeChat of the West
I remember pitching Kik to investors in 2009. It was the most frustrating experience. Why do you need chat that’s just on your phone? Why wouldn’t you just use Facebook Messenger? Why not just text? At the time, the West completely underestimated chat. People thought Facebook would rule forever.
Five years and a string of billion-dollar financings later, the West no longer questions the value of mobile-first chat. But once again, the West is completely underestimating where this is all going. They look to the East at WeChat and Line and say their platforms could never work here. They are so right, and yet so wrong.
The East
I remember when I first truly appreciated what was happening in the East. An engineer from Alibaba was in our office and we were talking about what was happening in China. But he could tell that I didn’t really appreciate it at an emotional level. Eventually, he pulled me aside, and said, “Ted, I want to show you something.” He took out his phone and opened WeChat, the dominant chat app in China. I had used the app several times before, so everything looked familiar. But then he said, “Watch this.” He went into settings and changed the language from English to Chinese.
“Now, take another look.”
The app had become five times bigger. Now, I could add my credit card. I could find a huge selection of games. I could order a taxi. I could browse take-out food. I could even apply for a mortgage and make investments. This wasn’t a chat app — this was a chat platform.
At the base of WeChat, you have chat, the killer app of mobile, connecting a vast network of people. Unlike PC-based social networks that connect people through the PCs they sometimes use, chat networks connect people through the smartphones that are almost literally part of them. With chat there is no such thing as offline.
On top of chat, you have content. Content could be the music you listen to, the clothing you buy, or the games you play. For the last four years, all chat networks have been struggling to figure out the most native, viral, compelling way to integrate content into chat. At first, separate apps were integrated into chat, so you could share content from other native apps. But that wasn’t quite right. A friend would send you content and you’d have to go to the app store to download a whole new app just to see what it was, creating all kinds of friction (assuming the developer even made their app for your operating system of choice).
“There are more official accounts created on WeChat each day in China than there are websites brought online.”
At Kik, we decided to move from native apps outside chat to web apps inside chat. Now when someone sent you content, you could experience it in one click, regardless of what platform you were on. But mobile web was hard. The discovery model wasn’t in place. Content providers and developers weren’t quite ready to build for the mobile web. Monetization models didn’t exist.
So we shifted the focus from web apps inside of chat to the chats themselves. Developers could now create “official accounts” on Kik that people could chat with in the same way they chat with friends. Once a user had opted in, he or she would receive text and multimedia content, as well as links to integrated web “cards” (mobile sites optimized for Kik) or links to content in external native apps. Official accounts were easy to build, easy to try, easy to spread, and easy to extend. Official accounts tied it all together.
It worked. On Kik, 70 percent of the 100 million messages brands have sent out are read within the first hour. Brands like Skullcandy have gone on the record to say they’ve never seen numbers like this. But we’re still years behind the East. In fact, I recently heard that there are more official accounts created on WeChat each day in China than there are websites brought online. Think about that: today, if you start a new business in China, you don’t put up a website first — you open an official WeChat account. WeChat is the web.
The question is, what will happen in the West?
WeChat of the West
If you talk to me, or to Evan Spiegel at Snapchat, we’ll say the same thing: We want to be the WeChat of the West.
If you say that to people in Silicon Valley, you’ll likely encounter something we’ve already heard a lot: The WeChat model will never work in the West. In China, you have a newer internet user who’s coming online through their smartphone and looking for new services. When they bank or shop through WeChat, they aren’t switching services — they’re merely being educated on which services to use. Compare that to the West, where you have much more sophisticated consumers. We already shop at Amazon, bank at Chase, and book rides with Lyft. People in the West have already decided which services they want, and they aren’t going to switch because of a better integration with chat. The WeChat strategy, while great in the East, will never work in the West.
And we agree. Would you switch from Amazon to Walmart just because you can now Kik a pair of shoes to your friends? I doubt it, unless you’ve never shopped at either store before.
But here’s what Silicon Valley misses: those people that have never shopped at either store. Youth. Young consumers in the West are like all consumers in the East. They haven’t yet decided where to bank, where to shop, or what games to play. But they all chat.
“Young consumers in the West are like all consumers in the East.”
For Kik, youth are the primary focus. To be the WeChat of the West, you have to have a mobile-first chat and a chat-first platform, and you have to get the youth on your side, in a safe and authentic way.
Through this lens, you can see why Facebook was so desperate to buy Snapchat. Snapchat has mobile-first chat, aspirations to build a platform, and a young userbase. Compare that to Facebook. Its Messenger is not a mobile-first chat app (there will always be the option to go offline), it doesn’t have a chat-first platform (a consequence of being founded in 2004), and it no longer owns Western youth (Hi, Mom!).
Now, $19 billion bought Facebook the world’s most popular mobile-first chat app, but WhatsApp still doesn’t have Western youth or a chat-first platform (in fact, its founders seem to be actively against having one). It is simply a really popular SMS replacement app. Could WhatsApp add a chat-first platform? Sure. Just like BlackBerry could’ve added a platform (and eventually did). But, just like BlackBerry, WhatsApp was never built with a platform in mind, making the process of shimming one in incredibly difficult.
This pattern isn’t new. IBM could have bought or built better PCs, but it didn’t. Microsoft could have bought or built better search, but it didn’t. Google could have bought or built better social networking, but it didn’t. Facebook will try to buy or build better chat. My bet is that it won’t. It’s much more likely that Facebook will be the Microsoft of chat. Should’ve won. Could’ve won. Didn’t win.
The WeChat of the West will have to come from somewhere other than 1 Hacker Way. And as WeChat, Snapchat and Kik are already showing, maybe it won’t come from Silicon Valley at all.
