Accessing the address book: why mobile apps can grow so quickly
In his post Facebook massively overpaid for WhatsApp, Albert Wenger makes an interesting assertion: “the switching cost for users on a phone number based messaging services is at or near zero”.
Think about that for a minute. People can switch these services in the blink of an eye and basically start using another one tomorrow. Wenger points out that another messaging app got 5M downloads in one day recently: Telegram:
4.95 million people signed up for Telegram today. Telegram is #1 most downloaded iPhone app in 48 countries. To the bad news…
— Telegram Messenger (@telegram) February 24, 2014
There is one very important reason why any of this is possible: the user’s social graph is not locked away in a proprietary format. Mobile apps have access to your address book on your phone and when they start up for the first time they ask for permission. Once they have that, you can basically start typing anybody’s name and send them a message. It’s actually a great user experience.
So that’s what’s at odds here. Wenger is saying that WhatsApp doesn’t have long-term lock-in so isn’t worth $19B. That may be true, but one of the reasons why WhatsApp grew so big so fast was because it was so easy to get started from the phone’s address book. As long as iOS and Android give apps access to the address book they can and will grow to extraordinary heights very quickly.