Venture

In India And Mexico, WhatsApp Is The New Growth Hack

Scooping aside, in order to work at Aarti and Sumit Rastogi’s ice cream shop Artinci in India, you have to have proficiency in WhatsApp, a social messaging app.

Co-founder Aarti Rastogi has a hearing impairment, so 90 percent of the business’ communication is through the Facebook-owned messaging app, which is currently free for normal and business users.

“It’s the lifeline of our business,” said Sumit Rastogi, the director of the ice cream shop.

Subscribe to the Crunchbase Daily

The Bengaluru company is one example of the 5 million monthly active users of WhatsApp’s business app, a version of the main messaging app that was rolled out about 22 months ago (not to be confused by WhatsApp Business API, a paid service for large enterprise customers). WhatsApp Business customers range from a nail salon in Mexico, to a São Paulo-based business that makes turbans, to a small jewelry store in Yogyakarta, Indonesia that works on wedding bands.

The rallying of demand in developing regions like India and Mexico is positioning WhatsApp Business as more than just an enhancer of a business, but instead a unique, needed part of the plan.

To paint a picture of WhatsApp’s current reach, more than 1.5 billion people in over 180 countries use the WhatsApp main app, according to Amrit Pal, a product manager over at WhatsApp. In India, it’s especially popular. More than 400 million people use the app every month in the country, Pal said.

The flagship characteristics of the business app include business profiles to enhance professionalism, messaging tools that aid with fast answers to frequently asked questions, and labels, so payments and follow-ups feel more manageable.

Still, Bryss del Ángel Martínez, the founder of Nails Bryss, a nail salon that also offers training for manicurists, said the platform “at first… was something that not everyone was used to.” Appointments were scheduled by phone or directly at the salon, she said, but adaption came with time.

Now, she said, in the one year since WhatsApp Business has been part of Nails Bryss’ business plan, its client portfolio has almost doubled. Martinez is thinking of opening up a second store in the near future.

Other startups that cite WhatsApp as a key business component include Vahan and Digi-Prex, both born out of Y Combinator’s most recent batch. The latter, for example, said during a pitch that it would acquire customers through WhatsApp to build out its online pharmacy in India.

Adora Cheung, a partner at Y Combinator, said there are no specific YC materials focused on WhatsApp, but collaboration on the service happens between companies in the batch.

WhatsApp was used as “a way to get around high SMS and data costs, and it just stuck,” she continued.

WhatsApp didn’t offer much information on how it is working directly with startups, but the company did explain that it has formed partnerships with local organizations, such as Startup Mexico or Startup India, to tap into talent.

About 48 percent of small businesses in Startup Mexico that use WhatsApp Business say they’ve been able to hire more employees thanks to growth driven by the app

Startup India did not respond immediately for comment. Startup Mexico explained that one-in-three Mexican startups they house develop their business atop the WhatsApp platform. About 48 percent of Mexican startups that are part of the Startup Mexico community in WhatsApp Business say they’ve been able to hire more employees thanks to growth driven by the app, the incubator said.

Rodrigo Maldonado, a program coordinator at Startup Mexico, said they partnered with WhatsApp “because everyone in Mexico who has a smartphone, has WhatsApp.” The next order of business was teaching startups under their umbrella how to best optimize the app, which Maldonado says has been a work in progress.

WhatsApp Business tackling markets in developing countries comes with its own set of nuances. Its parent company’s reputation, for one.

Facebook, which acquired WhatsApp for a steep $16 billion in 2014, has a track record of volatile third-party business management.

A few weeks back, Facebook suspended “tens of thousands” of apps using improper data, according to The Verge. The social media company also released a blog post saying that the apps were removed for multiple reasons such as “inappropriately sharing data obtained from us, making data publicly available without protecting people’s identity or something else that was in clear violation of our policies.”

Privacy concerns by WhatsApp’s parent company has left India legislators in flux. As first reported by Business Standard, the Indian government is delaying WhatsApp Pay’s launch in India, due to lack of data processing compliance. The saga has continued for months, and while the payments feature has already racked in 1 million users, it needs government approval before rolling out the system more widely. Right now, Paytm, an electronic payments startup, seems to be filling this gap.

Beyond compliance concerns, over-reliance on a singular app is never a good idea, according to Y Combinator’s Cheung. For example, what if the Business app goes from free to not?

Michael Cusumano, a professor at MIT Sloan School of Management who has been studying platforms for over 25 years, says we shouldn’t be worried.

“Facebook is a money machine because of the deep interactions among its users it can sell very targeted ads with high prices,” he said, while on a ferry before a board meeting. “It can afford to subsidize WhatsApp and keep it free.” The WhatsApp team also said that the features of the app will remain free.

Illustration: Li-Anne Dias.

Copy link