Facebook Buys WhatsApp: 3 Lessons for Your Business

www.jeffkorhan.com

WhatsApp is an instant messaging service for smartphones that has over 450 million users, and it is growing globally at a rate of one million users every day.

How WhatsApp operates promises to influence Facebook as much as its mobile technology. Tweet this

That has lessons that can help your business ensure its relevancy moving forward.

#1 – Don’t Fall in Love with Your Business Model

Facebook’s business model is clearly driven by revenue from advertising. This enriches Facebook at the expense of advertisers and users. That’s right, the content that finds its way into your newsfeed is largely the result of advertising. We tend to forget that.

This is one reason why I have never liked this model, and have instead suggested a subscription model, much like the one that WhatsApp employs. They charge all of their users 99 cents per year, with the first year being free. I’m sure you can expect that to go up in the future.

Is there anything wrong with that? Keep reading to learn why some form of subscription model may prove to be beneficial for everyone concerned.

#2 – The User Experience Matters

Wouldn’t your business gladly pay a few hundred dollars/year to have all of its content delivered to 100% of its fans? Would you as a user pay fifty dollars/year to have an unfiltered Facebook experience? Would you pay one hundred to have no advertising at all?

Thankfully, WhatsApp co-founder Jan Koum is an industry veteran who now has a seat on Facebook’s board of directors. If his voice is heard it will hopefully encourage more focus on earning revenue while respecting the user experience.

It’s doubtful Facebook will ever adopt a pure subscription model, but a hybrid incorporating some of its qualities is a possibility.

#3 – Partner with Relevant Businesses

From the beginning Facebook has encouraged it’s employees to “move fast and break things.” Breaking things will often get you into trouble, and over the years it has for Facebook, especially in regards to privacy. However, now that Facebook is a public company it is taking more prudent risks.

Facebook recognizes that it is not cool anymore, especially with the younger crowd that is gravitating towards applications like Instagram and WhatsApp. Thus, in order to ensure its future relevancy Facebook is buying relevancy.

While making acquisitions may not be a possibility for your business, it can partner with those in your industry that have different perspectives, approaches, and platforms. Many are lauding Facebook’s acquisition of WhatsApp, with some even beginning to compare Mark Zuckerberg’s forward thinking wisdom to that of Steve Jobs.

If this acquisition influences Facebook as suggested here, then count me in that camp too. Facebook has never been more profitable. That’s the best time to break things.

Is it time to reconsider your business model to provide a better customer experience?

About the Author:  Jeff Korhan, MBA, is the author of Built-In Social: Essential Social Marketing Practices for Every Small Business – (Wiley 2013)  

He helps mainstream businesses adapt their traditional growth practices to a digital world. Connect with Jeff on LinkedInTwitterFacebook, and Google+.

Facebook vs LinkedIn – Is a Public Company Better?


Year-to-Date Price Chart of LinkedIn Shares

Now that Facebook has finally gone public, investors and marketers alike are making comparisons with LinkedIn, a social network that went public one day shy of a year ago.

I bought ten Facebook shares just to have a reason to periodically check-in and stay involved with the future business plans of Facebook, more as it relates to your business and mine.

I was able to acquire my shares at the opening offer price of $38 by placing a limit order and patiently waiting for it to come back to that level, which it did just before the close of trading for the day.

It is interesting that LinkedIn’s share price doubled the day of its IPO, whereas that of Facebook remained flat.

Rumor has it the price of Facebook shares were propped up by the investments firms involved with the IPO, with only a small fraction of the buying coming from regular investors like you and me.

The cool reception to the Facebook IPO and the strong rise in the pricing of LinkedIn shares in recent months (chart above) does give us some insights into the confidence business marketers currently have in these two respective social networking sites.

Let’s take a closer look at where this can go.

Solid Business Models Build Confidence

LinkedIn uses a traditional business model. Revenues come from a small percentage of users that willingly pay for premium features, with the majority enjoying a free ride and some very useful features. This provides a pure experience for all – the only difference is those of us that have upgraded can push the envelope of its capabilities.

By comparison, the Facebook model is driven by advertising revenue. Your activity on Facebook is used to attract advertisers. There isn’t really anything wrong with that, because that is in fact what Google does too. It’s a game – one that you play to be more findable by Google by learning how to optimize your online presence for those seeking the solutions you provide.

Unfortunately, the Facebook advertising model intentionally provides a filtered experience for its users.

It blocks the majority of your fans from seeing the news your business page publishes in order to encourage you to buy more Facebook advertising. Like it or not, that’s how  Facebook has set up their game.

I personally don’t like it at all. Nevertheless, read on as there are some things Facebook could do that would earn back my trust.

Trust is Slowly Earned Over Time

One of the Facebook core values is to “move fast and break things.” That is all well and good, except that it makes the nearly one billion Facebook users unwillingly victims of its experimentation.

To be honest, Google also tosses lots of technology at us with only an idea as to how it can be used for practical benefits. However, most of the time these technologies are tools that we can choose not to use if they do not fit our needs.

On Facebook we are dug in – our personal and business communities are represented on Facebook, so breaking things with little or no notice is a core value that Facebook may wish to rethink for the benefit of all concerned. 

That practice has led many not to trust Facebook – and that’s not good for business. Instead of thinking about what Facebook wants, they should start listening to us – the users, some of whom are now owners of the company.

Earn the trust of your customers by learning from them – build a better Facebook to accomplish its mission of changing the world by making it more open and connected, while also allowing us to accomplish ours.

That will be really good for business – for all of us.

Easy to Work with Attracts Customers

People network for two reasons.

First, as human beings we are hard-wired to socially engage with others. Second, we seek relationships that make us happier.

LinkedIn gives people what they want by being searchable for everyone alike. You can search LinkedIn to find people, companies, groups, and more – allowing you to be successful even when you may not know exactly what you are looking for.

In comparison, sometimes you are challenged to simply find your best friends on Facebook. This is unfortunate because with their massive database of contextual social data, Facebook has the potential to be the most desirable search engine in the world!

If they do this, you can be sure I’ll be buying more shares of Facebook, because they will finally be giving us what we have been waiting years for – a social search engine to tap into the wisdom of our friends.

Heck, it could even get me to invest in more Facebook advertising because I would be more confident that the playing field is as open as Mark Zuckerberg says he wants it to be.

How about you? What’s your take on Facebook vs LinkedIn?

Do you think the Facebook IPO is going to make for a richer and more valuable user experience for all?

How are you staying connected with your important relationships?  Leave a comment below or on your favorite social network.  You can reach the most popular ones with one of the share buttons below. 

Until next time, Jeff

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