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Comment by okgabr | Hacker News Reader

It seems that people are running towards Telegram: "This is crazy. We'are getting 100 new registrations every second. Trying hard to prevent connection issues in Europe." https://twitter.com/telegram/status/437313902058426368

UPDATE: Telegram is already facing connection issues in Europe caused by the "avalanche" of new users. https://twitter.com/telegram/status/437335049923727360

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One of the key tenets of Warren Buffett's theory of investment value is based around "moats" - businesses that can't easily be replicated. It's impressive how large WhatsApp has grown but it might be more remarkable how quickly another service can grow in its place. Barriers to entry are continuously falling in mobile and tech in general.

Viber has also been steadily growing along side WhatsApp. I think they had around 200M users last summer. A great thing they have that was not in WhatsApp is free VoIP calling.

for messaging, there may be a rule similar to moore's for transistors;

... every 18 months a new messaging platform will be the go-to place.

This is pretty ridiculous. Whatsapp solved two important problems. It was the first non-SMS cross-platform messaging service for mobile (telephone number as address, etc), and carriers were (and still are) price gouging on SMS pricing. Whatsapp quickly picked up initial users because of this and growth accelerated as it benefited from the massive network effects of more and more users joining the service. It's not clear that Whatsapp has any major problems as SMS does that would allow an upstart to make a significant incursion into Whatsapp's user base. Whatsapp also has massive network effect now, the switching cost seems too high.

Counterpoint: as long as these trivial services are attracting $19 billion valuations, eventually someone is going to do the obvious rational thing, and pay new users $10 each to switch to their competing service. Lather, rinse, repeat, until equilibrium is reached.

You can pay users to join your service and download your app, but that doesn't mean they'll become monthly active users, which is the metric your business will be valued on.

This is a user acquisition tactic like any other - it doesn't get around the network effect that WhatsApp and others capitalize on to stay in the lead.

>it doesn't get around the network effect that WhatsApp and others capitalize on to stay in the lead

I've seen over 5 IM platforms rise and die (ICQ, AOL, MSM, etc), in the last 15 years, so this "network effect" is not that great a barrier...

Then make the payment after a predetermined metric is hit

That's a pretty good idea. You could probably even do it for less, or in a way that guarantees usage over time - pay $1 per month they are active on the service and adding friends, over a year.

Especially since the bulk of WhatsApp users are reported to be in other countries. US $1 a month is likely to be a bigger incentive than it seems at first.

Asking seriously: How would you pay someone $1 a month, especially to users in third world countries?

For that matter, you could you efficiently pay users in the United States a dollar month?

To try to answer my own question, how about:

- give $1 lottery tickets (in a lottery that is well-known and recognized for each country in which you operate)

- give $1 credit that allows the user to buy any iPhone or Android app he wants (Is there a way to actually do that?)

iTunes gift card, the universal currency.

The switching cost is virtually nil. You install another app in parallel, tell your friends you like it so much more, and if it's better they start using it. Eventually you pay less attention to the first app, spend longer before replying to messages on there or not at all, and so on.

You can have the service fallback to sending SMS but with an ad for the service before the actual message.

This used to be true about social networks as well, but Facebook (still) seems to be the end of that.

Whatsapp was completely destroyed in the Taiwan market about a year ago, simply because Whatsapp offered one year free while Line was free forever. When the year was up, people switched. People here laughed at the announcement - why would anyone pay 3 bucks for every person on Earth for a turkey like that? We weren't even willing to pay 2 dollars for ourselves.

Pricing largely depends on location.

Certainly in the UK, and most of europe, receiving SMS is free. Sending them might be 10-12p per message, but in practice contracts allow "unlimited SMS(sending)".

That's one of the reasons why I'd be hard pressed to use an application on a phone for sending messages - I already have that with SMS, and I don't need to know usernames, etc, I just use the contact number I already have stored.

The switching cost being installing a different app?

No. The switching cost is getting all of your contacts to install a different app and use it regularly.

But they don't actually need to use it just have it installed and you can message them. If they respond with a different app or a text message nothing breaks.

Exactly - I know numerous people who use multiple apps for messaging. Most of my US friends use iMessage and Facebook. But my UK friends use iMessage and whatsapp. It's no big deal to use more than one.

Apart from email, but yeah whatever.

their popularity was only viable once smart phones and data connections became ubiquitous with everyday life

Except Whatsapp has a very strong network effect that's difficult to replicate (the other person must also have the app). That's why we designed Upptalk to interoperate with standard telephony services like SMS and SIP.

Network effects are smaller than people think.

The best estimate from multiple methodologies is n log(n).

I disagree, network effects are incredibly strong. Since Telegram is only capable of talking to other Telegram apps, its value increases not only in proportion to the number of contacts who have it installed, but also how often you need to communicate with those people.

See http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf for more backing up what I said, based on a variety of arguments from a variety of sources.

I don't have time right now to read all that, but since I was referring generally to network effects, and not specifically Metcalf's Law, the paper probably validates my comment above.

The paper is about the scaling of the value of a network from network effects as the network scales.

It validates your point in that the value of a network depends both on how many people are in a network, and the value that each gets from it.

But it supports what I said. A variety of ways of estimating the second factor in real networks finds that it tends to scale proportionately to log(n), hence giving a total value of O(n log(n)) for the network.

This is backed up by every way we could find to look at the problem, from the volume of mail delivered by the post office, to scaling laws that have been found to be ubiquitous in social networks.

Installing an app is 2 taps, it's just as easy as opening a text message.

Do all your friends come with 2 taps though?

With enough practice.

Telegram have a bunch of J2ME apps?

messaging has network effects no?

Indeed, but users can easily have multiple apps installed and use them simultaneously, so it's not particularly hard for a user base to migrate over time -- having some friends on app1 and other friends on app2 isn't a huge deal for the most part...

[Most of these apps have already done this, by luring users away from SMS]

100 new registrations every second... wow.

And I thought the Facebook hate was mainly in the tech circles. I guess it's a real "thing". 100 registrations per second can't all be HNers.

I read that Germans are really into the alternative messengers right now. My Facebook feed with old (non-techy) highschool friends is full of "Go Threema" or "You can reach me via Telegram".

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