Lower than two weeks in the past, India’s first and solely indigenous messenger app, Hike, announced its passing. Its CEO, Kevin Bharti Mittal, stated: “As we speak we’re asserting that we’ll be sunsetting StickerChat in Jan 21. We thanks all for giving us your belief. We would not be right here with out you.”
The “Bharti” in Mittal’s center identify additionally belongs to India’s largest — or second largest, relying on how the numbers look on any given day — telecom firm, Bharti Airtel, which was began by Kavin’s father Sunil Mittal, who was as soon as a humble bicycle spare parts purveyor that, in fairytale vogue, rose to change into the proprietor of considered one of India’s most distinguished firms.
With this lineage, you’ll anticipate that it was solely a matter of time earlier than Kavin and Hike turned a mainstay with Indian smartphone customers nationwide. Alas, it was to not be.
It actually wasn’t for a need of cash or connections. In spite of everything, Hike had heavyweight investors within the type of Softbank and Bharti, each of whom on the outset turned 50:50 traders.
At its peak, round 2016, Hike managed to draw a complete of $260 million, together with $175 million from Tencent, an organization that owns China’s most profitable messenger WeChat. The funding introduced its valuation to an enviable and considerably incredulous $1.4 billion determine. One other large identify backer was Tiger World.
But, shortly afterwards, it was obvious that issues weren’t firing based on plan based mostly on its disclosed numbers. Revenues remained flat and its consumer base of a self-reported 100 million was additionally evidently not seeing a lot progress.
In fact, that does not fairly inform your entire story. In spite of everything, most web firms of scale right this moment, like Flipkart or PayTM, are nonetheless shedding cash by the bucketful. It is simply that the wager that they may ultimately optimise their operations, attain a sure scale, and at last make a revenue as extra of India will get wired is sweet sufficient for right this moment’s web traders who aren’t precisely leafing by way of Graham and Dodd’s bible on worth investing.
A STRATEGY THAT DIDN’T STICK
For Hike to have represented a seamless wager price taking, there ought to have been a convincing line of assault that appeared price banking on. Nonetheless, the corporate’s existential muddle might have set in proper from the start.
After I first reported on the outfit in 2013 whereas assembly with Kevin at his workplaces, resplendent in glass and metal and filled with busy individuals engaged in a flurry of exercise, it appeared that the corporate had the whole lot it could have to rival WhatsApp, a well known identify in India on the time with 20 million customers, however comparatively unknown exterior of the nation.
Mittal himself was sensible and urbane, however he was possibly a contact extra confident than he ought to have been. But he was no slouch, having armed himself with levels in engineering and administration from Imperial Faculty, London.
From the outset, Hike was confronted with considered one of two completely different fashions to benchmark — a plain and easy messaging app like WhatsApp; or an “ecosystem” app like WeChat, which captured its customers’ consideration from the time she wakened within the morning all the way in which to bedtime.
Since then, WeChat customers have been inspired to order cabs, purchase flowers, video chat dad and mom, rejig a inventory portfolio, purchase some life insurance coverage, and pay for his or her dry cleansing, all with out ever leaving the app. This was the perfect instance of a brilliant app. Different comparable ones which have made big splashes are Kakao Speak in South Korea and Line in Japan.
Those that received it proper made mountains of cash. Kakao Speak, as an illustration, generated a staggering $203 million in income and an much more astounding $59 million in earnings in 2013 through its 140 million customers hooked on the app’s 180 video games amongst different issues.
Though South Korea was little question a number of eons forward of India, this was a glimpse of a really actual future that might undoubtedly be inside grasp in 5 to 10 years’ time.
On the time, India had not but authorised digital funds, however you can see that it was solely a matter of time earlier than this may occur. Certainly, Hike gained approval for its funds system by 2017, however arguably, there was not sufficient traction to make it a go-to app to pay for issues.
For a brilliant app to work, considered one of many issues should be in place: Both you will have a captive consumer base within the type of a telecom operator, otherwise you construct one like WeChat did. Then, as soon as you’re authorised to get into funds and all the ecosystem fripperies, corresponding to grocery procuring, Diwali money presents, or pizza supply, you progress from a cumbersome wallet-based system to real-time fee transactions which India’s Unified Funds System made possible in 2016.
For some mysterious, baffling purpose nevertheless, Hike didn’t elect to hitch its wagons to 250 million some customers of its sister Airtel community. Maybe the formidable junior Mittal wished to point out Dad, and the world, that he may go it on his personal.
To get a way of the chance missed, check out Airtel’s nemesis Reliance Jio, which is a part of an octopus-like empire that runs the whole lot, from retail to groceries to telecom.
In fact, Jio’s technique is way more sophisticated now that it has entered into an settlement with its latest investor, Fb. As a part of this deal, Fb’s messenger WhatsApp, with some 400 million captive loyal Indian followers, is now integrating with Reliance Jio’s more and more well-liked grocery-ordering initiative, Jio Mart.
However, whether or not Airtel’s archenemy makes use of WhatsApp or ultimately its personal messenger, the plan to benefit from community results by linking the embedded messenger to each Reliance product and repair through a grafted-on fee mechanism is the form of game-changing technique that the Chinese language firms, Tencent and Alibaba, utilised to lift their revenues and valuations to stratospheric ranges.
But, Hike did no such factor. As an alternative, it selected to concentrate on India’s admittedly giant youth inhabitants, considering that this alone would drive consumer progress. To entice them, Hike started growing a localised sticker strategy that delivered quixotic and endearing messages for Indians to ship to one another.
Now, the large benefit that WeChat had on the time of its launch in 2011 was the serendipitous banning of Fb from China, which left no different actual social media choices. The sector was vast open.
India, nevertheless, witnessed the regular ascendancy of overseas social media gamers corresponding to WhatsApp and Fb.
As we speak, Mittal says that going the tremendous app method was a mistake and that the ecosystem in China, with no Western competitors, was and is considerably completely different from India’s. This distinctive ecosystem is what allowed for a brilliant app expertise in China and never India. Sadly, this epiphany was crystal clear even again then.
Mittal is appropriate by stating right this moment that his father’s archrival Mukesh Ambani compelled dust low-cost telecom charges and an ensuing collapse of the telecom sector, which, together with cheap highly effective smartphones with giant storage made housing over 100 apps straightforward to do. This, subsequently, obviated the necessity for a one-stop-shop that housed the whole lot.
Maybe. Nonetheless, a strong in-house messaging app embedded inside the Airtel household would have made the query of which app format to undertake finally irrelevant. Armed with a funds arm very similar to Alibaba’s Alipay or its archrival WeChat Pay, Hike may have been a drive that was sufficiently big to compete with Reliance and Fb.
As an alternative, it’s Reliance that’s now trying to create a super app for itself.
The tragedy of this story is that Kavin Mittal did have some good concepts — he launched a gaming firm on the time and purchased one other to capitalise on a pattern that he appropriately wager on. As we speak, the gaming business has skyrocketed in India and is probably the one internet-related sector that can flourish earlier than the rest.
In the meantime, Hike says it has pivoted to specializing in Vibe, a digital house to work together and watch content material with mates and Rush, a spot for multiplayer bit-sized gaming.
“World community results are too sturdy,” said Mittal in a tweet as a proof for Hike exiting the messaging landscaping. That won’t have been the case had he used a community that was proper below his nostril all alongside.