With the $19 billion purchase of WhatsApp by Facebook Inc (NASDAQ:FB) just completed you would be forgiven if you forgot that there remain a number of other widely used messaging apps on the market.
While WhatsApp is hugely popular in Europe, Kakao has a near stranglehold on Korea and other Asian markets. Its app is installed on more than nine in 10 smartphones in the country, and has launched apps in Indonesia, Philippines, Malaysia and Japan.
Following its second round of private fundraising the company is presently valued at $2.4 billion and is close to selecting banks to oversee its IPO that is expected next year.
Kakao’s co-CEO speaks of the future
Speaking at the Mobile World Congress in Barcelona this week, its co-CEO Sirgoo Lee said, “We will be going public in May next year. Who knows how much the value will be in a year from now?”
Alluding to the WhatsApp sale Lee continued, “Hopefully [value] will grow, we are not tied to a figure. It just goes to show you that the shift to mobile is going at a very fast speed.”
Kakao and its 130 million monthly users saw revenues rise from $46 million in 2012 to around $200 million last year and Lee sees room for considerable growth.
“We can experiment with different business models,” said Mr. Lee.
“We have been growing very fast. We got out of the red about a year and half ago after launching games – that brought in a lot of revenue for us. Last year, we made $65m in profit, and year before that it was about $60m-$70m.”
Returning to the recent WhatsApp acquisition by Facebook, Lee beamed as he said: “It was a surprise to a lot of people because they don’t see the value today but Facebook paid that money because the potential is there for WhatsApp to become even bigger than Facebook. The move from web to mobile is happening much faster than even we thought. The PC might disappear.”
Unlike Google, Apple, WhatsApp, Lee is content in Asia. He sees no need for expansion outside its home market.
“Europe and the US are a big mystery to us. The people are content with text messaging and WhatsApp – simple texting. It takes time for people to realise that there is much more to messaging than just text. I would rather have a large number of users in a small area than scattered users. A concentrated user base can transform a service to a platform and a platform can do all sorts of things. You become a portal.”
That may just work – it has so far.