neeraj aroraFollowing Facebook’s $19 billion acquisition of WhatsApp, I met Neeraj Arora, WhatsApp’s head of business development at the Mobile World Congress, last week. Arora, an ISB graduate, had worked in M&A for many years before joining WhatsApp – first at Times Internet, then with Google India, before moving to Mountain View, USA, when Google moved most of its India M&A team to the valley, realizing there wasn’t much in India to buy.

He had joined WhatsApp three and a half years ago, after being involved with acquisition and investment deals for Google. At WhatsApp, Arora has been responsible for inking business deals with telecom operators for Whatsapp, and he spoke with us in detail about why WhatsApp chose Facebook, what will change at WhatsApp post the Facebook acquisition, how discussions with carriers might be impacted, WhatsApp’s dealings in India and hiring plans. He reiterated that, post acquisition, ‘Nothing will change’. Part 1 of the interview:

MediaNama: What’s not going to change?
Arora: Everything will stay the same. The product, the product direction will stay the same. We’re launching voice in Q2, and that is exciting. We still want to do a billion users as soon as possible. Users will come first. You will not see ads, like if you’re thinking that Facebook has a different business model and this might get applied to WhatsApp, that will not happen. We keep our way of hiring, brand, office, and the end user should not see anything that we didn’t plan for them. We are the decision makers even after the deal gets closed. Jan (Koum, co-founder of Whatsapp) is getting on the board of Facebook, and this gives us comfort that this is a partnership.

MediaNama: The teams will be separate?
Arora: Totally separate. Different offices. We have our own hiring, our own marketing. If we need help from them, we can…they’ve been very supportive, saying whatever you guys need, let us know.

MediaNama: On the product side, I can understand that things will stay separate. What happens in case of business development, where you (Neeraj) have been a one person team so far. So do you now get more resources to hire more people and scale that?
Arora: Great question. Anyway the roadmap was, for this year, to expand the business development team, and to have some local presence. For 5-7 countries, which are really important, India being one of them, we actually want to have one person in that country to help us with business development, press, other miscellaneous activities that happen in that country: relationships with carriers, OEM’s, media and everything else. Nothing will change. It might happen that if someone from Facebook is interested in doing this for us, and if we like it, then we’ll do it. But not something that we plan for since the deal is not closed yet. For the end use, it makes no difference.

MediaNama: How does this (acquisition) impact your discussions with carriers, because now they see you differently from before?
Arora: Why do you think so?

MediaNama: Because for them, now you’re effectively a part of Facebook. It changes WhatsApp and its impact. You’re a much bigger player now, in their perception, with Facebook behind you.
Arora: I would say (these) two companies drive a lot of data, especially in the Indian context. It’s essentially good: they (carriers) get a focused relationship in the end, if this is in the bundle (instead of choosing one or the other). It will be easier for carriers to deal with one person eventually, if it happens. It might still happen, but at least for the forseeable future after the deal closes, we’ll have our own separate teams and do deals separately. We are two different products: they (Facebook) are social networking, we’re messaging. Carriers might want to do something more with messaging or more with social…they’re totally different products. That way if carriers think we want to provide one thing to the users, or both or one more, one less. It will depend on that.

MediaNama: And they’ll be dealing with two completely different teams, so no question of one team going and pitching both anyway.
Arora: No question, no.

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MediaNama: How does this change with voice, because it’s one thing to drive data…?
Arora: That is a better question. I would say, if you go back two and half years, when we started doing carrier deals, and this question was asked in every meeting: You want to work with us, we want to work with you, but it cannibalizes SMS. And now I don’t even get that question anymore. I’m predicting that the same thing will happen with voice. We’ll launch voice, and hopefully users will like it…I hope they like it. And, if they end up using our voice product, it drives data, and it will be the same curve again. First carriers will say…

MediaNama: But it’s a completely different thing when you’re impacting around 8% of revenue (SMS) versus when you’re impacting 60-70-80% of revenues, right? The danger they feel is greater.
Arora: To be very frank, I’ve not talked to carriers after this announcement*. I will see how they feel. Jan on stage said yesterday that the future is about data, and there were two more carriers on stage on the same keynote with him, and they also said it’s about data. (If) it’s all about bits and bytes and not about messages and calls, then we’re aligned. This phase from when VoIP is not commonly used to a phase when hopefully everything flows through the data pipe…I’m sure there are lots of smart carriers who are thinking of that transition and planning for it, and pricing correctly. Why does India have such a low data penetration? It should be like 10x of what it is today, and I think we can help that. Google, Facebook, Twitter, these companies provide services that can speed up data penetration, and if we can work with carriers to do it, why not?

MediaNama: So what are the things you hear from carriers in India when it comes to messaging conversations? What are the challenges you face with telco partnerships in India?
I think we’re doing fine. There are no challenges any more. I think the first was the biggest barrier because they didn’t know what will come out of it, and the first one we did with RCOM, has done exceptionally well, and that’s why we launched the second one with Tata (Docomo). There are a couple more in the pipeline. On the messaging side, I see no challenges. People get it, the carriers get it now. Also, there’s a very strong pull from the end users. Both of us serve the same users, and we have to listen to what the users want. We are providing a service, and they’re providing the data underlying it. If we go to the market combined and provide something which is better than what users can get if they just take some data connection off the shelf. Or, if people ask why do I need data connection, and they can say that you need it because we’ll give you unlimited Whatsapp, it makes a lot of sense.

Voice, we’ll see how it goes.

(*-This interview was conducted a day after the announcement)

MediaNama: Do you make money on carrier deals? Does the carrier pay?
Arora:
We don’t make any money on carrier deals. The only thing we do is, since it’s a partnership, we try to get some branding out of that launch. It’s awareness. You might have seen some Tata Docomo TV ads.

MediaNama: So then India is a no-revenue market market for you, right?
Arora: I wouldn’t say no-revenue because we have a subscription model there.

MediaNama: I’ve been on WhatsApp for a few years and I’ve never been asked to subscribe
Arora:
Our philosophy is like this: Countries like India, where payments are very challenging…even today, if you want to make a payment on Android, you don’t have carrier billing, you have to take out your credit card, and you know how bad credit card penetration is in India. People don’t trust using credit cards on their phones even now. So, we don’t want to penalize the end user just because the payments in India are not at a stage where they feel comfortable paying. It’s not a free product, and we’re waiting for a time where there is a carrier billing layer on top of Google Play.

MediaNama: What about Boku or Fortumo which are integrating carrier billing across the globe?
Arora:
 There are some technicalities around that. Apple and Google Play, which are the two biggest app stores in the world, do not allow third party payment systems for their app stores. It is not possible for us to do it even if we want to do it. It’s confusing for the user as well. The cleanest is credit card billing or carrier billing. It’s so simple. That’s the world we’re driving towards: this phone will be your payment system over time. We’re not in a hurry to charge people in India today. The focus of this company is not on monetization today. The focus is the best user experience, the best product, the most reliable service, keep on adding great features like voice, and think about monetization in 2016, 2017, 2018.

Part 2: WhatsApp’s Business Head Neeraj Arora on Integration Of Services, The Facebook Deal, Why He Joined Whatsapp