Tweetstorm: How China is Cashing in on Group Chats

Based on my article with Connie Chan as can be seen here.

But first, the chat groups this posts largely focuses on are not shopping-centric groups (ie Pinduoduo), but conversational group chats facilitated by businesses. These group chats thrive because they feel natural and not transactional.

Ctrip creates group chats for Chinese travelers to major world cities every week. They push products, like car rentals/tours and even spas, but also help travelers have fun to ensure repeat customers. It was fun waking up everyday to hear about adventures across the world!

They’re also nice because users can crowdsource literally anything! I saw people share pools to visit in Bali, photos of lines at Shanghai Disney, and restaurant reviews in Phuket. @ClaireLiStory told me about her mom crowdsourcing cherry blossom photo spots in Japan.

Group chats drive friendship because live conversations mimic real life. I saw tons of solo travelers planning meetups, trips, and nights out. Ctrip disbands the groups after every trip for privacy, but I know from my time in-groups that people make lasting friendships.

Even if the end result is not commerce, customer relationships build brand loyalty. One am, a user lost her bag in the airport. Ctrip support responded immediately with contact info, and fellow travelers helped her find it. That’s a lifelong customer/brand advocate.

Other examples: Supermonkey gym has no membership cards. They use group chats as a loyalty tool: instructors post class music/photos/nutrition tips, and users resell classes they can’t attend. When I attended a class recently, group members hung out IRL afterwards and went for bbq.

In Lingochamp, the group leader hosts a new activity every day in the group chat for students to practice with each other ie self-introductions, interviewing, or even reading Christmas poems. Every week the leader touts performance improvements while upselling premium classes.

That’s not to say only in China do businesses see the benefits of group chats: see Lambda School’s CEO @Austen’s tweet on what he uses group chats for:

In sum, the point is not that group messaging is better than group posts, it just drives a different kind of behavior. And the C2C interactions in the chat groups can work for businesses by building trust and driving sales.

Tweetstorm: Libra and WeChat Compared


(But first…) please note that none of the following should be taken as investment advice. See http://a16z.com/disclosures  for more info.

Similarity: WeChat and Libra both have the goal of payment accessibility. WeChat Pay spearheaded China’s transformation to a cashless digital society w/ 900M+ MAU, many underserved by traditional banks. Libra aims to bring price-stable money via crypto wallets to 2B+ people.

Ubiquitous mobile wallets is big for fintech and greater financial opportunity. While USD is relatively stable, other countries like Venezuela lack stable ways to preserve wealth. It also unlocks new business models, as seen in this post w/ @conniechan

Huge difference: currency/reach. WeChat Pay can be used in 49+ countries but the platform itself is limited to local fiat balances in China or Malaysia. By being a cryptocurrency not pegged to a single currency like RMB, Libra’s aim is to be used globally.

Huge difference: centralization. Libra will launch with 100 nodes (1 by Facebook). Developers and other ecosystem participants have less deplatforming risk than exists with WeChat (although it’s still more centralized than other cryptocurrencies like Bitcoin).

Kevin Werbach’s take on the importance of blockchain-enabled trust: “The benefits from re-establishing the trust it has lost would dwarf what it could squeeze out of mining the data.”

8/ That being said, centralization is not all bad for adopting new tech! WeChat incentivized online-to-offline payment adoption with $150M+ in subsidies in 2018 (Alipay spent $300M+)! But it also means they control the ecosystem.

Difference: Open-source. Unlike WeChat (and other fiat-based monetary platforms), the code that powers it is completely available for anyone to improve. In the event people are deplatformed, they can fork the code and create their own Libra alternative.

Similarity: Lack of anonymity. Libra is pseudonymous like Bitcoin and can be audited by third-parties or law enforcement, in contrast to completely anonymous products like Monero or Zcash (with shielded transactions).

So is Libra actually about emulating WeChat? There are clear differences, but the shared vision, with the potential of giving crypto wallets to the masses, may only be imaginable thanks to WeChat’s success in China.

In response to the Libra news, Tencent Chairman Pony Ma wrote, “The technology is mature, it’s really not difficult. It only depends on whether regulators allow it.” Going global ≠ open financial system, but there’s a lot to learn from studying their respective approaches.

Suggested reads:

The Real Reason for Facebook’s New Cryptocurrency — op ed by Kevin Werbach
Libra lessons from WeChat and QQ — podcast by Matt Brennan and John Artman
Can Libra replicate WeChat Pay’s digital payment dominance? — article by Nicole Jao