🕹️The Startup That Rejected $1 Billion Offer from Google
The Story of Sharechat:
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If Facebook is so popular in India, why do we need desi social media? An indigenous, made-for-India, social media?
Because Facebook treats India as one country and one people speaking one language and sharing one culture.
But India is a diverse set of people, speaking lots of languages and having different cultures. That’s why we need a social media that caters to all the different people.
This is the insight that led to the creation of Sharechat, the $5 billion social media app made-for-India.
In today’s article, I’ll tell you the story of this amazing startup, and share some of my insights along the way
Born from a WhatsApp Group
The TikTok Opportunity
The Future: Challenges and Opportunities
🕹️Born from a WhatsApp Group:
The story starts in 2015 inside a hostel room in IIT Kanpur. Ankush Sachdeva was sitting there, frustrated.
He was in his final year of college, meaning placement season. One person from his batch got a 2 crore offer from Oracle and it became national news. Ankush's parents and relatives were pressuring him to get a job.
But Ankush wanted to do a startup.
He had been wanting to do a startup since his first year. But he had tried 17 different startup ideas, and all of them had failed. Now, it seemed as if he would have to sit for placements.
That's when he saw a ray of hope.
A growth hacker on Facebook had made a post saying that he had made a WhatsApp group to discuss Sachin Tendulkar and cricket, and people interested could comment their numbers and he would add them to the Whatsapp group.
80,000 people commented their numbers on this post!
When Ankush saw this massive response, he got an idea.
Ankush quickly called his friends Farid Ahsan and Bhanu Singh, and together they took over 1,000 numbers and formed 10 WhatsApp groups.
He wanted to observe people’s behavior in these private groups.
The result surprised him.
These people were total strangers, so on Facebook, they didn’t interact with each other very much. But in the private WhatsApp groups, the barrier broke down. These strangers began sharing memes and videos and fan moments of Sachin.
Because on Facebook, the language is English. And these people weren’t comfortable with English. That’s why the interaction was less.
But in the private WhatsApp groups, the interaction was in their regional languages. That’s why they were interacting more.
These people wanted desperately to interact in their regional languages on Facebook, but couldn't do so.
That’s when Ankush got the 5 billion dollar idea: a desi social media app. A social media made-for-India.
Along with Bhanu and Farid, he started building this desi social media app, and Sharechat was born in October 2015.
Because they were targeting people from tier 2,3 cities, the app didn't have English language. It only had regional languages like Hindi, Marathi, Telugu, etc.
People loved this. Within 3 months, Sharechat had 1 lakh downloads. Within a year, it had 10 lakh downloads. The company got 50 lakh funding from India Quotient.
Early on, Ankush realized that having regional languages on Sharechat wasn’t a very strong moat.
If Facebook or WhatsApp added regional languages, they would kill Sharechat.
Thus, Ankush decided he needed a stronger moat against the social media giants.
He needed a moat that was so strong that people kept using Sharechat even if Facebook added regional languages.
That moat was: User Generated Content(UGC).
Until now, all the content on Sharechat was generated by the company. The company moderators posted news, jokes, horoscope, etc on the app and people could share it with their friends on WhatsApp.
But now, to grow even bigger and to compete more strongly against Facebook and Whatsapp, the company needed users to create content.
Enabling UGC was a tough decision. People asked a lot of questions about it:
are people even interested in creating content
do people know how to create content
will they find time to create content?
won’t they be ashamed of creating content in front of so many people?
But Ankush knew UGC was important, so he decided to turn on UGC in 2016.
This turned out to be the right decision. People were dying to create content in regional languages. As soon as Ankush turned on UGC, Sharechat was flooded with content.
For the first time, people from tier 2,3 cities could express their feelings online on social media in their own tongue and chat with like-minded people. It was a wonderful experience for them.
UGC took Sharechat’s growth to a whole new level. Sharechat went from 10 lakh downloads to 50 lakh downloads by the end of 2016. Their userbase was growing by 30% every month! By 2018, they got to 4 crore users!
Along the way, they picked up $4 million Series A in 2016 and $18 million Series B in Jan 2018 and $99 million Series C in September 2018. Wow!
Jio also helped Sharechat’s rapid growth. Due to Jio, 1) more people had internet and 2) they had better internet(4g vs 2g). So more people were able to watch videos and pics on Sharechat.
🕹️The TikTok Opportunity
By 2019, Ankush had a new target: 30-second videos.
TikTok had made everyone addicted to 30-second videos. It seemed as if the whole world was swiping or making 30-second videos for TikTok.
But Ankush realized that 30-second videos were actually the next frontier of social media. Just like pics and videos, 30-second videos would be the next big thing in the social media world.
As we can see right now, he was right. People are spending more time on TikTok than on FB and Insta and Youtube. Advertisers are increasing their TikTok ad budgets. Live commerce is booming on TikTok.
Thus, back in 2019, it was clear to Ankush that 30-second videos were going to be a big opportunity and he couldn’t let TikTok eat the whole market. So:
Sharechat acquired a TikTok copycat called Clip App and integrated it inside Sharechat app. The acquisition gave 10 million additional users to the company.
When Govt of India banned TikTok on June 29th 2020, Team Sharechat got to work immediately. Within 30 hours of the ban, they built a TikTok copycat app called Moj and launched it on Play Store. Moj was an instant hit. Within 6 months it gained 8 crore users. Like ShareChat, Moj was also available in regional languages.
When Sharechat saw that another app called MX Takatak was threatening Moj’s dominance, they acquired it for $600 million this year. The combined userbase of Moj(160M) and Taka Tak(150M) is 310M monthly active users!! This will make it one of the biggest 30-second video apps in the world.
So as you can see, Sharechat is pretty serious about 30-second videos, and they look set to capture the tier-2,3 city market.
🕹️The Future: Challenges and Opportunities
Sharechat faces 2 main challenges: fake news and profits.
Since the content on Sharechat is in regional languages, catching fake news is more difficult than english content. As a result, fake news spreads more quickly on Sharechat.
They have tried to fix this problem using machine learning algorithms that identify the fake info early on and remove it from the app. But these algorithms don’t work very well and Sharechat has to improve them.
The other problem is profits. Sharechat isn’t profitable till now. They have got over $1.7 billion funding. Last year, they had a revenue of 80 crores and a loss of 1400 crores. And the loss is increasing year by year, so doesn’t look like profits will come soon.
But this doesn’t mean Sharechat cannot become profitable at all. Since they are a social media app, they have a lot of sources of revenue: ads, creator economy, live commerce, etc.
Right now, the company isn’t worried about profits. They are relying on funding. Just 2 months back, they got $300 million funding from Google after they rejected a $1 billion acquisition offer from Google.
For now, the company’s goal is 1 billion users.
Only 15 apps in the world have gotten to the golden mark of 1 billion users: Facebook, Instagram, Messenger, WhatsApp, Telegram, Snapchat, Netflix, Spotify and TikTok.
Sharechat is already at 400 million. Can they reach 1 billion?
This wraps up today’s newsletter. Thanks to Prithvi Raj Chauhan for his valuable contributions to the newsletter.
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