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India's Hike aims to build on messaging success

Hike's office is typical of a technology company these days -- open plan with spaces to work, play and even nap for its 250 staff. (Photo by Jagan Negi)

NEW DELHI -- Kavin Bharti Mittal, founder of India's biggest homegrown messaging network, is sitting in his new office savoring a satisfying moment. His Hike Messenger mobile app has just signed up its 100 millionth user after about three years in operation. Now the 28-year-old son of billionaire telecom czar Sunil Bharti Mittal is eyeing even more ambitious numbers.

Kavin Bharti Mittal, founder of Hike Messenger (Photo by Jagan Negi)

"We're at the beginning of the beginning of this Indian market," said the younger Mittal, chief executive of Hike, which is backed by a joint venture between Japan's SoftBank and his father's Bharti Enterprises, which controls Bharti Airtel, the country's biggest mobile operator. Only about 150 million of India's 1.2 billion populace are now mobile Internet users, Mittal says, dismissing estimates that 400 Indians are online as "total nonsense."

Mittal, who did summer internships at Goldman Sachs and Google, began coding at 15 and previously created a food recommendation app and a movie ticket-buying app. Hike has its own ecosystem of built-in "micro-apps" which give users direct access to other services such as news and sports. This approach lowers demand for phone storage, which is helpful given that most smartphones sold in India are low-end models.

WeChat, the China-focused messaging network owned by Tencent Holdings, offers a huge range of micro-apps that allow users to do everything from ordering taxis, food and movie tickets to playing games and paying bills. WeChat has an estimated average revenue per user of at least $7, seven times that of Facebook-owned WhatsApp, according to Nomura Securities.

Hike Messenger mobile app has just signed up its 100th million user after three years in operation. (Photo by Penny MacRae)

"WeChat has 650 million users and there are 200 million using Line in Japan," Mittal told the Nikkei Asian Review. "When you see how these apps are used, it blows your mind.It shows you fundamentally what's possible."

Immediate plans

Hike is now second in terms of users in India behind WhatsApp and though it has few users outside the country, its Indian customer base makes it the fifth-largest messaging network worldwide, according to Mittal.

While the app is free to use, Hike is partnering with brands to offer discount coupons to keep revenue flowing as it expands. Mittal declined to provide financial figures but said the company did "extremely well" in the last six months and noted its move into expanded offices.

On a social level, Hike allows users to swap music, videos and other files across short distances. For many teenagers, Hike appeals with its option to keep communications private in a country where mobile phones are often shared with family members.

"I use Hike to chat with my friends," said 17-year-old student Kavita Singh. "It's got a chat hide feature so my sister can't read what we're talking about and it's got good emojis."

Hike is targeting the youth who make up around half of India's population and who like their counterparts elsewhere are showing more enthusiasm for messaging networks than public social networks like Facebook.

Available in English and Hindi and soon to be launched in eight other Indian languages, Hike is used at least once a month by 44% of Indian smartphone users, according to Ericsson ConsumerLab, a unit of Swedish tech company Ericsson. WhatsApp, which also leads in global user count, is still way ahead in India with 98% usage, but Hike is more popular in the country than players such as Facebook Messenger, Google Hangouts and WeChat.

"Hike's becoming that very large, dominant No. 2 Indian player, building something very different" than WhatsApp, Mittal said. "Today we're closely positioned to WhatsApp because it's messaging, but by year-end, it'll become hard to compare Hike and WhatsApp as we add content."

"In messaging, each country seems to have two very dominant players," he said, "one that's a simple messaging application and one that [uses] messaging as a platform -- what we call ourselves -- and so we believe there's a possibility for two people to win this market in two very different ways."

Mittal sees Hike becoming a platform specially positioned to connect Indians with basic phone plans and low-end models running on congested networks to a wide range of web-based services. "Messaging will do for mobile what the browser did for the desktop [computer] times 100," he said. "The web is optimized for a big screen, not a small-screen experience."

Mittal carries a low-end smartphone so that he can better understand his customers' experience. "This can handle no more than three apps," he said, gesturing to his phone. The experience of navigating India's many challenges will position Hike well to compete in other developing markets like Indonesia and Vietnam, he believes. "Very few people are lucky enough to come from a country with an internal market of over 1.2 billion," he said.

Mittal is tightlipped about Hike's ownership structure but said the company received $21 million in funding from the joint venture between Bharti Enterprises and SoftBank. Last August, U.S. investment company Tiger Global put in $65 million. In January, Silicon Valley-based tech veterans including Adam D'Angelo, founder of question-and-answer website Quora, Aditya Agarwal of file hosting service Dropbox and Matt Mullenweg, co-founder of blogging software maker WordPress invested undisclosed sums. Mittal has also bolstered his team with high-profile Silicon Valley hires, the latest being ex-Motorola wearables chief Rajesh Rudradhya.

Mittal said he aims to generate a profit in Hike's next financial year. But despite the advantage of cross-promotions with Airtel, competition will make breaking into the black difficult, analysts say.

"There is [WhatsApp], a deep-pocketed, well-entrenched market leader and another deep-pocketed rival entering," said Kashyap Kompella, analyst at tech consultancy Real Story Group, referring to Reliance Jio, owned by Indian tycoon Mukesh Ambani. Reliance Jio last month launched mobile services on a trial basis and is developing its own mobile-app ecosystem.

In a wider sense, Hike has taken away some revenue from Airtel by diverting customers who would have sent text messages. But Mittal sees that as a lesser blow than losing users to competitors like WhatsApp. That's where market knowledge will give Hike an advantage in the long run, he believes. "We know exactly what people want."

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