Lab Notes

Messaging, On-Demand, and What Comes Next

What Mobile Hath Wrought

In the last year smartphone adoption has continued its dominance, radically altering consumer behavior both on and offline.

In particular, two major trends have created a massive opportunity for brands and startups alike.

The first is the growth of messaging services, where messaging apps like Snapchat and WhatsApp have built massive user bases around private, one-to-one connections.

The second trend is the rise of on-demand mobile services, where phones have become hubs for everyone’s information, location and payment.

The result: consumers now expect simple, seamless experiences wherever they are, whenever they want.

Success in Messaging and On-Demand

The flight to private messaging and on-demand has given rise to a new ecosystem of companies and services.

Several startups have seen explosive growth, joining a small club of Unicorns who have deftly anticipated these movements.

TaskRabbit’s flexible framework has grown an entire on-demand workforce across cities in America. Postmates has also emerged from a slew of on-demand food delivery companies and recently expanded from its initial launch in San Francisco and New York.

Many know Uber as the flagship company of the on-demand economy. Uber’s valuation currently rests near $50 billion, and it shows no signs of slowing.

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The company has overturned the taxi model by reducing friction at every turn. No waiting on hold for dispatch. No calculating a tip. No more wondering when the car will arrive.

In the messaging space, Snapchat and Slack have upended both personal and professional communication.

Snapchat boasts over 100 million users with over 600 million snaps sent per day. Slack recently announced one million daily users, who spend an average of two hours each day on the platform. Slack has doubled its valuation in the last six months and proven itself as the first legitimate email killer.

The velocity at which these applications and services have grown shows consumers want more.

With massive company valuations and VC backing in these sectors, mobile, messaging, and on-demand are foundations of digital’s present and future.

The Tip of the Mobile Iceberg

As user behavior drives faster, more personalized solutions, new companies have emerged focused on messaging-as-a-service. These companies fulfill on-demand requests using people behind the scenes.

The most notable of these companies is Operator.

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Operator is the brainchild of Robin Chan and Garrett Camp, both co-founders of Uber. Operator is a simple messaging service platform.

A user looking to find a product sends an SMS-like message describing the item or assistance they need and an “Operator” answers the request. The Operator researches product options, discovering what best fits the user’s needs. All products can be bought within the application and the company takes a small transaction fee.

 

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The sheer simplicity of the model positions Operator to challenge the way users research and purchase products. Operator is coming out of stealth and currently has 80,000 people waiting to use the application. The company is backed by Expa, which previously backed Uber and is well on its way to proving that “messaging will be the future atomic unit of modern commerce.” 

Other applications are quickly moving into this space, combining concierge type services with the simplicity of messaging. Before being sold to Daum Kakao, Path integrated their chat app with Talkto to provide users a way to message business with questions and requests.

Magic launched in February on Product Hunt to much acclaim, offering “whatever you want, on demand”. Magic doesn’t have an application, instead it utilizes SMS itself to fulfill requests. There are currently 35k people waiting for access to Magic.

 

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Taking Advantage of the Opportunity

Messaging-as-a-service is set to rupture the thinking around online commerce and services.

Smart companies have embraced connecting with customers on platforms they use and trust every day.

Case in point, Everlane and Zulily have been using the recent update to Facebook messenger to push their services to a new platform. Many brands with customer service capabilities should consider moving quickly to follow suit.

Messaging-as-a-service creates serious opportunities for brands. Products like premium concierge services could be built to create new revenue models. Customer services could migrate to mobile messaging for better customer service.

There is even an opportunity for companies to reduce large algorithmic systems in favor of more nimble human search, discovery, and curation. Concierge services may disrupt the way consumers search for goods, necessitating a marketing shift away from SEO focused strategies.

 

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It takes foresight and investment to compete in the new mobile-first world. While opportunity abounds for the brave, so does the risk of sitting still. At the end of the day, consumer expectations have shifted, not by what traditional competitors are doing, but by the mobile experiences (especially in leading apps) people use every day.

 

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