WeChat: China’s Operating System - [Business Breakdowns, EP. 93]

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Jan 18, 2023

In this discussion, Connie Chan, a General Partner at Andreessen Horowitz and expert in Chinese consumer technology, delves into WeChat's unmatched ecosystem. She highlights how the app seamlessly integrates messaging, shopping, and payments, making it the go-to platform in China. Connie explains the significance of user trust and contrasts WeChat's model with Western apps, emphasizing why similar super apps haven't emerged in the West. Insights into the app's innovative features and the implications for the future of digital interactions round out this fascinating conversation.

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INSIGHT

Tegus Evolution

Tegus evolved into a full company intelligence platform.
It streamlines investment research by surfacing qualitative insights and providing access to financial data.

INSIGHT

Super App Model

The "super app" model leverages existing traffic to introduce users to new products and services.
Western apps like DoorDash and Uber are exploring this model by suggesting additional services to existing users.

INSIGHT

East vs. West App Development

Western apps focus on horizontal expansion, increasing user numbers across different countries.
Eastern apps prioritize vertical expansion, increasing app usage frequency by a single user.

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Today, we’re breaking down one of the most important apps in the world, WeChat. WeChat is the default operating system for life and business in China. Founded inside of Tencent in 2011, it is the original super app and its 1.3 billion monthly active users can order food, message friends, play games, pay bills, shop, and more on the service.

To break down WeChat, I’m joined by Connie Chan. Connie is a General Partner at Andreessen Horowitz and is well-known across Silicon Valley for her deep knowledge of the Chinese consumer technology landscape. We discuss WeChat’s legendary founder, how trust is integral to the app’s success, and why we haven’t seen super apps proliferate in the West. Please enjoy this breakdown of WeChat.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:40] - [First question] - Overview of the super app model

[00:04:43] - How apps and software from the Western world differ from WeChat

[00:06:19] - WeChat’s history in China and why it dominates

[00:08:27] - Seeing WeChat as an OS within an app

[00:09:19] - How service unification in WeChat affects privacy, identity, and marketing

[00:13:16] - High-level analysis of their business model and reach

[00:16:53] - What Westerners would find surprising about using WeChat

[00:18:04] - History and functionality of WeChat Pay

[00:23:14] - The importance of their integrated Mini Programs

[00:25:56] - Factors impacting their margin structure

[00:28:51] - Holistic design philosophies for maintaining user engagement and trust

[00:30:44] - WeChat’s saturation point and how future growth might look

[00:32:02] - How they leveraged mobile-only coding, self-disruption, and internal competition

[00:37:21] - Initial app build - simplicity for steady growth

[00:38:36] - How her understanding of WeChat influences her investment decisions

[00:41:47] - Western companies that have super app potential

[00:43:52] - Exporting the philosophy of treating your app users like friends to Western developers

[00:44:25] - The relationship between WeChat and the suppliers on their platform

[00:47:14] - Uncertainty caused by software regulations in China

[00:47:53] - Attributes of her typical investments

[00:49:42] - Lessons for operators and investors when studying WeChat’s story