3 things we can learn from LINE’s planned IPO

Posted on Oct 17 2013 - 11:00am by J. Angelo Racoma

Line app

The messaging space is a lucrative industry today, with apps like Whatsapp, LINE, WeChat, Viber and the like growing to hundreds of millions of users in a span of months. In fact, LINE — an app developed by Korean search company NHN Naver and its Japanese subsidiary NHN — reportedly earns upwards of US$ 10 million a month in sticker sales alone and US$ 27 million monthly from in-app purchases on its gaming platform.

LINE is reportedly planning an initial public offering (IPO), and analysts report that the company could launch as a publicly-traded firm either on the Tokyo Stock Exchange or NASDAQ in New York. The bigger news is that LINE is said to be likely to open at a US$ 28 billion, which is even bigger than Twitter’s planned IPO.

While The Next Web Asia editor Jon Russell says the valuation “seems more than a little on the steep side,” the company has been lauded as being more than just a messaging company. In fact, LINE has established its core messaging business as a platform for communications and content distribution. This gives it much more value than simply running a cross-platform IP-based texting service.

This brings us to the question. If LINE could build a lucrative business on top of a core messaging app, then why can’t an already-established company with an existing user-base capitalize on its platform in order to sustain and expand its business? This brings three lessons to mind.

1. Stickers can be hot

LINE stickers

The sticker business is certainly not new, and is not an original creation by LINE. In fact, stickers initially became popular in select markets, particularly among the youth in Asia (such as Japan and Korea). Who would’ve known that you can earn tens of millions monthly from a product that can otherwise be described as cute and trivial?

Now, most popular chat apps, including Facebook Messenger, Viber, WeChat and WhatsApp are offering their own stickers and sticker stores. Another Korean firm, Kakao Talk, has even gone as far as launch television ads with stickers and sticker characters as the main focus.

The lesson here is not necessarily that your company should launch a sticker-based business. However, what’s good to note is that stickers are only part of what makes LINE popular and lucrative. Again, LINE’s core business is its messaging service, and stickers only add value to the app. Once you have built a solid platform, then you can expand on this, in order to enhance interest in your platform.

2. Go beyond the walled garden

Credit: Mactrast

Credit: Mactrast

At the outset, LINE launched as a communication platform that spans several OSes. This included, of course, Android and iOS. But LINE also has an app for Windows Phone and BlackBerry. It even works on Nokia Asha feature phones. Going beyond mobile devices, however, LINE also extended its service to desktop users, with standalone clients for OS X and Windows. Running a platform-specific messaging service, after all, is considered the kiss of death for this kind of application.

Sure, you might say that Skype actually beat LINE to the punch when it came to having cross-device communication capability. But LINE offered cross-device syncing from the start (meaning what you read on one device does not appear as “new” on another), and of course it offered additional content like games and stickers. In fact, LINE can be used as a social network, where users can share updates, photos and connections, much like Facebook.

The lesson here is that if you operate in a cloistered environment, then you may not be able to grow your audience. For instance, BlackBerry Messenger could have reached hundreds of millions if it went ahead with its Android and iOS launch. It may have missed the opportunity for growth when it delayed the release amid much excitement over the official launch.

On the downside, however, this platform thinking might have a negative effect for the likes of BlackBerry and even Microsoft if big developers choose not to release apps because of a lack of potential user base, perceived or otherwise. If you ever wonder why Instagram for BlackBerry and Instagram for Windows Phone are not likely going to happen as official app releases anytime soon, it’s because Instagram CEO Kevin Systrom himself said this is not within the company’s priorities: “in order of priority, the way we evaluate where to expand to is really simply where our users are, and where the growth is.”

But if you’re looking for growth, you know where to find it: in platforms.

3. You can find opportunities in challenges

Nuclear

Tragic and catastrophic incidents can be difficult and painful, but what can be trouble for some may be considered an opportunity for others. LINE actually rose in popularity when it launched in Japan after the 2011 Tohoku earthquake and tsunami, which claimed more than 15,000 lives and an economic cost of US$235 billion. The event also caused nuclear meltdowns, the effects of which are still being contained to date.

Communication facilities became unreliable during disasters, as telephone-based systems became overloaded. At the time, LINE engineers were able to communicate using the platform — which was then an internal messaging service — and envisioned that their messaging app can facilitate communication during disasters.

You don’t necessarily have to wait for another catastrophe or disaster before you can find an opportunity to build something. But behind any difficulty can be an opportunity to rise up to the challenge. Is your startup or business faltering? Pivot and start anew. Is your app or platform not gaining any traction with your target audience? Perhaps you need to focus on something different.

Now, what?

The lesson for developers, entrepreneurs and even users is to think outside the box, and to also work outside the box. LINE deserves to have a successful multi-billion dollar IPO because it has proven to be a great platform for communication and information exchange. It’s not only for chats and instant messages, but has also expanded to games, premium content and social networking. The best part is that it’s not only limited to one mobile OS. This is one company we will keep an eye out for.

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About the Author

A technology and automotive journalist with an interest in emerging standards, J. Angelo Racoma has written extensively about mobile, social media, enterprise apps and startups. Angelo has been active in online media since the early blogging and social networking days, and is co-founder at WorkSmartr, a small outsourcing platform for freelancers.