Group Messaging: A Feature, Not a Company

Mark Suster, a venture capitalist (VC), delves into the notion that group messaging is a feature, not a company. This concept, initially sparked by a conversation with Chris Fralic at First Round Capital, highlights the often-debated distinction between a stand-alone business and a feature integral to a larger platform.

• Suster defines a feature as a set of product features that might struggle to sustain as an independent business or generate sufficient revenue to justify its existence.
• He uses this concept as a mental framework to question whether certain teams have contemplated monetization strategies for their products.

The Rise and Fall of Group Messaging Startups

Suster elaborates on the recent acquisitions of group messaging startups by tech giants like Facebook and Skype. He argues that these acquisitions demonstrate the inherent challenges of building a sustainable company solely around group messaging.

• He points out that the overwhelming majority of text messages are point-to-point rather than group-oriented, making it difficult to generate substantial revenue through group messaging alone.
• He highlights the competition posed by established platforms like Facebook, Google, Apple, and Skype, which already offer free group messaging features as part of their broader ecosystems.
• He suggests that group messaging startups face a dilemma: they must either broaden their product offerings or seek acquisition by larger companies.

Facebook's Acquisition of Beluga

Suster's analysis focuses on Facebook's acquisition of Beluga, a group messaging startup that was lauded for its innovative features. He posits that while Beluga was a promising product, Facebook's acquisition showcases the challenges of building a sustainable business around group messaging alone.

• The acquisition signifies Facebook's strategic move to integrate group messaging into its broader social network, further solidifying its dominance in the communication space.
• It also underscores the increasing trend of tech giants acquiring startups with specialized features to enhance their own platforms.

Skype's Acquisition of GroupMe

Suster also examines Skype's acquisition of GroupMe, a group messaging startup that gained traction for its simplicity and user-friendly interface. He emphasizes that despite GroupMe's success, its acquisition by Skype highlights the inherent limitations of building a sustainable company solely around group messaging.

• He suggests that the acquisition showcases Skype's intent to integrate group messaging capabilities into its platform, enhancing its communication offerings.
• He stresses that GroupMe's success, coupled with its acquisition by Skype, underscores the strategic importance of group messaging as a valuable feature within larger platforms.

The Future of Group Messaging: A Feature or a Company?

Suster concludes by reflecting on the future of group messaging, questioning whether it can sustain as a standalone business or if it will inevitably become a feature integrated within larger platforms like Facebook, Google, or Skype. He acknowledges the challenges of building a sustainable business solely around group messaging, considering the competition from established platforms offering free group messaging features.

• He believes that group messaging startups have a limited path: broaden their offerings to become more than just a messaging platform or seek acquisition by larger companies.
• He acknowledges the value of group messaging as a feature and its potential to enhance various platforms, but remains skeptical of its long-term viability as a standalone business model.

The Importance of Innovation and Adaptation

Suster's analysis of the group messaging landscape highlights the importance of innovation and adaptation for startups in a rapidly evolving digital landscape. He emphasizes that companies must constantly evolve their product offerings and seek new ways to monetize their services.

• He suggests that startups should focus on developing features that provide significant value to users and differentiate themselves from the competition.
• He encourages entrepreneurs to be strategic in their monetization strategies, considering the competitive landscape and the potential for acquisition by larger companies.