A deep dive into super apps and why they’re booming in the East and not the West

When I set out to write a newsletter about the tech industry in Asia, I knew I wanted to write about super apps. My first few posts on Gojek, Grab, and Wechat laid the foundation for the ideas proposed in this post.

In this article we will cover:

To confidently write this post, I needed to spend time studying existing ones. I wanted a better understanding of what makes them so powerful and what differentiates them from the monster FAANG (Facebook, Amazon, Apple, Netflix, and Google) apps of the West.

Photo credit: Wikimedia

Gojek’s engineering blog provides the most succinct definition of a super app:

“A super app is many apps within an umbrella app. It’s an operating system that unbundles the tyranny of apps. It’s a portal to the internet for a mobile-first generation.”

While there are many super apps (and many companies trying to be one) these days, the term is most often associated with Tencent’s WeChat, which is widely described as the “one app to rule them all.”

While WeChat may have been the first to embody the principles of a modern super app, the term dates back to 2010.

Does the name Mike Lazaridis mean anything to you? Lazaridis is the founder of Research in Motion (RIM), the manufacturer of the BlackBerry device. He also invented the concept of a super app.

In 1999, BlackBerry debuted one of the world’s first smartphones, the BlackBerry 850.

By 2010, BlackBerry was on top of the world. It was the no. 1 smartphone in America (no. 2 worldwide), had sold more than 75 million devices, had more than 200,000 registered app developers, and had over 14,000 employees focused on the BlackBerry.

That year, about half of every smartphone shipped in the world was a BlackBerry:

In a speech at the Mobile World Congress 2010, Lazaridis introduced the concept of a super app.

“Super apps are integrated with other apps, giving a seamless experience across the device. They’re contextual – aware of things like your location and status,” he said. “Super apps are apps that once you start using them, you wonder how you ever previously lived without them.”

Lazaridis was describing apps that could talk to each other. For example, a user looking at an eBay auction could then automatically sync the app with the device’s calendar so they could get a reminder when the auction is about to end, he said.

The founder viewed this as a way to lock in users for BlackBerry. He was trying to demonstrate that only on BlackBerry could you connect apps to each other, turning your calendar or eBay app into a super app with a seamless, integrated experience.

The core difference between Lazaridis’ definition and the modern definition is that his was hardware-dependent. By using the calendar app or eBay on a Blackberry, those apps would be “supercharged.”

Modern super apps, however, are hardware-agnostic. In general, there aren’t notable differences between WeChat on Android and WeChat on iOS.

Today, BlackBerry devices are mostly a relic of history. While I give Lazaridis and BlackBerry credit for creating the term “super app,” they can’t get credit for the value capture and ecosystem that modern super apps have built.

(Side note: Surprisingly, BlackBerry still did about US$1 billion in revenue last year, but that’s down from a peak of about US$20 billion in 2011.)

There is no single set path to becoming a super app. But there are several common characteristics among the super apps I’ve studied or are in the process of adding:

And there’s one bonus attribute that’s more tongue-in-cheek inclusion than a serious one. For now at least, super apps use the same design layout where the home screen resembles that of your phone’s home screen. This isn’t a mandatory characteristic, but it’s common throughout all super apps I’ve viewed.

Super apps have a significantly lower cost of acquisition for new users. If WeChat rolls out a new social function, for instance, that product is sharing the same social graph as its other apps, and so porting information over or connecting accounts is easier.

Where this point is less obvious is around financial products. Each time fintech apps brings on new users, these companies pay non-trivial costs to multiple vendors to run know-your-customer (KYC) and anti-money-laundering (AML) checks. If a user goes through KYC or AML for GrabPay, they presumably don’t need to go through the same KYC procedures for Grab Insurance or lending. This decreases the cost of acquisition of new customers.

Super apps also have higher lifetime value with their users. As far back as 2015, WeChat had an average revenue per user (ARPU) of about US$7, and investment banks in 2014 pegged WeChat’s value per user (as measured by Tencent’s stock price) at around US$95 per user. Likely, this number is much higher for WeChat now, given that mini-programs didn’t exist yet in 2015. As a point of comparison, Facebook’s 2019 ARPU was US$7.26, about what WeChat’s was in 2015.

User data is another benefit for super apps. Imagine having direct access to your users’ financial transactions, social media posts, taxi history, and a myriad of additional health and financial data. You could do a lot with that. (Incoming call from Cambridge Analytica! 📞)

If you live in the US, you’ve heard of super apps. If you live in Asia, you’ve used one.

If you look at Europe and North America, there are no dominant super apps. It’s impossible to say with certainty why they aren’t common in Western countries (and I’ll specifically talk about the US here since it’s the country I’m most familiar with), but here are my four hypotheses:

The current group of well-known super apps started in countries with underdeveloped internet infrastructures.

Part of this is also due to the wide selection of apps in the US that would make it difficult for one app to consolidate all of those applications’ features into one.

Some of this is due to “path dependency” as well. Talking about QR codes in China, American analyst Ben Thompson says, “Once a job is done – and credit cards do their jobs very well – it takes a 10x improvement to get users to switch…”

In the same way that the US and China are on different paths regarding payments, they’re also on different paths regarding applications and the mobile web.

Super apps could simplistically be thought of as platform companies that are able to build out many verticals within one app. This has worked well in markets like China, Indonesia, and other countries because those markets did not have strong incumbent competitors.

It’s possible that several app experiences within one app could be superior, but at this point, many in the West are OK with and have been trained to be OK with switching between multiple apps for things.

Uber, iMessage, and Twitter all do their individual jobs well. A new app that wants to recreate all these experiences would have a high bar to clear to get users to switch.

(Hat tip to Abheek Anand for guiding my thinking here.)

Even though Indonesian internet usage is surging – reaching about 65% of the population in 2019 – only about 26% of the population used computers in 2018.

Super apps are primed for mobile experiences. As far as I know, Gojek and Grab don’t offer desktop experiences, and WeChat notoriously has a very stripped-down and basic desktop interface.

As the US becomes a more mobile-first country (with younger generations leading the charge), it’s possible we could see popular consumer apps add super app-like functionality.

On the individual app level, what are some new apps that have taken historically desktop-based experiences and turned them into mobile experiences for younger generations? There’s no better example than stock trading app Robinhood, which turns your brokerage account into a sleek mobile experience. All the challenger or neo-banks also fit these criteria of taking previously clunky, desktop interfaces and turning them into sleek mobile experiences.

A key element of all the super apps I’ve previously covered is that they own or have a direct connection to users’ bank accounts. This is partly because in the countries where these super apps operate, the populations were largely unbanked or cash-dependent before these super apps offered solutions.

To some degree, companies like Gojek needed to help their users move into digital payments because it made it easier for the company to process transactions. Also, compare this to the US, where only about 7% of the population is unbanked.

This explains why you see aspiring super apps like Facebook (via Facebook Financial) or Uber (via Uber Money) really try to earn their user’s deposits. But again, the problem is that many Americans are pretty satisfied with their current bank or digital wallet offerings, and so there will be a high bar to get them to switch to an alternative product.

When you own your users’ deposits, you gain certain benefits:

The leaders of countries with super apps seem to really love them. The Indonesian president, for one, fired a cabinet member who appeared to be anti-Gojek and then appointed Gojek’s founder to his next cabinet. You can’t get much cozier than that. Well, unless you’re Tencent. There are countless articles talking about censorship within WeChat at the behest of the Chinese government, and I believe Tencent’s top executives are also official members of the Chinese Communist Party (as most top company execs must be in China).

In today’s political climate, it’s challenging to imagine an American or European leader going out of their way to promote a burgeoning super app. (Look at how WWestern democracies have treated Facebook and Uber.)

As I’ve covered before, Gojek and Grab have lots of pro-nationalist marketing in which they align themselves with the growth of the companies they operate in.

And that’s not all just marketing. Gojek appears to make meaningful contributions to Indonesia’s gross domestic product and has increased the standard of living for its drivers.

In the case of Grab, Malaysia notoriously had one of the most dangerous taxi industries in the world. While I haven’t seen exact figures, it’s possible they’ve also increased foreigner’s willingness to visit the country (good for tourism, small businesses, taxes, etc.).

In the US and Europe, antitrust laws are often stricter than the rest of the world. If American leaders are talking about breaking up Facebook, oh boy, they would hate an app with dominance and reach like WeChat!

Given both the stricter regulation in the West and the current political climate toward big tech, it is possible that regulation could be the biggest barrier to entry of a super app ever reaching a level of influence like WeChat commands.

Jumping off of the hypotheses above, it’s possible that a super app could bloom in the US as members of the country’s Generation Z and younger segments lead the country to become more mobile-centric.

While I believe it will be difficult for a Western-focused company to build a generalizable super app, I do believe it is possible for entrepreneurs and existing companies within Western markets to build powerful “super apps for X.”

Some examples of this include:

Now, you might be reading this and thinking, “Isn’t a super app for X just a vertically integrated app?” Well, yes and no.

The difference between a super app and a vertically integrated app is that the former is open and allows other companies to live within its ecosystem, acting as a marketplace or portal, whereas the latter is the owner or developer of all the apps within its ecosystem.

Aditi Sharma, Grab’s director and head of startup programs and investments, drives this point home:

“It is clear from the beginning that doing this all by ourselves is not entirely practical. Strategically, it makes more sense for us to build a healthy ecosystem of partners around our users.”

The evolution from a regular app to a super app looks something like this:

By this definition, only WeChat is a full super app. Grab and Gojek are still on step two, while many of the aspiring Western super apps are still on step one.

For example, M1 Finance features several functions (opening checking accounts with a debit card, borrowing, investing), but they’re created, managed, and offered by the Chicago-based company.

Another example is London-based fintech firm Revolut. It enables users to open checking accounts, transfer money, purchase stock and cryptocurrency, buy insurance, and carry out other financial related transactions. While some of these are driven by partnerships (stock trading via DriveWealth, Insurance via Simplesurance), the tie-ups aren’t the same as how WeChat and Didi or Gojek and Halodoc are partners.

Revolut uses DriveWealth to provide stock trading and uses Simplesurance for it insurance products, but these companies are behind-the-scenes service providers. Most people trading stocks with Revolut will have no idea that they are trading with DriveWealth as a third-party broker.

This is different than if Revolut users could click on “trading” in the app, and then it took them to a service like Robinhood or another user interface that was built into Revolut.

(This is one of Revolut’s user interfaces. Looks familiar? 🤔)

The super-app craze has swept Eastern countries. While Western entrepreneurs want to build super apps of their own, many of them are struggling to embrace the open nature of building such an app.

For many reasons, I predict we will see more applications trying to brand themselves as “super apps” because being known as one leads to a higher valuation than “vertically integrated” does, among other reasons. 😉

I’m excited to see attempts at building more super apps, and I’m eager to try out US contenders.

This is an edited and condensed version of an article that was first published on East Meets West.