Social networks operate under network effects—you are on a platform because your friends are there. So, when a company is in the ascendant, it can grow very quickly due to the virtuous, self-reinforcing cycle of people joining the platform as many of their friends and contacts are on it as well.
The obverse dynamic is that, as people start leaving the platform and migrate to other networks, the fall in the user base is equally precipitous.
So what can Hike do to arrest this fall?
It is tempting to believe that this situation is one of Hike’s own making. That the company lost its focus after raising such a large round and ended up “exploring” too many peripheral distractions.
That it hired too many people and acquired too many companies, leading to a bloated organization. The tempting part about such a school of thought is that it puts Hike’s destiny in its own hands—that it can fix these problems by cutting down team size, stopping peripheral experiments, and refocusing on its core product of “social plus content”.
Unfortunately for Hike, though, this is not likely to be the case. Neither Hike’s initial success nor its recent failures have much to do with the company itself.
Hike’s original raison d’etre was based on two arbitrage opportunities that gave them a thin wedge to gather traction. But as is wont to happen with arbitrage, the market corrects itself in due course to shut off and invalidate these gaps.
To explain Hike’s predicament, we need to ask and answer two questions:
Who is the Hike user?
And why does he/she use it?
Hike’s user base is drawn from two sets of overlapping demographics—college students and young adults, as well as people from tier 2 and 3 towns in India.
The original driver for these folks was Hike’s value proposition of being able to connect and communicate with friends even without internet connectivity. This was originally facilitated by using SMS as a fall-back channel when friends were not online.
It later morphed to make use of initiatives such as mesh networks and USSD (Unstructured Supplementary Service Data) messaging. In addition, Hike incentivized users to bring their friends on board by offering free/cheap data connectivity or credits to those who invited others to the platform.
The primary driver for all this was the prevailing dynamic of high data connectivity tariffs in India.
Today, this demographic has all but disappeared. Not because more young people or folks from tier 2 or 3 towns are coming on board, but because such people no longer have to bother about scrimping and saving up to afford data plans.
Thanks to players such as Jio, data connectivity is all but ubiquitous today and is nearly free if not entirely so. When data is a few paise per day, even young folks can easily afford data plans, and Hike’s original value proposition has all but disappeared.
The disappearing “Feature Arbitrage”
While falling data prices would have hurt one part of Hike’s value proposition, the emergence of the likes of Jio should have provided Hike with a new larger potential user base. After all, a rising tide raises all boats, right? That hasn’t happened.
In the company’s own words, Hike today is “a social content platform focused on privacy, expression and bite-sized content”. The problem here is that none of these features are unique to Hike. They were relevant in an earlier time when the likes of WhatsApp didn’t have some of these features.
Take privacy, for example. There were several users on Hike who would use the platform simply because it gave them the ability to control who could see their online status. Being able to selectively turn this on/off was a feature that WhatsApp didn’t have at the time.
Hike’s privacy control feature was a godsend for youngsters who didn’t want their parents to know that they were chatting online, or for couples who could chat discreetly in “hidden mode” using stickers that Hike provided—sanskari sexting if you will. But once WhatsApp introduced this privacy control feature, Hike’s advantage evaporated.