KakaoTalk went public

6.11.2014 Magdalena Gauci

KakaoTalk went public… we wonder how the messaging app made enough money to do it!

KakaoTalk is Korea’s biggest messaging app and is about to become a public company without the company having a choice in the matter. KakaoTalk bought Daum Communications, a large tech company which was public when they bought it. The new Franken-merged company, Daum Kakao, is expected to have a market cap of roughly $10 billion and is going to be added to the Korean stock market mid this month.

KakaoTalk is just another sign that messaging is the way of the future in social-networking. DCM, which placed a Series A bet on the company, also had a great stroke of luck with the company.

“When KakaoTalk launched in 2010 they were purely a messaging service, very similar to Whatsapp,” Osuke Honda, general partner of DCM has stated. “When I initially heard about it I was like, ‘Is that really going to work?’” Many years on and boasting 152 million registered clients to its name, KakaoTalk has proven to be a goldmine.

Kakao’s success provides some excitement for Western messaging companies who are still waiting for their massive outbreak. The key though, to Kakao’s revenue stream was to diversify their product which was initially released as a free chatting application and they sold stickers and emotions to make up for the costs of running the free app, games were soon to follow on the KakaoTalk app.

Kakao developed partnerships with other companies for advertising once it was big enough to garner interest, and Kakao eventually delved into commerce. Now KakaoTalk users can even send each other physical gifts through the app which has made Kakao interested in developing an eBay-like service.

Asian messaging apps such as China’s WeChat, Japan’s Line, and Korea’s KakaoTalk are very different in their approach to businesses when compared to Western messaging services like WhatsApp, MessageMe, Kik, and GroupMe but this makes sense as Western users are more interested in simplified services and it is not clear if such service-rich apps would make it in the Western Hemisphere.

Asian users have had a longer time engrossed in mobile technology and their tastes have changed over time to want more, faster. For KakaoTalk, the Asian market is a treasure trove and we might get to see them make the Western push soon.

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