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No Mercy No Malice

Super-App

December 3, 2021

Finally.

Two years ago I wrote a letter to the chairman of Twitter calling for Jack Dorsey to be replaced as CEO. Or, more to the point, for the board to appoint a full-time CEO. An executive who spends 90% of his time running another company and plans to spend half the year on a different continent looked like a recipe for poor shareholder returns. Spoiler alert: It was.

This past February, as there were now directors on the board acting as fiduciaries, I predicted Dorsey would be replaced by the end of the year.

Between the day @jack reclaimed the CEO position and the day he resigned (six years), Twitter’s stock increased 33%. The S&P 500, Facebook, and Google rose by 121%, 283%, and 447%, respectively.

My next prediction? Twitter will be acquired by the end of 2022, most likely by Salesforce or a fintech company like PayPal or Stripe with inflated currency. Jack could also reunite his sister-wives — in a man-bites-dog scenario, the company formerly known as Square could acquire Twitter. Why? For the same reason it’s now called Block. Super-apps.

A super-app offers a suite of internet services on one platform. Block already boasts an armament of super-app services: peer-to-peer payments (CashApp), crypto and stock trading (also CashApp), lending (Afterpay), music streaming (Tidal), it’s dabbled in food delivery (Caviar, sold to DoorDash in 2019), and its core merchant-payment platform (Square). Building social into the platform is the logical next step to becoming America’s first super-app.

I wrote about super-apps last week in New York magazine, and excerpts from that article appear below. It was timely: Super-app stories have been in the news ever since.

  • Square changed its name to Block — this was announced 48 hours after Dorsey exited Twitter. “Square” will be reserved for the merchant-payment business; the three-dimensional moniker encapsulates all its various products. Twitter would give Block even more dimension.
  • ByteDance (TikTok’s parent company) invested in iMile, a last-mile courier service that connects mostly Chinese e-commerce companies to consumers in the Middle East. Dance videos are just the bait — commerce is the hook, and ByteDance is building services for more than limber-limbed teens.
  • Grab, the “everyday everything app” from Singapore, made its public debut yesterday after a $40 billion SPAC deal. It’s the biggest SPAC to date, though the stock fell more than 20% by the closing bell.
  • Indian super-app Paytm IPO’d with a $20 billion valuation — the largest public listing in the nation’s history. However, however … it, too, shed more than a fifth of its value on the first day of trading. Then slid further before maybe finding solid ground at $14 billion.

In sum, it’s getting crowded in the super-app lobby. The competition in India now includes: Amazon Pay, Google Pay, WeChat, and PhonePe (owned by Flipkart/Walmart). Southeast Asia also hosts many players: Gojek, Line, Sea Limited, Tokopedia, Zalo, and more.

And for good reason. The super-app market is the digital Iron Throne. Super-apps live on mobile, and mobile is the internet in emerging markets. India, for example, has three times as many cellular subscribers as the U.S., and Indians spend 17% more time per day on their phones.

Long term, however, it’s the world’s largest economy that is the biggest prize. A platform that services every aspect of the consumer experience in any market will be one of the most valuable companies in that market. The firm that establishes super-app leadership in America will be the most valuable company in history. Some thoughts below, with excerpts from our piece originally published in New York magazine on November 24, 2021.

The metaverse is best described as a consensual hallucination between Mark Zuckerberg and the media — a fantasy that we’ll trade pleasurable activities in the physical world, like cooking and dating, for nausea-inducing hours in a virtual realm full of legless avatars. To most ordinary people, the Facebook CEO’s aspiration to be the god of a universe we can enter only by affixing a prophylactic to our heads seems megalomaniacal. They’re correct. However, every time you hear Zuckerberg say metaverse, swap in super-app and the plan sounds less stupid.

A super-app is a single mobile app that offers basic services including chat and payments, along with a suite of “mini-apps” from third parties, ranging from stores and restaurants to government agencies. Westerners aren’t familiar with them, but across much of Asia, super-apps are the internet. The largest is China’s WeChat, possibly the most used piece of software on the planet. On WeChat, you can find a date, hail a cab, pay utilities, even get divorced. An app reaches super status when it knits together a critical mass of services, makes them so easy to toggle across that, even if they aren’t as good as sole-purpose apps, the app becomes your OS for your digital life. The more services, the less reason to ever leave.

A super-app can start small: WeChat began in chat; Indonesia’s Gojek started in ride hailing; and in India, Paytm was originally for buying prepaid mobile minutes. All eventually expanded from their niche and snowballed to dominance. The economics of super-apps are powerful — and possibly inexorable. I’m convinced that constructing a U.S. super-app is the strategic-imperative of the next decade and could result in the first $5 trillion company.

Already, there are a host of companies looking to replicate the Asian model — but to do so, they’ll have to get past Apple and Google, the nearly hegemonic mobile-OS providers, which are investing billions to prevent a super-app from inserting itself between consumers and the OS. The radical transformation of Apple under Tim Cook has been a decade-long project to extend the company’s ecosystem to nullify the potential for a super-app to sit on top of iOS. It explains why Apple now offers both credit and debit payment systems, why you can use your Apple ID to sign in to a huge range of third-party services, and why Cook is giving Reese Witherspoon and Jennifer Aniston hundreds of millions of dollars to produce an inferior version of Murphy Brown.

​​Who are the strongest challengers to Apple and Google? Most apparent, the other Big Tech behemoths, Amazon and Facebook/Meta, who aim to leapfrog by building alternative interaction paradigms, a pretentious way to say “voice” (Amazon) and “VR” (Meta). And while they are both trying to skate to where the puck is headed, Meta is on thin ice with a portal that makes you nauseous. Voice is underhyped, and VR overhyped.

The likely epicenter for aspiring super-apps is fintech. Payments in particular: PayPal, which owns Venmo, and Block né Square. And new fintech unicorns are being birthed weekly, including crypto-based businesses that are also in a position to leapfrog with long legs of capital, vaulting over the entire existing financial system. Fintech companies that reach scale have valuable infrastructure, acquisition currency in the form of overheated stock, and trust. Traditional Big Tech leaders, social media companies especially, have burned through acres of PR heat shields over the past years, relentlessly assaulted by bad press as they ask people to come for teen depression and stay for insurrection. Fintech has been (relatively) unscathed. Plus, these companies begin their assault from higher ground: payments.

Payment processing is the foundation of a super-app. It’s the glue that integrates core features with those provided by third parties on the platform, and it gives users the convenience of not needing to enter credit-card information across apps and sites. A shift in the arbitrage of attention, from ads to the more potent payments business, promises to fuel a historic merger-and-acquisition binge that will reshape the array of industries that tech derisively labels “content.” The likely biggest acquirers will be in finance — not just start-ups but Wall Street’s Old Guard, whose imminent panic will manifest in M&A banker fees.

Financial-services firms are already expanding into new markets. Not long ago, American Express acquired the reservation service Resy. There was a brand logic to that deal, as AmEx has long offered concierge services. In addition, JPMorgan recently purchased the Infatuation, the restaurant-review site and owner of Zagat, which is considerably more curious. In March, Square paid nearly $300 million for the music streamer Tidal, prompting a wave of WTF? coverage. You’ll know the super-app conquest has hit another level when Jack Dorsey combines Square with the other company he used to stop by on Wednesday and Friday afternoons, Twitter, and offers useful services.

I’ve lived through half a dozen of these techno-social transitions, from the PC era to “dot-coms” (ask your parents), through mobile and social, and now this. Every shift has created more wealth than the one before — but also levied more harm. One thing they all had in common is that we never really saw them coming. In hindsight, these things look obvious, but none of these transitions have manifested as we expected. For the most part, they’re worse. The difference now is that we can see super-apps coming. In Asia, they’re already here. As consumers, investors, and political leaders, we have a chance to do better. To set the stage for competition and empowerment, not co-option and enragement. Whether our future is mediated by Siri, Alexa or by Meta, it doesn’t need to be a world of addiction and exploitation. The virtual world isn’t “it is what it is,” but what we make of it.

Life is so rich,

P.S. Making predictions can be dangerous. It might put you in the Twitter crosshairs of Elon Musk. Yet I persist. Join my free Predictions livestream on December 7. You probably won’t regret it.

38 comments

  1. Sia says:

    Superapps exists in Asia (I know, got a company there) due to a lack of competition and an overpowered political class who act as regulatory enablers for bribing companies.

    It would be much harder for superapps to persist in the west.

  2. Mike says:

    Scott, I love your stuff generally and greatly admire your smarts, experience, and only mildly forced humility.

    Having said that, I’m old enough that it’s hard to get contagious about your apparent enthusiasm for what to me sounds for all the world like a rebranding of the crappy OS’s we’ve all been subjected to being unpaid beta-testers for over the last three decades.

    I wonder if it occurs to any of the starry-eyed believers that perhaps – especially after the new, gullible (read: emerging / frontier, lol) markets might just possibly get a little cynical after a while.

    As for back home, I guess you’re assuming that even though both parties in Congress have already shown a willingness to go after Big Tech to some degree, yet more consolidation will be tolerated if not embraced?

    Respectful disagree, sir.

  3. jay says:

    Scott is a beast…how 1 person can have so much info is impressive!

  4. Jacques Sandtonian says:

    Facebook already attempted the super-app with Messenger. Zuck saw the reach and dominance of WeChat and wanted to recreate it in Messenger along with “M”, its own Alexa-ish virtual agent, and ultimately with payments. It failed on both and appears to have ditched those aspirations in favour of this “metaverse” which seems more PR distraction than actual innovation.

    Replicating something with the broad capabilities of WeChat is a practical impossibility. WeChat benefits from the Chinese state tying everything together, not least payment. One key reason why Facebook couldn’t properly integrate commerce into Messenger is the disparate and fragmented payment merchant landscape globally.

    It’ll take a lot more than M&A to make a super-app capable of getting close to what WeChat has achieved in holistic utility.

  5. Ember says:

    1st paragraph,
    90% of “his” time…
    In order to work on unconscious bias and all that comes with it, try to say “they” or hey, flip it around and say “her”.
    Also, reading “his” for everything related to a CEO position just looks outdated to me.

    • SK says:

      What a woke bias…Just because you want to push your agenda deosnt make usage wrong. Even if u r right, shouldnt jack doresy consent to the use of pronouns..why will scott use pronouns on jacks behalf..mental

  6. Stuart says:

    You’ve mentioned the transformation potential of “voice” a couple times in the past. Would love to get your thoughts on voice being an underhyped technology/medium and explore that further.

    Blast from the past – your 2019 predictions post:
    Voice (specifically Amazon’s Alexa) is going to be the next big thing — Disco
    The baton has been passed from the iPhone to Alexa as the most transformative technology over the next decade.

  7. Don Short says:

    The key infrastructure for the metaverse (read: all of our digital communication) is a persistent source of identity. The problem with identity solutions to date is that they are all siloed, regional or corporate. Check out the Ethereum name service and their roadmap for identity. It might be the solution for identity that crosses regional and corporate boundaries and unlocks the future of digital communications.

    • Sia says:

      That has little to do with the metaverse (avatars in a 3d-environment) – you seem to interchange the metaverse with web3.

  8. Glenn says:

    Hi Scott, great post and thanks for always sharing your thought provoking ideas. I was wondering that if payment is the basis for creating mobile based super-apps, what is your take on the adoption of contactless biometric cards as an secure, easy and fast alternative to using your mobile phone. Furthermore, banks want to avoid sharing credit/debit card usage with big-tech, hence a biometric contactless credit/debit card could be an alternative to mobile-payment.

  9. Bob Cooney says:

    Don’t underestimate the impact of spatial computing. You seem to dismiss it because early VR experiences with shitty tracking and frame rates induced simulator sickness in 7% of people. But that’s already been mostly solved already, with hundreds of billions being continuously invested into that space. People scoffed at Steve Jobs when he launched the iPod and said people would eventually be walking around with earpods everywhere. The addiction to smartphones is a leading indicator. People crave distraction from this increasingly dystopian present. VR will prove an irresistible distraction.

    • Karl Hungus says:

      VR will only be a (sustained) irresistible distraction for douchy geeks until a way is found to do away with the ridiculous headset.

      • Hamlet K. says:

        Bought several VR headsets, gave them as gifts to non-geeks. They love them. The form factor will improve over the next decade. But I agree with Bob, don’t underestimate the spatial computing as it will grow and get substantially better. Some of the available games, apps, experiences right now are pretty amazing.

  10. Kris De Decker says:

    The wealth is probably created thanks to the addictive nature of these apps. Any dealer will confirm: to make profits you need addicts. And most dealers will tell you: I am providing a service, I am not forcing people to buy my stuff (Meta’s answer to all inquiries). Any police officer will tell you: take a dealer off the streets and he/she will be immediately be replaced by another dealer (blocking Tech gigants will not make the addiction go away). Comparing social apps to drugs can help in understanding the dynamics and the outcomes. People want to buy. People want to socialize. Any platform that allows people to buy and socialize effortlessly and cheaply should be classified as a narcotic. Why do the most happy countries in the world strictly control the distribution of alcohol? Is controlled distribution of narcotics the key to happiness (Scandinavia) or is a free for all system (China/US) the cause for unhappiness. Can you increase happiness by restricting access to narcotics (social apps, alcohol, drugs)? Let me know what you think. Life is a blast 😉

    • Neil says:

      Your reply was very thought provoking. I live in Thailand a seemingly happy country where they seem to see alcohol as the demon. So maybe you are right and it is necessary for it to be controlled to provide happiness. We will see

  11. Fran Sho says:

    Murphy Brown was great for its time, but how good can any show be that needs a laugh track? Morning Show is much more layered, serious and hard to compare.

  12. Beerajaah Sswain says:

    Well, Meta is getting to the payment game in India through Whatsapp….with its Jio partnership (largest cellular operator and a conglomerate).
    https://www.linkedin.com/posts/digvine_jiomart-shopping-on-whatsapp-activity-6872176998375014400-BW9m

  13. c cook says:

    Everyday, more FinTech companies, by now they are just late for the train bailouts from Wall St. Look around, everyone who uses a phone to pay for something uses ApplePay. I see the odd tap of a plastic card, and for the first time in a week, someone using real money. Venmo great for small exchanges, but beyond that? Third world will use their own apps, the developers are likely related to rulers and ruling class, not much chance for sharp MBAs from NYU to get in there. When someone can actually explain how Web3.0 will work and be allowed to gut the current financial system, maybe there will be traction. For now, not much actual change, just apps to make it easier to part with your money.

  14. Moe Adel says:

    Awesome as usual! How about FinTech companies that incorporate behavioral aspects into their business models (FinTech 2.0)? Example: Lemonade.

  15. tommy says:

    if SQUARE is now BLOCK, how long until they morph into TESSERACT?

  16. Larry says:

    Apple Pay is the winner. When McDonalds drive-through can’t accept cash, patrons ask if they take Apple Pay. When it’s time to pay for the check at Korean BBQ, soccer moms ask if they take Apple Pay and walk up to the register to tap their phone. It’s American DNA, and it won’t change. I believe the US Super-App will come by the “Hollywoodification” of clickbait content. TikTok videos will look like they were made at ILM. Mobile game ads still misrepresent the actual game but become the new Super Bowl ads. We watch the ads for the ads themselves and talk about it. The US Super-App will be built from here. Content is still king.

  17. Ankit Chaudhary says:

    Great article Scott as usual.
    Totally agree that super apps start with solving one core problem really well and then build an ecosystem around the core offering.

    The example of Paytm in India is not the most apt. The company is churning off users in masses and its core payments offerings are no longer it’s moat. The app which is closest in the race to being a super app in india is either Amazon or phonepe. Gpay was doing good in the last year, but even it’s out of race now.

    Amazon started with ecomm and now deeply going in deeper to all categories like payments, groceries, flights, travel etc.
    Similarly, phonepe is the market leader in india in payments and now going deeper in financial services and allied products.

    So, the biggest bets for being a super app in india are phonepe and Amazon in the given order. Paytm is really out of bounds!

  18. Winnie the Pooh says:

    Let’s give tech companies even more monopolistic power and government collusion. What could possibly go wrong? Chairman Xi can disappear Peng Shuai with the snap of a finger, just like your favorite wokesters at big tech companies suppressed the Hunter Biden story last year. Anyone who challenges the super app regime shall be unpersoned, or in modern America branded as a white supremacist. As Twitter’s new CEO says: “If they are not gonna make a distinction between muslims and extremists, then why should I distinguish between white people and racists.”

  19. Michael says:

    I agree with many of your thoughts but i don’t believe the West needs SuperApps: 1) They caught on in China/SEA because folks couldn’t afford iPhones. WeChat, AliPay, Grab make cheap smartphones more useful to people. 2) It’s just not that hard to touch another iPhone icon (or ask Siri) for a superior experience in a given vertical. 3) As you say, Apple and Google will try hard not to let a SuperApp gain traction.

  20. Joe Buhler says:

    Spot on commentary by Prof G. This is indeed the digital world that many Asians have been living in for quite some time now. We, in the West, will follow in some variation or other. Oh, BTW I’ve been in business since even before PCs, so, even if I could, there’s no need to ask any parents about past tech shifts. Lived through them all.

  21. John Zacharopoulos says:

    For me, this was your most inspirational work. Imagine the signaling through behavior collected and then mined to code an almost perfect personalized dopamine schedule. Gamers, shoppers, stock players, loads of bias in search of confirmation, all catered to via one app and organized according to each’s dopa schedule. I say let them.. it won’t bring happiness!

  22. Cole Inman says:

    I don’t believe a super app will work in the US. The irony is, that before the techlash and antitrust rhetoric of the past 5 years, it could have happened. Now it’s a red flag to consumers and lawmakers alike. In a politically divided US, free market ideals and caution towards anything that even smells like a monopoly is ingrained on both sides of the isle. This wariness isn’t subsiding until Google spins YouTube, Facebook is forced to spin Insta, or (my personal favorite) a perp walk.
    If a super app would work, why is Uber Eats a separate app from Uber? Why didn’t Uber just bake in (pun intended) Eats into its current app?
    Why are Amazon, Amazon Music, and Amazon Alexa 3 different apps?
    Don’t even get me started on the amount of Google apps that are out there.
    UX is also a huge reason I don’t see super apps working in the US. Compare AliExpress’s app to Amazon. Chinese apps/sites have TONs of things going on in the viewport at once. Western one have been on a trend of simplicity for the past 10 years. (Robinhood’s only redeeming quality)
    Facebook’s app is/was the closest thing to a WeChat. Just look at the amount of tabs: dating, groups, marketplace, events, games, messenger, pages. (Read: a bloated UX mess) Zucc’s poor decisions and lack of likability has successfully killed FB’s chance of ever being a WeChat, but it almost doesn’t matter because no other app has come remotely close to what FB accomplished. (writing that hurt)

  23. Ven says:

    Great commentary, Scott. I am curious why a company like Apple or Alphabet would not want to create a super-app. They seem the most well positioned.

    Apple already has the whole suite minus Social. Could you speak more to this?

    Thank you,
    V

  24. Earl Dougovito says:

    Nice job! sweet. Looking forward to the predictions, what worlds will begin, which might end.

  25. Andrew Daniel says:

    ummm, this is just AOL with aura of being hip/woke/cool, not sure why that’s not obvious to everyone.

  26. Aristoteles Nogueira Filho says:

    You might take a look on how the experiment of doing a super app is going in Brazil. The second highest mobile internet usage in your chart. Magalu, Inter, Nubank are the contenders. Success has been doubius.

  27. Stephanie says:

    Shall we list how many times you have been dead wrong? I can make all kinds of predictions too. Your arrogance is only surpassed by your need to be “cool” And guess what..you’re not

  28. Stephanie says:

    Shall we list how many times you have been dead wrong? I can make all kinds of predictions too. Your arrogance is only surpassed by your need to be “cool” And guess what..you’re not

  29. Ishaan Gupta says:

    Block (formerly Square) does not own Caviar anymore.
    They sold Caviar to Doordash in 2019.

  30. Shelly Smee says:

    Thank you for your keen insight distilling the key factors and players. As someone with limited time or expertise using many of these platforms, understanding where tech is headed and why we should care is a topic any leader of any organization in any field should have some basic knowledge of. thank you

    • Mohamed Kamel says:

      Great post.

      However, I think FB has the clear advantage outside of China / US with a super app as what’s app is THE most widely used app for communication. It is also the closest to WeChat in terms of ease of use, smooth sharing of photos, documents, …etc and currently super widely used for work and friends groups.

      Something to think about :).

  31. Michel Gutsatz says:

    Great analysis as usual! One element is missing however when you analyze the Chinese super-apps (what I do in my marketing and branding classes in China and France): WeChat is totally customer-centric being built (like Alibaba) around the customer to provide all services in the eco-system to a clearly identified person (Uni ID in the Alibaba world) whilst our western model is built on silos. It will take time and huge resources to built a western customer centric eco-system : you have to acquire companies that have pretty high valuations. In China even DIDi was a joint project between Alibaba and Tencent and is part of both their eco-systems… Will we be able to move OUT of the silo model and mentality ? Your prediction Scott?