Iteration, stagnation, and stickers: Cubie’s hard fight in the mobile messaging wars

Nine months ago, a monetary windfall hit three mobile app startups specializing in messaging. In February, Japanese ecommerce giant Rakuten announced it would purchase Viber, which claimed to have over 100 million monthly active users (MAUs), for US$900 million. Days later, Facebook acquired WhatsApp, which had over 450 million monthly active users, for US$19 billion. Then in March, China’s Alibaba sunk US$215 million into Tango, which at the time had 70 million MAUs.

For the founders of WhatsApp and Viber, these acquisitions meant fat paychecks. But for countless other messaging startups, the acquisitions only heightened a dilemma that already existed – how can a runner-up chat app prove the value of its smaller slice of the messaging market? How can it distinguish itself from its competitors without going too niche? If it’s possible for Tango to pick up a massive investment, is it possible for Voxer? For Maai? For Talko? For Jongla?

Square pegs

In the case of Taipei’s Cubie, the heated competition in mobile messaging presents a massive challenge, along with several opportunities.

Serial entrepreneurs Tempo Feng and Cjin Cheng began building Cubie in late 2011, on the heels of Gamelet, their casual games company. For the bulk of its two-and-a-half year existence, Cubie has looked and felt more-or-less like every other messaging app out there – users can send texts, pictures, and emoticons to friends.

Following strong organic growth after it first hit the App Store in 2012, Feng and Cheng joined the 500 Startups accelerator in Silicon Valley, which helped further boost the team’s credibility and prestige in Taipei’s startup community.

But in June 2014, leadership changes took place at Cubie that signaled a shift in its strategic direction. Feng and Cheng are no longer involved in the company’s day-to-day operations. Pinehurst Advisors, an early investor in Cubie, appointed a Thelma Lin, formerly of Taiwan’s SNS Plus,  to run the company as COO. Pinehurst partner Mark Hsu has also assumed a more active role in strategy and fundraising.

None of the parties involved in the turnover will discuss the leadership change at length, and all insist they remain on good terms. But the reasons for the handover are clear – Cubie hasn’t been growing. The app accumulated nine million users in its first eighteen months. But since then, it’s drawn in only two million more new users to date. That’s a far cry from the 50 million new registrations that Line attracts every quarter.

In Hsu’s view, this sluggish pace calls for some re-sized ambitions.

“If you look at the general messaging landscape and look at WeChat and Line, their downloads are in the hundreds of millions. We need to be realistic – realistic in the sense that Taiwan’s ecosystem is not conducive to building out a billion dollar tech company,” Hsu tells Tech in Asia. “From a strategic standpoint, we’re being realistic by saying, ‘Okay, the runway that we get will be different than a company like Tango in Silicon Valley, which just raised about US$215 million. We’re being pragmatic in that we need to figure out where our positioning is. It’s not about being a general messenger, but being a targeted social network or ‘social messenger’ if you will.”

What’s the “target” that Hsu speaks of? Games and forums. As of September of this year, Cubie is no longer a person-to-person mobile messenger, but a game-centric community bolstered by its person-to-person chat functions.

Following her arrival last summer, Lin launched a section on Cubie dedicated to message boards. Users can share comments and photos on forums dedicated to manga, anime, video games, movies, sports, news, and other lifestyle themes. Lin sees the feature as an of gaming-related forums in Asia that remain popular well into the Web 2.0 era, but don’t have a mobile complement.

“In Taiwan, the biggest gamer forum is Gamer.com.tw,” says Lin. “You have to open a browser on the mobile web, log in with a password, attach a photo, and use a URL. But now, in Cubie, if you have something you want to share, you can go on to our forums, attach a photo, and go.”

Screenshots of the new forums on Cubie

Cubie is also talking with publishers in hopes of importing mobile games to the app. The engineering team is building an open SDK that will allow developers and users to take advantage of a registration and rankings system. Ideally, future Cubie users will log into the app to play games, discuss games on forums, chat directly with other community members, and maybe – just maybe – spend a little money on a game-related purchase.

Same cake, different icing

Iteration stagnation

Mobile messaging, phase one