SuperApp
from SeedTable
Super Apps
The pre-covid world and the post-covid world look very different, but not just due to face masks. With Covid19, as many have discussed and will surely continue to discuss, came the acceleration of all things digital. In 2019, most people still met in person, facetime was seen as no more than a quick way to get in touch with friends and family elsewhere in the world. Most people divided part of their purchases online, through eCommerce, but still many of us preferred to go to the nearest Zara store to buy a new set of shirts or a dress. It was an in-person first, digital second world. Now, in mid-2021, things have changed. More than ever before, the world has gone online. 2021 has brought with it a world that is digital first, in person second.
But all changes come with unintended consequences. One of these unintended consequences of Covid is that the number of apps in our phones we use on a daily basis has grown exponentially to meet the requirements of this digital-first world. It is, to be frank, becoming a bit annoying.
Some people have turned their thoughts inwards and elsewhere to find a solution to this problem. Some even see opportunity in it. What if, some people ask themselves, we could simply have one app on our phones to handle all our digital-first world needs? One app, one sign-in, one user experience... What would that look like?
The Solution: SuperApps
It turns out such apps already exist, and have existed for years now. SuperApps, as some people call them, have reined supreme in some Asian countries for quite some time, especially in China. Ever heard of WeChat? or AliPay? Those two together account for more than 90% of digital payments in China. WeChat, specifically, also happens to be the main tool for social messaging and media in the country.
Pre-Covid, most people scowled at the idea of building a WeChat or AliPay for Europe. It can't be done, they said. Users from so many different countries and cultures will never trust a single app to take over their lives. And they were right. Pre-Covid, the divide between European countries was too large, and the world was not digital enough to accommodate a SuperApp. But as things have changed, so have people's thoughts around this issue. In some people's minds, suddenly the likelihood of a SuperApp taking over all of Europe increased. For others, the issue is still unclear.
The verdict, then? It's too early to tell. But that doesn't mean some companies aren't trying. But before we get into who those companies are, let's dive deeper and explore: How do SuperApps work and what are their benefits?
How do SuperApps work, exactly?
In many ways, the concept of a 'SuperApp' is not that new, not even in Europe. We've always had companies that try to take over many or all aspects of their users lives. What's new, though, and what no one company has been able to achieve in Europe like WeChat did in China, is the mobile implementation of this winner-take-all business strategy.
SuperApps, put simply, seek just that: to win the entire market. With a SuperApp, users can order food and groceries, chat with friends and family, shop their favorite stores both online and in-person (think QR or contactless payments), book a plane ticket or hotel reservation for their next post-vaccine holiday in the Maldives. By leveraging users' embracing of all things digital in this post-Covid world, SuperApps aim to build a seamless customer-to-market relationship experience.
That's the obvious benefit of SuperApps: consumers get to simplify their lives exponentially, while the one company that manages to capture their hearts and phones gets to become stupidly wealthy.
But SuperApps get more interesting than that, because they come with second-order benefits that affect not just users and the aforementioned dominating SuperApp, but other companies as well.
Second-Order Benefits of SuperApps: Cross Selling & Super App Infrastructure
The whole reason why SuperApps work is their capacity to cross-sell products and services to users, meaning the company can offer the user various products and services, all in one app. This in turn drives the company's growth, creates more and more ways to engage with existing customers and opens up new customer bases via partnerships while reducing re-acquisition and user-retention costs. But no one company can hope to build every single aspect of the tech infrastructure required to pull off such a feat under their roof. Sure, they can acquire other companies, and absorb their features into their app, but there's a better, more effective and efficient way: to build an ecosystem.
Much like Apple did with the Apple Store, SuperApps elsewhere have built software 'ecosystems'; a sub-industry of services that are built with the sole purpose of supporting the SuperApp's infrastructure. If a SuperApp were to take over Europe, it wouldn't mean the end of all other startups, but instead the proliferation of a new, previously untapped sector. How many people have become filthy rich since Steve Jobs revealed the first iPhone and its App Store, after all?
Still, it's clear that the true prize lies not in the sub-industry of SuperApp supporting services and products, but winning the game entirely and becoming the SuperApp that, much like in the case of a king and its subjects, dominates the European landscape.
And as mentioned above, many companies are working hard to become the European SuperApp. Some are doing it covertly, slowly expanding their business to accommodate more and more features, hoping one day consumers will go to sleep and wake up realizing they use one app and one app only for most their digital-needs: their app.
Let's look at some examples, shall we?
First, there's Spotify. They made a lot of noise back in 2020 when they paid an ungodly (yet undisclosed) sum of money for Joe Rogan to join their brand-new podcasting service. Was that just a casual move? Or something else entirely? Spotify (MathjaxDialect1715898967EquationNumber11.7B). When they released version 7.0, a few months ago, Revolut users realized that suddenly the app had changed entirely; now Revolut was not just a bank, but a multitude of apps for spending, saving, budgeting, investing, all within the same app. There's even a social element to it now.
There aren't many other European wanna-be SuperApps, not just yet. Most SuperApps, in fact, can be found in smaller markets such as Latin America, or Asia. There's a few companies, though, which may be worth noting, seems it seems they too may be aiming to become European SuperApps. These are:
Yandex (public) (MathjaxDialect1715898967EquationNumber2819M)
Tinkoff (MathjaxDialect1715898967EquationNumber3159.6M)
Investors' Appetite
It's too early to tell if investors are making bets to fund the next SuperApp—overtly that is. But that doesn't mean there hasn't been any investor interest in the companies mentioned above. If anything, these companies are some of the most-funded in all of Europe. It only makes sense; building an app whose goal is to take over not a single market in a single country but all markets in all European countries requires one thing above all else: a preposterous amount of money.
There is one notable example, though, of an overt SuperApp that has recently garnered a lot of investor attention: in December of last year, Lydia, the financla SuperApp, announced an extension to its Series B with a $86 million round led by Accel. The money was raised to expand Lydia beyond France, and make the first of many moves to take over the rest of Europe.
Other investors dipping their toes (or jumping straight into) the uncertain pool that are SuperApps include:
Horizon Capital (invested in Tinkoff)
Baring Vostok Capital Partners (invested in Tinkoff)
Accel (invested in Lydia, Spotify)
Founders Future (invested in Lydia)
XAnge (invested in Lydia)
CNP Assurances (invested in Lydia)
Belcube (invested in Lydia)
Le Groupe Financière Duval (invested in Lydia)
Tencent (invested in Lydia, Spotify)
Fidelity (invested in Spotify)
Gibraltar Ventures (invested in Spotify)
DST Global (invested in Spotify, Revolut)
137 Ventures (invested in Spotify)
Founders Fund (invested in Spotify)
Horizon Ventures (invested in Spotify)
Creandum (invested in Spotify)
SoftBank Vision Fund (invested in Revolut)
Lakestar (invested in Revolut)
Bond Capital (invested in Revolut)
Index Ventures (invested in Revolut)
Draper Esprit (invested in Revolut)
Balderton Capital (invested in Revolut)
Point Nine (invested in Revolut)
Seedcamp (invested in Revolut)
Tiger Global (invested in Yandex)
RTP Global (invested in Yandex)
Almaz Capital (invested in Yandex)
Pitfalls & Challenges
While the appeal of SuperApps, both for Entrepreneurs and investors, are many, that doesn't mean there aren't multiple pitfalls and/or challenges to building a European SuperApp. Chief among these is the amount of data harvesting required for such an app to exist: it's this data that allows SuperApps to launch hyper-relevant, affordable and convenient services tailored to the needs of specific users across so many cultural and geographical barriers. In a world that is slowly moving towards more and more data privacy, SuperApps would go straight in the opposite direction. Will do EU ever allow it?
Maybe, maybe not. GDPR is a thing, for whatever that's worth. And speaking of the EU: there are other regulation-centric concerns when it comes to SuperApps. SuperApps are by definition monopolies, and Europe has a long history of breaking up companies that have garnered too much power for themselves. And then there's the fact that SuperApps rely heavily on open APIs, which is another aspect of the European tech ecosystem that is highly regulated.
And structural and regulatory concerns asides, there are other challenges to take into account: Europe is not China. Users themselves don't particularly like centralization. Historically speaking at least, we've always leaned less towards one-app-to-rule-them-all, and more towards highly specific, dedicated, use-case-by-use-case apps.
Many experts, in fact, believe an app like WeChat would never work in a place like Europe. Some cite the reason I just mentioned, while others point to the Social Media and communication fragmentation we see in Europe that we never saw in China: Social Media and communication are a key aspect to all successful SuperApps, and we've yet to see a European Messenger software that has managed to gain significant market share.
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