Success Stories

WhatsApp Story- How Jan Koum went from welfare to billionaire?

WhatsApp Story- How Jan Koum went from welfare to billionaire?

Roughly one in seven people on earth have Jan Koum, and his company WhatsApp, to thank for their ability to call and text their friends and family free of charge.

Over 1.5 billion people use the free mobile messaging app worldwide; it is particularly popular across Europe, South America, and Africa. To put the WhatsApp’s monumental success into context, Twitter only has 328 million monthly active users.

Born on the 24th of Feb 1976; Jan Koum is the Co-founder of the globally famous mobile messaging application – WhatsApp. WhatsApp was acquired by Facebook in February 2014 for a whopping $19 Billion.

In 2014, he entered the Forbes list of the 400 richest Americans at position 62, with an estimated worth of more than $7.5 billion. He was the highest-ranked newcomer to the list that year. To add to that, Forbes also stated in another article that, Jan’s prodigy would also be the sole reason behind the loss of a combined total of $386 billion that will be incurred by the telecommunications industry between 2012 and 2018!

Jan Koum Whatsapp HV
Jan Koum

Nevertheless, the story of WhatsApp is yet another live example of innovation in true terms, for everyone out there waiting for motivation.

But Jan is no stranger to failure and is a founder who had to go through his fair share of rejection by top tech companies, including the one that eventually bought their service, only to become the most valuable messaging platform on the planet.

EARLY LIFE

Jan was born in the rural areas of Kiev, Ukraine. This was during the Soviet Era, so being a Jewish and living in a rural area was definitely not easy. He lived in a house that did not have electricity and being in a country that mostly had a temperature below 0 degrees; they didn’t even have hot water. His parents also denied the usage of phones because they were often tapped by the govt.

To worsen things more, being financially unwell they also had to go through a regularity of hardships as well.

Hence, in an attempt to put an end to all this, they decided to move to America and Jan along with his mother and grandmother moved to Mountain View, California in 1992.  His father stayed behind in Ukraine hoping to join his family shortly.

Here they were helped by a social support program to get a small two-bedroom apartment. Jan worked as a cleaner at a grocery store, his mother babysat. By 18 Jan knew he wanted to learn to program. The cheapest way to learn was to get some books and study on his own. Lacking money to even buy the books, Koum bought them from a used book shop and returned them when he was done. Working and going to school at San Jose State at the same time, Koum quickly discovered that he hated school. He dropped out.

Just when things began to look normal is when another tragedy hit their lives, when his mother was diagnosed with cancer. But he always believed that whatever did not kill you, only made you stronger, and his adversities were only making him more resilient.

In the next two years, he had fully trained himself all about computer networking and all set to take up his next task.

This is when he gained a sudden interest in programming and got himself enrolled at San Jose State University. Along with that, he also began working with Ernst & Young as a Security Tester.

After working there for roughly six months, Jan got the biggest opportunity of his life when he got selected to work at Yahoo as an Infrastructure Engineer. Now, this was when he was still studying at San Jose State University.

Yahoo back then was just like any other start-up and was beginning to grow, and since Jan loved what he was doing, he dropped out of programming and moved ahead with yahoo.

His father passed away in 1997, and his mother couldn’t out-beat cancer for long and also passed away in 2000. He was suddenly left all alone. This is when his friend from E&Y (and Yahoo) ‘Brian Acton’ helped him fight the loneliness by inviting Jan to his house off-and-on, for playing soccer, ultimate Frisbee, etc.

Whats Brian Acton and Jan Koum
WhatsApp’s Brian Acton and Jan Koum (Photo: Robert Gallagher for Forbes)

Together, they went on to work with Yahoo for more than nine years! While at it, they got to intake numerous amounts of priceless knowledge and experience. They saw Yahoo go through multiple ups and downs. Even though he hated advertising, he still worked on some of the most important projects of yahoo such as their advertising platform Project Panama in 2006. He likes to call that phase, “depressing,” ads get on his nerves.

Anyway, after giving nine years of his life, Jan and Brian left their jobs in September 2007 and took a year off. And this is when it all began!

REJECTION

For the rest of the following years, Jan relied on his $400,000 savings. They began by going on a trip around South America. Later, they also applied for Facebook but got rejected. As a matter of fact, Brian had also got rejected by Twitter as well.

Ideation

In January 2009, Jan bought an iPhone and realized that the then seven-month-old App Store was in the process of launching a whole range of new apps. This gave him a brilliant idea.

He visited the home of Alex Fishman, a Russian friend who would invite the local Russian community to his place in West San Jose for weekly pizza and movie nights. Up to 40 people sometimes showed up. The two of them stood for hours talking about Koum’s idea for an app over tea at Fishman’s kitchen counter. But eventually, the conclusion was that the whole of the idea was not possible without an iPhone developer, which is when Alex introduced Jan to a developer in Russia named Igor Solomennikov that he had found on RentACoder.com.

Although the idea itself was at very nascent stages, but since the beginning itself, they were very clear about three rules: their service would definitely not carry advertising, would have a satisfying experience, and lastly, keeping in mind the privacy of their customers in mind, their product would also not store any messages. Additionally, they would also maintain to deliver the product without any gimmicks or stunts, with an endless amount of reliability and rich experience.

Koum almost immediately chose the name WhatsApp because it sounded like “what’s up,” and a week later on his birthday, Feb. 24, 2009, he incorporated WhatsApp Inc. in California.

Whatsapp web

Now as the work progressed, they figured that WhatsApp kept crashing or getting stuck at a particular point. This went on for a long time, which built up a great amount of frustration. Jan at one point even lost hope and felt like giving up and looking for a new job. But Brian helped him get motivated and got his act together, and asked him to for a “few more months.”

And finally a few months down the line, help came from Apple. They launched their push notifications which used to allow the developers to ping their users when they weren’t using an app.

Jan updated WhatsApp with the same and each time someone changed their status, it would ping everyone in your network. And it suddenly became a trend, Alex’s Russian friends started using it to ping each other with funny custom statuses like, “I woke up late,” or “I’m on my way.”

Growing Days

Soon, the second version called WhatsApp 2.0 was also released. This was turned WhatsApp into Instant Messenger because it also had a messaging component. And just within a blink of an eye, they had 250,000 active users. He needed help.

Now, this was the time when Brian Acton was still unemployed and was trying to establish another unsuccessful start-up of his. Jan somehow convinced him and Brian decided to join WhatsApp.

Anyway, soon they also got their first round of funding of $250,000, after a little persuasion, from five of their ex-Yahoo friends in against for a co-founder status and a stake.

And after staying in the beta stage for so many months, the app finally saw the daylight in November 2009 exclusively on the App Store for the iPhone. Soon another BlackBerry version was also made by an old friend called Chris Peiffer.

In no time, they also sub-leased a few cubicles on a converted warehouse on Evelyn Avenue. They didn’t even have a WhatsApp sign for the office, and the other half of the building was occupied by Evernote.

With Koum and Acton working for free for the first few years, their biggest early cost was sending verification texts to users. Koum and Acton were using cutthroat SMS brokers like Click-A-Tell, who’d send an SMS to the U.S. for 2 cents, but to the Middle East for 65 cents. Today SMS verification runs the company about $500,000 a month. The costs weren’t so steep back then, but high enough to drain Koum’s bank account. Fortunately, WhatsApp was gradually bringing in revenue, roughly $5,000 a month by early 2010 and enough to cover the costs then. The founders occasionally switched the app from “free” to “paid” so they wouldn’t grow too fast. In Dec. 2009 they updated WhatsApp for the iPhone to send photos and were shocked to see user growth increasing even when it had the $1 price tag.

The app received tremendous success in a very less time. By 2011, it was listed amongst the top 20 of all apps in Apple’s U.S. App Store. This was also because the app was made such that the users found it pretty easy to use and they didn’t have to register on it to use it as well.

Now around that time, Jim Goetz from Sequoia Capital was desperately in search of the founders. They had originally discovered WhatsApp through an App store tracking system they had developed for their assistance called ‘early bird’.

Even then, it literally took months for the VC firm to trace them down, given that the company didn’t have a publicly available address at the time.

They eventually found the WhatsApp founders when started searching for them on the streets of Mountain View. Goetz sat down with Jan and Brian at Red Rock Cafe, answered all their questions and promised not to push advertising models on them and will only act as a strategic advisor. With all these in place, WhatsApp finally agreed to take $8 million from Sequoia Capital in April 2011.

And within a span of two years i.e. by 2013, WhatsApp had reached to a user base of more than 200 million and a staffing of 50 employees.

This was the time the founders again thought of raising funds. Jan remembered his mother’s words, that never put yourself in a position where you can’t meet ends, in other words, always keep some extra bucks with you.

Hence, they kept a secret second round of funding and raised $50 million at a valuation of whooping $1.5 billion from Sequoia. At the time, WhatsApp bank balance read $8.257 million, which indeed was more than what they had raised earlier.

While working with Yahoo, the founders had learned the tricks of the trade and knew for a fact that most of the users do not like advertisements flashing while using an application.

As a matter of fact, the company doesn’t even employ a marketer or a PR person, and yet has managed to become one of the greatest brands in the world, just by creating a strong emotional connect with their consumers. Additionally, they still do not have a signboard outside their WhatsApp office.

And clearly, this has reflected in their growth as well. From 400 million active users in 2013, the company has grown to over 500 million monthly active users in early 2014, to over 600 million active users worldwide. And more than 10% of the total worldwide users came from India, which was also the single largest country in terms of the number of users for them. They were also in the process of reaching 1 billion active users in no time.

Five years after launch, WhatsApp is listed amongst the world’s most popular and profitable phone apps. According to Jan that “active”, is what sets them apart from the rest. He very rightly points out that, “Comparing total registered users and active users are like comparing Ferrari 250 GTO with a skateboard.

No Ads! No games! No gimmicks!
No Ads! No games! No gimmicks!

And the only thing that has helped them reach this stage, defeating all the bigger competitors (with deeper pockets) is the pin-up on their desk that says – “No Ads! No games! No gimmicks!

The Acquisition

WhatsApp became popular in just a short amount of time, and this caught Facebook’s attention. Facebook’s founder Mark Zuckerberg first contacted Koum in spring 2012. The two began meeting at a coffee shop in Los Altos, California, then began a series of dinners and walks in the hills above Silicon Valley.

On February 9, 2014, Zuckerberg asked Koum to have dinner at his home, and formally proposed Koum a deal to join the Facebook board – 10 days later Facebook announced it was acquiring WhatsApp for US$19 billion. But WhatsApp would remain independent and Jan & Brian would only be the ones managing it.

Soon after the acquisition was completed, Jan donated $1,000,000 to the “The FreeBSD Foundation” and around $556 million to the “Silicon Valley Community Foundation (SVCF)” in November 2014.

Jan Koum quote

Due to his profits from the Facebook acquisition, WhatsApp founder Jan Koum currently ranks third among social media billionaires worldwide with an estimated personal net worth 9 billion U.S. dollars as of March 2017.

Moving on, WhatsApp has introduced quite a few new innovations to its existing mode such as Voice calls, WhatsApp Web, Whatsapp for Business etc.

As of January 2017, the mobile messenger has more than 1.2 billion monthly active users worldwide and ranks as one of the most popular social platforms globally.

Was this article inspiring? Then you’ll really like reading these posts about other relevant people that have changed the course of history.

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