The unlikely founders behind WhatsApp's rise

Feb 20 2014, 4:45pm CST | by

NEW YORK (AP) — WhatsApp isn't your average Silicon Valley startup.

The company's founders Jan Koum, 38, and Brian Acton, 42, shun the media spotlight and are much older than your typical college dropout-turned CEO. And at a time when social media companies are focusing on advertising to generate revenue, WhatsApp rejects the idea of showing ads to the 450 million people who use its mobile messaging app.

The whopping $19 billion that Facebook is paying for the service is also unusual, even as other startups with no profit, or even revenue, are commanding sky-high valuations.

Koum and Acton are at the center of the largest buyout deal ever for a venture-backed company. How did two former Yahoo engineers who witnessed the late '90s dot-com boom — and bust — create the world's hottest app and make 10-year-old Facebook seem a tad grizzled?

"Jan keeps a note from Brian taped to his desk that reads 'No Ads! No Games! No Gimmicks!' It serves as a daily reminder of their commitment to stay focused on building a pure messaging experience," wrote Sequoia Capital partner Jim Goetz in a blog post about Thursday's deal. Sequoia is WhatsApp's sole venture capital investor.

The Ukraine-born Koum, WhatsApp's CEO, move to the U.S. when he was 16. Acton was born in Michigan.

"We're the most atypical Silicon Valley company you'll come across," Acton told Wired in a December interview that the magazine will publish next month in its U.K edition. "We were founded by thirtysomethings; we focused on business sustainability and revenue rather than getting big fast; we've been incognito almost all the time; we're mobile first; and we're global first."

The pair started WhatsApp in 2009, two years after they left their jobs at Yahoo Inc. and five years after Facebook got its start in Mark Zuckerberg's Harvard dorm room. The service is simple. People use it to send text, photo or video messages to their contacts, bypassing text messaging charges and other fees from wireless carriers.

"WhatsApp is simple, secure, and fast. It does not ask you to spend time building up a new graph of your relationships; instead, it taps the one that's already there. Jan and Brian's decisions are fueled by a desire to let people communicate with no interference," writes Goetz, who along with Sequoia also stands to reap a hefty sum from the deal.

Much like Zuckerberg did during Facebook's early years, WhatsApp's founders shun ads. But unlike Facebook, which now relies on advertisements for the bulk of its revenue, WhatsApp remains ad-free.

Users who download WhatsApp on their phones are greeted with a link that reads "Why we don't sell ads." The link leads to a quote from Tyler Durden, the anti-establishment character from the 1996 novel "Fight Club."

"Advertising has us chasing cars and clothes, working jobs we hate so we can buy s--- we don't need," it reads.

A note from Koum follows with more details.

"These days companies know literally everything about you, your friends, your interests, and they use it all to sell ads," writes Koum. "No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they'll see tomorrow. We know people go to sleep excited about who they chatted with that day (and disappointed about who they didn't). We want WhatsApp to be the product that keeps you awake."

Koum then goes on to call advertising an insult to users' intelligence and an interruption to their train of thought. Take that, Facebook.

While WhatsApp rejects ads (it charges 99 cents per year after letting people use it free of charge for the first year), Facebook works to gather as much information as possible about its 1.23 billion users, their tastes for coffee and music, where they live and travel, their friendships, marriages and breakups. WhatsApp doesn't ask users their age, gender or where they live.

In a conference call with financial analysts, Zuckerberg talked about the acquisition and said he doesn't think ads are "the right way" to make money from messaging services. Koum agreed. Although WhatsApp is profitable, Koum told analysts on the call that making money "is not going to be a priority for us."

"This is why I actually respect Mark and his vision, is that he takes a very long term on everything they do at Facebook. They focus on something that is not just tomorrow, but something that's 5 or 10 years from now, and that's the same about with our company," he said. "We always talk about where mobile is going to be, not today, not next year, but in 2020 or in 2025. And as we look forward to the next 5 or 10 years, 5 billion people will have a smartphone and we have a potential to have 5 billion users potentially giving us money through the subscription model."

Koum, who is now a billionaire, at least on paper, lived on food stamps when his family first moved to the U.S. He told Wired of growing up in a communist country, where "everything you did was eavesdropped on, recorded, snitched on." That's another, more personal reason for his insistence on not collecting information about users. WhatsApp doesn't store your chats history on its servers because it doesn't need to, since it doesn't need it to target advertisements to you.

Though he's known Zuckerberg for a couple of years, the Facebook deal wasn't in the works yet when Koum spoke to Wired late last year. He brought up Facebook, Google, Apple and Yahoo as examples of "great" companies that never sold, and signaled that WhatsApp would like to stay independent.

Acton, meanwhile, expressed worry about what a bigger company would do with WhatsApp's users, to whom the company has made such an important promise of "no ads, no gimmicks, no games."

Source: AP Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/31" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

blog comments powered by Disqus

Latest stories

Global entrepreneurship summit boost for SMEs
Marrakech, Nov 22 (IANS) Nine agreements were signed between the Moroccan General Confederation of Enterprises (CGEM) and several small and medium enterprises (SMEs) as well as between major Moroccan banks and start-ups at the 5th Global Entrepreneurship Summit (GES 2014) held in Morocco.
 
 
NASA's flying saucer among 'Best of What's New'
Washington, Nov 22 (IANS) NASA's Low-Density Supersonic Decelerator (LDSD), a spacecraft that aims to facilitate the safe landing of future Mars missions, has earned a place in the the Popular Science magazine's "Best Of What's New" list.
 
 
Indian helping to light up Gambia (Diaspora Feature)
Banjul (Gambia), Nov 22 (IANS) Like many Indians who are proving to be philanthropists around Africa, Ram Mohan has set up a social business called Comafrique Intelizon Initiative and has embarked on the replacement of candles in villages in the Gambia with solar lights from India.
 
 
Leopards in human areas not conflict animals: Study
New Delhi, Nov 22 (IANS) Leopards in human areas are not always "stray" or "conflict" animals but residents with strategies to thrive in human dominated areas, says the first GPS-based study of leopards in India.
 
 
 

Latest from the Network

Amazon Black Friday: Samsung UN32H5203 Black Friday TV Deal is Best Seller on Amazon
Amazon begun to take pre-orders on 15 Samsung TV Black Friday 2014 TV deals. All deals are the at the lowest advertised prices in Black Friday ads. All Samsung Black Friday deals seem to be controlled by Samsung. Amazon...
Read more on Black Friday Countdown
 
Evangeline Lilly appreciated new Hobbit role
Evangeline Lilly found it ''liberating'' playing a new character in 'The Hobbit' movies. The former 'Lost' actress joined the cast as Tauriel in second movie 'The Hobbit: The Desolation of Smaug' and though she was...
Read more on Movie Balla
 
Indian smuggler shot by Nepal police
Kathmandu, Nov 22 (IANS) Nepal Police shot dead an Indian national along the Nepal-India border while he was smuggling weapons from India. The incident took place Saturday afternoon in Bishnupura village of Rupandhei...
Read more on Politics Balla
 
Battle with IS militants continues in Iraq
Baghdad, Nov 22 (IANS) Iraqi security forces launched a major offensive against Islamic State (IS) militants in the western province of Anbar Saturday, even as fighting continued in the province of Salahudin, a...
Read more on Politics Balla
 
Global entrepreneurship summit boost for SMEs
Marrakech, Nov 22 (IANS) Nine agreements were signed between the Moroccan General Confederation of Enterprises (CGEM) and several small and medium enterprises (SMEs) as well as between major Moroccan banks and start-...
Read more on Business Balla
 
Five killed in Indonesia landslides
Jakarta, Nov 22 (IANS) At least five people were killed and many houses damaged in landslides in Indonesia's North Sumatra Saturday, an official said here. Heavy downpour caused the landslides in Sibio Bio village of...
Read more on Politics Balla
 
Al-Shabaab claims responsibility for Kenya bus attack
Nairobi, Nov 22 (IANS) Somalia-based militant group Al-Shabaab Saturday claimed responsibility for the killing of 28 bus passengers in Kenya. Al-Shabaab spokesman Sheikh Ali Mohamud Rage said the dawn attack on the...
Read more on Politics Balla
 
Force India cars to start 13th, 14th at Abu Dhabi
Abu Dhabi, Nov 22 (IANS) Force India drivers Sergio Perez and Nico Hulkenberg will start 13th and 14th at the season ending Formula 1 Abu Dhabi Grand Prix to be held at the Yas Marina Circuit here Sunday. In Saturday'...
Read more on Sport Balla
 
Chandhok finishes 6th in Putrajaya ePrix
Putrajaya (Malaysia), Nov 22 (IANS) India's Karun Chandhok, driving for Mahindra Racing, eventually finished sixth to bring home eight points despite racing for a podium spot for most of the Formula E Putrajaya ePrix...
Read more on Sport Balla
 
Australia replace Sandhu with Conway in team facing India
Melbourne, Nov 22 (IANS) New South Wales (NSW) fast bowler Harry Conway replaced bowler Gurinder Sandhu in the CA XI squad in the first tour match against India as the Indian-origin player was selected for the NSW...
Read more on Sport Balla