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- I've heard from several people that WhatsApp got lucky, and the evidence those people offered was the fact that there were numerous competing apps. It seems to me that these people just haven't looked closely enough at the differences between WhatsApp and its competitors. From my research, the major factors I identified were: 1) WhatsApp was out-of-the-gate near the start of when push notifications were released, 2) it was run by owners/cofounders instead of by people who were working for someone else (AIM, GTalk, Skype), 3) it was run by people who had serious experience in scaling systems, 4) it moved quickly to add new platforms. I imagine you have spent time thinking about this issue; do you agree that those factors were significant? Are there any other factors that jump to mind that I didn't mention?
- What do you think of these people (like the Snapchat founders) who are able to bootstrap to X number of users and then raise enough money to hire good engineers? It seems like it's very important to have good engineers, but that if you're able to find a good opportunity and raise money, that kind of talent is readily available: if you're willing to pay $X, you can be almost guaranteed engineers who will be able to solve that part of the puzzle of building a billion-dollar company. Whereas that doesn't seem to be true of choosing what to build; it doesn't seem like you can just pay $X and be guaranteed that you'll be working on the right thing. It seems to me that there may be more of a lack of knowledge in the Valley around 1) identifying these big opportunities and 2) getting early traction than there is around being able to exploit them once they show early promise. But I may have an inaccurate view of the situation. What's your take on that topic?
- The articles suggest that Jan inadvertently created a messaging app, but he started creating the BlackBerry version of that app in may, one month before push notifications were released. Creating a version of the app for another OS would have been a big investment, like maybe $10,000 - $20,000. And there was a lot of press about the push notifications. It seems like jan may have seen this opportunity ahead of time to some extent. Can you shed any more light on this?
- What was the startup Brian had tried to get going? The fact that Brian didn't immediately start working with Jan suggests that they really didn't see the messaging thing happening opportunity ahead of time.
- My understanding is that there was an initial rush of users in the summer of 2009 that motivated you to join. At that time, it seems Jan had both a BlackBerry and iPhone version of the app out, and only those out (not Nokia, etc.). I'm guessing those versions of the app were set up so that you could send messages between them, is that right? Do you know what the rough make-up of iPhone vs. BlackBerry users those early users were? And since both the BlackBerry and iPhone already had free messaging services (BBM and iMessage), would you agree that those users were primarily motivated by the ability to do free messaging between BlackBerry and iPhone?
- Do you know roughly how many users WhatsApp had when it released the version that used push notifications to send messages? Was it under a hundred? Or several hundred? Or thousands?
- How much did Jan pay for the first version of the iPhone app and the first version of the BlackBerry app? What kind of retainer agreement did he have with the developers?
- IIRC an article said Jan got you to raise $250,000 from friends and former coworkers. I'm guessing that early money was for developer time and SMS fees. How did he arrive at that number in particular? How much runway were you guys aiming for?
- Do you think Apple had its hands tied w/r/t creating a push-notification messaging service for iOS 3 because of their close dealings with carriers (like AT&T)? Or do you think it just wasn't a priority for them / they overlooked the opportunity?
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- WhatsApp Blog
- The first blog entry is August 8, 2009, just two months after push notifications were enabled, and only one month after the first version of WhatsApp to use push notifications.
- From this blog post it seems that Jan was the one writing the blog entries: the command prompt entries start with "jkb@c123$", and I'm guessing jkb refers to Jan Koum. [Later: Also, this blog post, "Brian and I"]
- 2012.06.18 - Why we don't sell ads
- "At WhatsApp, our engineers spend all their time fixing bugs, adding new features and ironing out all the little intricacies in our task of bringing rich, affordable, reliable messaging to every phone in the world."
- 2013.07.17 - iPhone v2.10.1 release notes
- "As you know, we used to charge iPhone users a $.99 one time payment, while Android and other platforms had free service for the first year and paid $0.99 a year after that. From now on, we've simplified our business model so that all users on all platforms will enjoy their first year of WhatsApp service for free, and only pay $.99 per year after that. (...) The good news for all current iPhone users is that WhatsApp will be free of charge for the rest of your life."
- AppAnnie - WhatsApp
- Wikipedia - WhatsApp
Expand WhatsApp Inc., was founded in 2009 by Brian Acton and Jan Koum, both former employees of Yahoo!. After Koum and Acton left Yahoo! in September 2007, the duo travelled to South America as a break from work.[9] At one point they applied for a job at Facebook but were rejected.[9] For the rest of the following years Koum relied on his $400,000 savings from Yahoo. In January 2009, after purchasing an iPhone and realizing that the seven-month-old App Store was about to spawn a whole new industry of apps, he started visiting his friend, Alex Fishman in West San Jose where the three would discuss "...having statuses next to individual names of the people," but this was not possible without an iPhone developer, so Fishman introduced Koum to Igor Solomennikov, a developer in Russia that he had found on RentACoder.com. Koum almost immediately chose the name "WhatsApp" because it sounded like "what’s up," and a week later on his birthday, on February 24, 2009, he incorporated WhatsApp Inc. in California. However, early WhatsApp kept crashing or getting stuck and at a particular point. Koum felt like giving up and looking for a new job, upon which Acton encouraged him to wait for a "few more months."[9]
In June 2009, Apple launched push notifications, letting developers ping users when they were not using an app. Koum updated WhatsApp so that each time the user changed their statuses, it would ping everyone in the user's network.[9] WhatsApp 2.0 was released with a messaging component and the active users suddenly swelled to 250,000. Koum visited Acton, who was still unemployed while managing another unsuccessful startup and decided to join the company.[9] In October Acton persuaded five ex-Yahoo friends to invest $250,000 in seed funding, and as a result was granted co-founder status and a stake. He officially joined on November 1.[9] After months at beta stage, the application eventually launched in November 2009 exclusively on the App Store for the iPhone. Koum then hired an old friend who lived in Los Angeles, Chris Peiffer, to make the BlackBerry version, which arrived two months later.[9]
WhatsApp was switched from a free to paid service to avoid growing too fast, mainly because the primary cost was sending verification texts to users. In December 2009 WhatsApp for the iPhone was updated to send photos. By early 2011, WhatsApp was in the top 20 of all apps in Apple's U.S. App Store.[9]
In April 2011, the founders agreed to take $7 million from Sequoia Capital on top of their $250,000 seed funding, after months of negotiation with Sequoia partner Jim Goetz.[9] According to Goetz, the venture capital firm originally discovered WhatsApp through an App store tracking system they developed called 'early bird', at a time when the app was much more popular in other countries than in the US. However, it took months for the VC firm to track down Koum and Acton, given that the company didn't have a publicly available address nor signage at the time. All Goetz knew was that they were located in Mountain View, and Sequoia partners "literally walked the streets of Mountain View to see if [they] could intersect with [Koum and Acton]."[10]
By February 2013, WhatsApp's user base had swelled to about 200 million active users and its staff to 50. Sequoia invested another $50 million, valuing WhatsApp at $1.5 billion.[9]
In a December 2013 blog post, WhatsApp claimed that 400 million active users use the service each month.[11] As of 22 April 2014, WhatsApp had over 500 million monthly active users, 700 million photos and 100 million videos are shared each day, and the messaging system handles more than 10 billion messages each day.[12] On August 24, 2014, Koum announced on his Twitter account that WhatsApp had over 600 million active users worldwide. WhatsApp added about 25 million new users every month or 833,000 active users per day.[4][13] With 65 million active users, about 10% of the total worldwide users, India is the largest single country in terms of number of users.[14]
Acquisition by Facebook
On February 19, 2014, months after a venture capital financing round at a $1.5 billion valuation,[15] Facebook announced it was acquiring WhatsApp for US$19 billion, its largest acquisition to date.[8] Facebook, which was advised by Allen & Co, paid $4 billion in cash, $12 billion in Facebook shares, and an additional $3 billion in restricted stock units granted to WhatsApp's founders (advised by Morgan Stanley), Koum and Acton.[16] Employee stock was scheduled to vest over four years subsequent to closing.[8] The transaction was the largest purchase of a company backed by venture capitalists to date.[7] Days after the announcement, WhatsApp users experienced a loss of service, leading to anger across social media.[17][18]
- GrowthHackers - WhatsApp
Expand After coming up with the initial idea, Koum was quick to choose the name WhatsApp because it sounds like “What’s up?” and he incorporated WhatsApp Inc. just a week later, on February 24th, 2009—his birthday. But WhatsApp wasn’t always a messaging service. After Koum kept missing phone calls while working out due to his gym’s rule barring cellphones, he came up with the idea of a mobile address book that displayed statuses next to contact names, so that friends could let one another know if they were available or at the gym, in a meeting, had a low phone battery, and so on. Around the same time, Koum’s Russian friend Alex Fishman held pizza and movie nights for the local Russian community—sometimes up to 40 people at a time—at his West San Jose home. On such nights, Koum talked to Fishman for hours about his app idea, and many of the app’s earliest adopters came from this group, including Alex Fishman. Once he’d downloaded the app, he met with Koum at Tony Roma’s in San Jose to go discuss the problems he’d encountered. Though a promising concept, the initial incarnation of WhatsApp tended to crash, and adoption was not instantaneous. In fact, early on Koum confessed to Acton (who had yet to sign on as a co-founder) that he was thinking of giving up and looking for a job. Acton advised Koum, “You’d be an idiot to quit now. Give it a few more months.” [12] As it turned out, Acton was right. It wasn’t long until Apple launched push notifications, which Koum incorporated into WhatsApp. In the newest incarnation, when users changed their statuses the app pinged everyone in their network via push notification. Users liked this function so much that they began using the app to ping one another, at which point Koum realized he had inadvertently created a mobile instant messenger. He explains, “Being able to reach somebody [halfway] across the world instantly, on a device that is always with you, was powerful.”[12] Seizing this opportunity, Koum released WhatsApp 2.0 with a more prominent messaging functionality, and the formerly lackluster user base quickly grew to 250,000—proving Acton right and letting Koum know he was on the right track. [12]
Timeline of their success
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