The unlikely founders behind WhatsApp's rise
By Barbara Ortutay, AP
February 22, 2014, 12:03 am TWN
NEW YORK--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 US$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 UK 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.
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 chat 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.