The Whatsapp Story - A Tale Of Modern Day Rags To Riches

Providing a free solution to a problem is the key to riches today. The Whatsapp story will perhaps become one of the case studies on how to become a billionaire in the shortest time possible.

Whatsapp Success Story

Like many people in the technology industry, Whatsapp's founders started with a bright idea. Ideas often fail mid way or never take off at all. But Whatsapp not only became a big hit, it brought in fame, fortune and one of the greatest modern day rags to riches stories we have ever seen. 

Jan Koum began his career working at yahoo, but quickly became disillusioned by the constant advertisements that were used to fund the site. By 2007, he decided to leave Yahoo and start his own company with fellow engineer, Brian Acton. Their goal was to create a simple way to send messages and find an easier way to find out customers' information. Unlike Yahoo and Google, WhatsApp was designed to exist without any advertisements, games and gimmicks. 

whatsappWith over 600 Million active users and rising, Mark Zuckerberg says that this app could connect 2-3 Billion users in the future. No wonder, he is paying $19 Billion to purchase this app.

Creating A Multi-Billion Dollar Company

Today, WhatsApp has developed a monthly user base of 600 million people. This is almost double the users on Twitter which stands at 271 Million people. The success of the business drew the attention of Facebook. CEO Mark Zuckerberg who chose to buy the five-year-old business. The amount of money paid for WhatsApp made it the largest Internet deal since Time Warner merged with AOL back in 2001. How much did Facebook pay for Whatsapp? Answer : An insane $19 Billion. Which instantly made Jan Koum a billionaire.

A Changing Life 

As a child, Jan Koum never guessed that he would one day become a billionaire. His family moved from Ukraine when he was a teenager and lived off of food stamps throughout his youth. Back in Ukraine, Koum and his family were used to having phones regularly tapped. This taught him the value of privacy and encouraged Koum to create a messaging system that was completely private. Unlike other sites and applications, WhatsApp does not take personal information like names or addresses. Instead, it authenticates phone numbers before approving user accounts. 

Keeping Focused On The Goal 

After losing money in the dot-com bust, Koum went to work for Yahoo. Interestingly, he was turned down for a job position at Facebook. Before long, Koum and Brian Acton decided to create their own application. WhatsApp was designed to be completely free to send messages for one year. After the initial year, sending messages costs only 99 cents. Instead of using traditional marketing, they allowed the service to spread through word-of-mouth. In particular, WhatsApp became popular among family members and friends who lived in different countries. The application allowed these people to get around the high costs charged by phone carriers for international calls. 

The success of the company was further ensured by their low-cost focus. Instead of seeking additional funds or employees, they kept the original office filled with just ten desks and old carpeting. While other applications branched out into games or advertising, WhatsApp's founders kept their application focused on just sending fast messages. This focus on a single-minded purpose paid off. In 2011, Sequoia Capital invested $8 million into the application. This 15 percent stake in WhatsApp is now valued at a total of $3.5 billion. 

Even after merging with Facebook, WhatsApp has maintained its independence. The application operates autonomously so that it can remain true to the original business goal. Altogether, this message service was purchased by Facebook for $19 billion. Since Koum has a 45 percent stake in the company, the purchase makes him a billionaire several times over. Even Acton's 20 percent stake is enough to bring him into the ranks of the world's richest people. 

Lessons To Take With Us

  • Providing a free solution to a problem can be beneficial to the long term success of your company. This is especially true for tech companies.
  • Being extremely focused can be helpful to a business that is just starting out.
  • Focusing on just one thing can sometimes bring you greater success than trying to do too much
  • Keeping costs low is one of the tested ways of success in the long run.

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"If I have seen further than others, it is by standing upon the shoulders of giants." Isaac Newton

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