WhatsApp: unlikely duo behind $19bn sale

WhatsApp Messenger's sale to Facebook for up to $19 billion on Wednesday may sound like a classic Silicon Valley success story. Yet Jan Koum and Brian Acton, the five-year-old app's creators, are not your typical Silicon Valley founders.

Both were well over 30 years old when they launched their messaging app in 2009. They hate the advertising that funds most consumer technology businesses, and have paid for almost no marketing to attract their 450 million regular monthly users.

They charged for their service, rather than giving it away for free, tacking on a business plan only after attracting millions of users. And when WhatsApp raised a new funding round of $50 million last year, they kept it a secret rather than shouting about it from the rooftops.

“They are contrarians, they are mavericks,” says Jim Goetz, the Sequoia Capital partner who funded WhatsApp and was its only external board member. “They shunned publicity and took a very deliberate approach.”

In this tech hothouse, hyping your start-up in the press, hustling to sell out to Yahoo or Google and preaching entrepreneurial "wisdom" are all daily habits for many Mark Zuckerberg wannabes. Not so for Koum, Whatsapp's chief executive, who pulled no punches in a series of tweets during 2012.

“People starting companies for a quick sale are a disgrace to the Valley,” he tweeted. “If you run a start-up and your goal is to get on techcrunch [the tech blog], you are doing it wrong . . . Next person to call me an entrepreneur is getting punched in the face by my bodyguard. Seriously.”

Rags to riches
Yet many of his Silicon Valley peers were not even aware that the world's pre-eminent messaging app – twice as big as Twitter by user numbers, far larger than the much-hyped Snapchat – was based in an unmarked office just down the road in Mountain View.

The Facebook deal certainly changed that. Forbes estimates that Koum netted some $6.8 billion from the deal, including earn-outs if he stays with Facebook.

His is a true “rags to riches” tale. Koum, now in his late 30s, arrived in Mountain View aged 16, when he and his mother emigrated from then-Communist Ukraine. Learning technical skills from second-hand textbooks, living on food stamps and far from home, he longed for a cheap and easy way to keep in touch with his family back in eastern Europe – including his father, who died before he could move to the US.

Koum also developed his dislike for advertising from his home country, epitomised in a handwritten note from Acton pinned to his desk that reads: “No ads! No games! No gimmicks!”

Ukraine’s secret police “made him appreciate communication that was not bugged or taped”, noted Sequoia in a blogpost on Wednesday. WhatsApp does not collect any of the personal or demographic information that Facebook, Google and their rivals use to target advertisements.

But in spite of its political and economic difficulties, Koum remembers his childhood as “idealistic”.

“The joy of growing up in an uncluttered lifestyle was really good,” he said in an interview last month at Germany’s DLD conference. “You could focus on things such as education, which was really valuable. Moving to another country, you could see the difference – there was a lot of clutter. You see that clutter coming through in the advertising noise. We wanted to make sure we were an exception to that.”

Refused jobs
His colleague and mentor Acton was also put off advertisements by his experiences working at Yahoo, where the pair first met.

"On the internet, there is a lot of flash and fad," he told the Financial Times in WhatsApp's first newspaper interview in 2011. "What we are trying to build here is a long-term persistent sustainability."

Back in 2009, when social media was the hot trend in Silicon Valley, Acton was refused jobs by both Facebook and Twitter.

“That’s okay. Would have been a long commute,” he tweeted of the Twitter rejection, little knowing that Facebook would make him a billionaire just five years later.

Acton secured seed funding for Koum’s idea of an ultra-simple messaging app for Apple’s recently opened App Store. Now, more than 30 of WhatsApp’s 50-some employees are engineers like its founders – an unusually high ratio of an unusually small staff – and the pair still take more pride in delivering a quick and reliable service than sleek, Apple-like design.

“The simplicity and the utility of our product is really what drives us,” Koum said at DLD, joking that WhatsApp was “clearly not doing that good a job” because it has not yet reached its goal of being on every smartphone in the world.

After promising to keep WhatsApp free from advertisements under its new ownership, this Porsche-driving billionaire might do well to remember the Kanye West lyrics he tweeted back in 2012: "You think you free but you a slave to the funds, baby." – (Copyright the Financial Times )