From poverty to a billionaire; An inspiring story of WhatsApp co-founder Jan Koum
Today social media platforms become an important part of our daily life, no one is unfamiliar with WhatsApp and Facebook. Jan Koum is the CEO and co-founder of WhatsApp. This tall man with a scrawny appearance has had a difficult childhood. Koum was born in a tiny hamlet outside of Kyiv to Ukrainian parents. Growing up in a Communist environment had a detrimental impact on Koum as a kid, which affected his strong devotion to privacy protection.
When explaining why his organization takes this aspect of the business so seriously, he replies that I grew up in a society where everything you did was eavesdropped on, recorded, snitched on. Nobody should have the right to eavesdrop, or you become a totalitarian state — the kind of state I escaped as a kid.”
After the collapse of communism in Eastern Europe, Koum’s mother decided it was best if the family moved to America to start a new chapter. But, their new life in Mountain View, California, wasn’t easy by any means. To make ends meet, the mother and son received federal assistance: welfare, food stamps, and government housing. Poverty-stricken, the teenager supplemented their income by working as a janitor at a grocery store.
His father intended to join Jan and his mother after they were settled, but he became ill and died five years later, never being able to see his family again. Jan’s mother was diagnosed with cancer, and she died of it only three years after Jan’s father died.
Despite his circumstances, Koum was a self-starter and quick-learner who wasn’t afraid of hard work. Two years after immigrating to the U.S., Koum taught himself computer programming. This is when he discovered his passion for programming and enrolled at San Jose State University. In addition, he began working as a Security Tester for Ernst & Young. After working there for around six months, Jan was offered the opportunity of a lifetime when he was hired as an Infrastructure Engineer at Yahoo. Jan Koum was still a student at San Jose State University at the time.
Yahoo! had become a source of boredom for Jan. He left Yahoo! at the age of 31 and took some time off to tour the world with a buddy, Brian Acton, who had also departed. After the pair returned to the U.S., they considered their next move: join another company or start their own. As new technologies emerged such as Skype, Jan Koum began forming an idea of how to improve user experience. He was influenced by his own personal experiences. When he was a teenager, communication with his family was irregular because it was extremely expensive. He wanted to provide a solution for those in similar circumstances by creating an easy-to-use cross-platform messaging app that made phone calls and texts more accessible to friends and families. In early 2009, he consulted with his friend, Alex Fishman, who helped him hammer out his vision for a new app. Additionally, Fishman got him in touch with a Russian developer who could build the front-end of the messaging platform.
On February 24, Koum’s birthday, he met Acton for ultimate frisbee — one of their favorite past-time activities. It was here that he shared his idea for WhatsApp with his friend. The same day, the business was legally established as WhatsApp Inc.
The WhatsApp app launched on May 3, 2009, only a few short months after its conception. At first, the app flopped. But a month later, Apple updated the software for iPhones to allow push notifications. This move changed the entire game plan. Koum reworked his strategy to build the app around people’s social networks. Additionally, before the relaunch of WhatsApp, Acton joined in to help with investment and business strategy.
The new version’s release in September proved massively successful. the company experienced rapid growth, which resulted in experimentation with various business models. “We’d grow super fast when we were free — 10,000 downloads a day. And when we’d kick over to paid, we’d start declining, down to 1,000 a day.” Doing so helped the business grow at a rate it could handle. Eventually, the business settled on an annual fee of 99 cents after the first year of use. With growth and profits skyrocketing, the pair had found the right formula.
With the success of the new launch, the company began seeking investors who could help their organization scale. That October, Acton got several former colleagues at Yahoo to invest USD 250,000 in the business. While Acton handled business relations, Koum kept working on improving the app and making it functional for more users.
Although WhatsApp showed promising signs of growth, it wasn’t cheap to run. For example, the cost of SMS verification texts cost the business thousands of dollars per month, a figure that hardly matched their USD 5,000 a month profit in 2010. Nevertheless, the founders agreed to not take a salary those first few years. Additionally, they invested money from their life savings into their startup.
Their persistence, dedication, and hard work paid off. By 2011, the money started coming in. Venture capitalists wanted in on the app, yet Koum and Acton felt hesitant about bringing just anyone on board. They were serious about doing things their way: no advertising — at all. Both co-founders absolutely hate it. In fact, this particular point ended up playing a significant role in why they walked away from the company years later. In terms of investors, they developed a relationship with Jim Goetz from Sequoia Capital. He seemed to best represent their interests and agreed to the terms they established regarding advertising. In 2011, they received USD 8 million from Sequoia, which was followed by USD 50 million in 2013. The additional money provided room for more growth. The company upgraded its office space, expanded its staff, made critical fixes, provided new features, and continued spreading like wildfire. For example, from April 2013 to February 2014, when Facebook acquired WhatsApp , the business grew by 265 million users.
In 2014, Facebook made WhatsApp’s co-founders an offer they couldn’t refuse: USD 19 billion dollars. While both Koum and Acton stuck around in partnership with Facebook for a few years, they eventually left due to issues regarding advertising and users’ privacy protection. These were the two principles the business was founded upon. In the process, Acton cited he left USD 850 million dollars on the table. It was clear there was some bad blood. After his departure, he even participated in the #DeleteFacebook movement. Koum’s exit, although more friendly, was also due to disputes regarding core foundational beliefs established under his leadership with Acton.
Jan Koum became a billionaire in the very building he used to pick up food stamps for himself and his mother. Today, Koum’s net worth is USD 9.9 billion. Why someone hasn’t turned the life story of co-founder and former CEO of WhatsApp into a movie is beyond anyone’s best guess. As a Ukrainian immigrant who escaped the U.S.S.R., he moved to the United States, met even more extreme poverty, but still managed to build a billion-dollar company within five years.