The Accidental Rise of WhatsApp: How Two Rejects Created a $100 Billion Company

In the late 1990s, two men met while working at Yahoo — Jan Koum and Brian Acton. Little did they know at the time, their chance meeting would lead to the creation of WhatsApp, one of the world’s most widely used messaging apps and a company eventually acquired by Facebook for $19 billion.

This is the story behind WhatsApp’s incredible accidental rise. It’s a story of perseverance in the face of failure, seizing opportunity amidst coincidence, and staying relentlessly focused on simple goals.

Two Yahoo Rejects Meet in 1998

Jan Koum was born in 1976 in a small village outside of Kyiv, Ukraine. In 1992, when Koum was 16, he immigrated with his mother and grandmother to Mountain View, California. To survive, his mother babysat while he swept floors at a grocery store.

By the age of 18, Koum’s aptitude for computer networking earned him an internship at Ernst & Young as a security tester. In 1997, he was hired by Yahoo as an infrastructure engineer.

Meanwhile, Brian Acton was born in 1972 in Michigan. Acton studied computer science at Stanford but dropped out before completing his degree. In 1996, he got a job as a systems administrator at Apple but left after six months.

In 1998, Acton and Koum were both working at Yahoo. Though they sat at opposite sides of the office, they immediately clicked over their similar no-nonsense, get-it-done attitudes.

“We both showed up essentially in ripped jeans and T-shirts,” Acton recalled. They often played ultimate frisbee together after work. Both men were valued engineers at Yahoo, but they also shared frustrations with the company’s bureaucracy.

Failed Facebook Interviews Lead to “Facebook Reject Club”

In September 2007, Koum and Acton left Yahoo. They took a year off, traveling, relaxing, and recharging. Both men became wealthy from Yahoo’s acquisition of their stock options.

Unsure of their next moves, they applied to Facebook in 2008. Both men failed the interviews. According to Acton, “I think very highly of Jan’s technical capabilities, and I wasn’t able to convey that during the interview.”

Now members of what they joked was the “Facebook reject club,” Acton and Koum went their separate ways. But they stayed in touch, updating each other on their lives and occasionally getting together to discuss ideas for new projects.

The iPhone Launches the App Revolution

In January 2009, Koum bought an iPhone. He was immediately struck by the potential of the App Store, which at that point was only seven months old.

“I saw the opportunity was in the apps,” Koum said. The App Store represented a whole new paradigm — making mobile apps available to anyone through a centralized storefront.

To tap into this opportunity, Koum enlisted his friend Alex Fishman to design the first version of an app idea he had. Koum wanted to create an easy directory displaying friends’ statuses next to their names.

Koum turned to contractor Igor Solomennikov, found via the site RentACoder.com, to code the backend. The app was called WhatsApp, punning off the phrase “What’s up?”

WhatsApp 1.0 Crashes Constantly

WhatsApp launched in November 2009, offering status updates next to contacts in your address book. Usage was free, with no ads.

The app only attracted a few hundred users. But worse, it constantly crashed due to bugs. After a few months of struggles, Koum considered abandoning WhatsApp and looking for a new job.

Push Notifications Change Everything

In June 2009, Apple announced a major new feature for developers: push notifications. This allowed apps to send real-time alerts directly to users, without needing the app to be open.

Koum realized WhatsApp could leverage push notifications in a clever way. When someone updated their status, it would push a notification to their contacts. This sparked an insight: What if they made statuses more conversational, like text messages?

In August 2009, WhatsApp 2.0 launched with push notifications for status updates. Koum built up a system allowing statuses to be replies, initiating messaging chains.

Some early WhatsApp users began using statuses playfully, exchanging jokes and messages. Almost by accident, WhatsApp had become a messaging app.

Version 2.0 Takes Off Like a Rocketship

Koum quickly shifted the product focus to messaging. WhatsApp 2.0 launched in October 2009 with a personal messaging system.

Growth exploded thanks to word of mouth and notifications urging users to invite friends. Within a few months, WhatsApp hit 250,000 active users.

Revenue began flowing in from a $1 annual subscription fee, charged beginning in the second year. But the founders avoided ads, wanting to focus on speed and user experience.

Seeing explosive growth, Acton — who was still unemployed — emailed Koum in October 2009 about joining the nascent startup. After months of persistence, Acton convinced Koum to take him on as a cofounder.

Acton Joins in 2009 as Cofounder

In November 2009, Acton was brought on board as a cofounder with a 20% stake, infusing several hundred thousand dollars into the business.

The founders got to work out of an office in Santa Clara, California. Other employees found the office sparse, lacking even a sign on the door.

But for Koum and Acton, this was perfect. “No distractions. No bullsh*t,” Koum said. They were singularly focused on keeping WhatsApp fast and simple.

WhatsApp Hits the Top 20 U.S. Apps in 2011

Growth kept accelerating into 2011, with WhatsApp breaking into the top 20 social networking apps in the U.S. App Store.

In February 2011, Acton was able to secure funding from Sequoia Capital. WhatsApp raised $8 million at a $250 million valuation. This grew into a larger Series A round of $50 million in 2013, valuing WhatsApp at $1.5 billion.

By now, Koum and Acton were nearing a billion messages sent per day. Their user base was dwarfing popular apps like Twitter. But they were about to get an unlikely message from a far bigger competitor.

Mark Zuckerberg Comes Calling

In April 2012, Jan Koum received an email from Facebook’s Mark Zuckerberg, asking simply to “get together” to talk.

Zuckerberg was impressed with how WhatsApp had used the smartphone revolution to become a worldwide hit. And it was growing faster than Facebook did in its early days.

Over the next two years, Zuckerberg pursued meetings with Koum, wining and dining him and floating the idea of a partnership or acquisition. But Koum remained focused on WhatsApp’s mission.

WhatsApp Hits 1 Million New Users Per Day

WhatsApp’s growth was exploding. By early 2013, WhatsApp was adding a staggering million new users daily.

In just over 3 years, WhatsApp had gone from zero to over 200 million active users. And they had only 55 employees and a simple business model.

Seeing skyrocketing engagement, Facebook became determined to acquire WhatsApp. The mobile messaging firm represented an existential threat to Facebook’s dominance.

Facebook Acquires WhatsApp for $19 Billion

On February 19, 2014, Facebook announced its blockbuster acquisition of WhatsApp for $19 billion — by far its largest acquisition to date.

The valuation was eye-popping for a company with just 55 employees. But WhatsApp had amassed 450 million monthly users who were highly engaged.

The founders received $15 billion in Facebook shares. And Koum and Acton insisted WhatsApp would remain independent with its simple focus on messaging.

WhatsApp Now Has Over 2 Billion Users

Today, WhatsApp has over 2 billion users worldwide, making it the top messaging app.

Facebook has monetized WhatsApp modestly with a small business platform. If WhatsApp were a standalone company today, its valuation could exceed $100 billion.

The app regularly handles over 100 billion messages daily. Yet it retains its simple interface and focus — the hallmarks of its early days as an underdog startup.

Key Takeaways from WhatsApp’s Origin Story

WhatsApp’s incredible success stemmed from a series of fortunate events — showing how new startups can rise by seizing opportunities as they come. Here are some key lessons:

• Solving your own problems — WhatsApp originated from Koum’s frustration with his own phone. He scratched his own itch, creating an app he wanted.
• Leveraging new platforms — Koum immediately recognized the potential of Apple’s fledgling App Store. He built one of the first smash hit iOS apps.
• Pivoting based on user behavior — When users started messaging through statuses, WhatsApp pivoted from a status app to messaging.
• Focusing on the product — WhatsApp succeeded by relentlessly focusing on speed and reliability, avoiding distractions.
• Persisting through early failures — It took time to stabilize WhatsApp’s backend. A less determined founder may have given up early.
• Taking advantage of lucky breaks — WhatsApp exploded thanks to timely events like Apple’s push notifications system.
• Raising money when momentum hits — WhatsApp took on funds to scale fast once usage started taking off.
• Saying no to early acquisition offers — WhatsApp’s founders were committed to their vision, turning down early buyout attempts.
• Hiring carefully — WhatsApp built a talented small team of just 55 people to serve 450 million users.

WhatsApp’s story teaches startup founders to move quickly when opportunity strikes and stay focused on users’ needs instead of profits. Thanks to this simple playbook, two unknown engineers built one of tech’s greatest success stories.

Jan Koum’s Early Life in Ukraine

WhatsApp co-founder Jan Koum was born in 1976 near Kyiv, Ukraine. He grew up in the small village of Fastiv, outside the Ukrainian capital. Koum’s childhood home had no hot water, and his family rarely had more than salt or sugar in the house.

Both of Koum’s parents worked low-paying jobs. His father was a construction worker, while his mother worked as a house cleaner. When Koum was growing up, Ukraine was still part of the Soviet bloc.

In 1992, when Koum was 16, he immigrated with his mother and grandmother to Mountain View, California. The family struggled with the adjustment to life in America. To make ends meet, Koum’s mother worked as a babysitter, while Koum swept floors at a grocery store.

Despite their challenging beginnings, Koum quickly taught himself computer networking using manuals bought second-hand. By 18, he landed an internship at Ernst & Young as a security tester, leveraging his self-taught IT skills.

Koum’s technical talents paved the way for his future success at Yahoo and as the co-founder of WhatsApp. But he credits his difficult upbringing in Ukraine with giving him grit and determination that were invaluable in overcoming obstacles and setbacks.

Both Founders Start at Yahoo in the Late 1990s

Jan Koum and Brian Acton first met while working at Yahoo in the late 1990s. Koum was hired by Yahoo in 1997 as an infrastructure engineer after impressing CEO David Filo in an interview. Acton also joined Yahoo in 1996 after previous jobs at Apple andMontaVista Software.

Acton and Koum quickly bonded at Yahoo because of their similar no-frills, results-oriented approach to work. Even though they sat on opposite sides of the office, they discovered an easy rapport.

“We both showed up essentially in ripped jeans and T-shirts,” Acton said of their time at Yahoo. “We were two guys who came in with very little pedigree.”

Koum was known for his earnest, straightforward style. Acton, meanwhile, brought sharp business instincts. Both men were valued members of the Yahoo engineering team. But over time, they grew frustrated with corporate bureaucracy. This eventually motivated them to leave and pursue their own entrepreneurial ideas.

Their shared disdain for business politics brought Acton and Koum together. Little did they know, their partnership would eventually lead to the founding of WhatsApp.

WhatsApp Started as an iOS App Status Feature

The idea for WhatsApp originated in January 2009 when Jan Koum bought his first iPhone. Koum recognized the potential for apps on the iPhone’s groundbreaking new App Store.

Intrigued by the App Store’s possibilities, Koum started visiting friends in Los Altos who were entrepreneurs to brainstorm ideas. Steve Chen, co-founder of YouTube, was one friend who gave Koum advice.

Koum’s original idea was to display statuses next to friends’ names in your phone’s address book. The statuses could show if someone was on a call, at work, or on vacation, for example.

To build his app idea, Koum enlisted an old Yahoo friend, Alex Fishman, to design the user interface. For the backend, he hired Russian developer Igor Solomennikov through the site RentACoder.com.

Koum named the app WhatsApp as a play on the phrase “What’s up?” The initial version launched in November 2009, letting users update statuses visible to friends using the app.

While the status app idea didn’t take off, it set Koum on the path toward solving mobile communication in a new way.

WhatsApp’s Buggy Launch Led Koum to Consider Quitting

The first version of WhatsApp launched in November 2009, letting users create statuses visible to friends with the app installed. But the launch was fraught with technical issues.

The app only attracted a few hundred users. Worse, it crashed constantly due to problems with its backend infrastructure and draining phone batteries.

After months of struggling to fix crashes, Koum felt ready to call it quits on WhatsApp. He started looking for a new job, considering his app a failure.

Koum learned two valuable lessons from WhatsApp’s buggy launch. First, he realized the importance of keeping apps focused to avoid bloat. Second, he discovered how vital persistence is, a trait he learned growing up in Ukraine.

Koum’s friend and future WhatsApp co-founder Brian Acton convinced him to keep trying with WhatsApp a little longer before giving up. This encouragement proved pivotal, as Koum’s fortunes were about to change.

The iPhone Push Notification System Spurs Pivoting

In June 2009, Apple announced a major new feature for developers: push notifications. This allowed apps to send real-time alerts to users, without needing the app to remain open.

Koum instantly realized the value of integrating push notifications into WhatsApp. At first, he built it so users would get notified when their contacts updated their status.

This sparked an insight: What if users could update their statuses more frequently, making them like text messages? Koum envisioned turning WhatsApp into a messaging system based on status updates.

The ability to tap into Apple’s push notification system was a huge breakthrough for WhatsApp. It enabled what would become WhatsApp’s defining feature — quick, seamless messaging between users.

WhatsApp Finds Its Footing with WhatsApp 2.0

In August 2009, Koum released WhatsApp 2.0 with support for push notifications when status updates were posted. This turned statuses into conversational threads for the first time.

Some early WhatsApp users began using statuses playfully, posting jokes, thoughts, and messages. Koum realized how this accidental behavior could define a new type of messaging app.

In October 2009, WhatsApp 3.0 launched with enhancements making statuses more conversational. Koum removed the distinction between statuses and messages, unifying them into chats.

This transformed the app into a full mobile messaging platform. Word spread fast among early adopters who loved the convenience of on-the-go messaging. Within a few months, WhatsApp had rocketed to 250,000 active users.

Almost overnight, WhatsApp had found its winning formula. This rapid product iteration marked the transition from status app to indispensable messaging tool.

Brian Acton Invests and Joins WhatsApp in 2009

Following WhatsApp 2.0’s successful launch, Jan Koum enlisted his friend Brian Acton to join him in growing the fledgling startup. Acton invested $250,000 into WhatsApp in exchange for co-founder status and a 20% stake.

Acton officially came on board in November 2009 as WhatsApp’s business strategist. While Koum focused on the product, Acton concentrated on fundraising, partnerships, hiring, and guiding WhatsApp’s strategy.

The founders rented an office in Santa Clara, California, avoiding the clutter and distraction of Silicon Valley. They prioritized keeping WhatsApp’s backend infrastructure lean and speedy.

Acton’s injection of funding and strategic guidance proved invaluable at this sensitive time. His belief in Koum and WhatsApp helped cement its status as a breakout hit.

Bringing Acton into the fold was a masterstroke by Koum. Acton’s business savvy perfectly complemented Koum’s engineering talents as WhatsApp entered its period of exponential growth.

WhatsApp Charges a $1 Subscription Fee

Unlike many apps of its era, WhatsApp quickly instituted a paid subscription model. After a free first year, WhatsApp charged users $1 annually for unlimited use.

This subscription fee helped WhatsApp scale profitably while keeping its interface free of ads. It also ensured only serious users stuck around, weeding out those not fully engaged.

Charging a nominal fee gave WhatsApp early revenue to fund its rapid expansion. It also reinforced the app’s premium, no-compromises nature compared to free competitors.

According to Acton, WhatsApp’s subscription fee provided invaluable insight into users’ preferences: “You really know what people want and value when.

WhatsApp Hits Top 20 U.S. Apps in Early 2011

By early 2011, WhatsApp’s relentless growth had secured it a spot among the top 20 social networking apps in the U.S. App Store.

WhatsApp was outpacing stalwart social apps like Foursquare and Classmates. At this point, WhatsApp was handling over 2 billion messages per day.

WhatsApp’s daily message volume was already on par with SMS text messaging globally. The app owed its meteoric rise to its laser focus on speed, reliability, and ease of use.

Hitting the top charts sparked increased buzz and downloads, initiating a virtuous cycle of viral growth. WhatsApp was well on its way to dominating global mobile communication.

Sequoia Invests $8 Million in 2011

With WhatsApp’s exponential growth clear, venture capital came calling. In February 2011, influential firm Sequoia Capital invested $8 million into WhatsApp at a $250 million valuation.

This marked WhatsApp’s first major round of external funding since Brian Acton put up $250,000 of seed capital in 2009. Sequoia’s Jim Goetz also joined WhatsApp’s board.

“I remember telling Brian Acton in 2009: ‘You have a massively valuable company if you can get to 100 million users,’” Goetz said. “WhatsApp has done that in three years.”

The capital injection from Sequoia gave WhatsApp resources to scale up staffing and infrastructure to keep pace with its skyrocketing usage.

WhatsApp Valued at $1.5 Billion in 2013

In February 2013, Sequoia Capital led another $50 million funding round for WhatsApp at a staggering $1.5 billion valuation.

This new capital increased WhatsApp’s resources right as it began finalizing voice messaging features. Sequoia’s dealmakers were keenly aware of the potential for voice to boost WhatsApp’s engagement even higher.

The astounding $1.5 billion number reflected Sequoia’s recognition that WhatsApp was on its way to dominating global communication. At this point, WhatsApp had surpassed 200 million active users.

“We believe WhatsApp is on its way to bringing the mobile messaging market to its natural resting state, which is in the hands of a few companies that bet on mobile and the Cloud since day one,” said Sequoia’s Jim Goetz.

WhatsApp Voice Messaging Boosts Engagement

In August 2013, WhatsApp introduced voice messaging features to complement its text chat, group chat, and photo sharing functions.

The ability to send short recorded voice notes proved enormously popular, becoming one of WhatsApp’s most distinctive features. By early 2014, WhatsApp users were sending over 100 million voice notes daily.

Voice messaging was particularly successful in international markets where typing is less prevalent. And voice felt richer for quickly conveying nuanced emotions.

The voice messaging capabilities gave WhatsApp’s growth an additional jolt right as Facebook was ramping up efforts to buy the red-hot startup.

Mark Zuckerberg Pursues WhatsApp After 2012 Outreach

In April 2012, Jan Koum received an unexpected email from Mark Zuckerberg asking to meet up and talk. Zuckerberg didn’t reveal any agenda, only telling Koum he wanted to discuss ways they could work together.

Intrigued, Koum agreed to a meeting. He soon realized Zuckerberg had deep interest in acquiring WhatsApp or forming a strategic partnership.

Zuckerberg was impressed with how quickly WhatsApp was growing. He saw WhatsApp as a potential threat to Facebook’s global domination. A deal would eliminate a competitor.

Koum wasn’t ready to sell or partner then, remaining focused on expanding WhatsApp independently. But Zuckerberg’s outreach planted the seeds for an acquisition.

WhatsApp Hits 500 Million Active Users

By December 2013, WhatsApp crossed 500 million monthly active users — just five years after its founding. The app was adding tens of millions of users every few months.

WhatsApp’s runaway success resulted from its ruthlessly simple interface optimized for messaging. Features like group chat, voice notes, and photo sharing made WhatsApp indispensable.

By now, WhatsApp was handling 50 billion messages per day across over 250 countries. Engagement was sky high, with the average user opening WhatsApp 23 times daily.

These staggering metrics made WhatsApp the undisputed leader in mobile messaging worldwide. An acquisition by Facebook was imminent.

Facebook Acquires WhatsApp for $19 Billion in 2014

On February 19, 2014, Facebook announced its blockbuster $19 billion deal to acquire WhatsApp. The valuation was eye-popping for an app with just 55 employees.

But WhatsApp had proven its dominance of mobile messaging. Its 450 million active users were already sending more messages than the global SMS volume.

Jan Koum and Brian Acton received $15 billion worth of restricted Facebook stock. But they insisted WhatsApp would remain operationally independent within Facebook.

The founders saw vast untapped potential ahead. “No one in the world gets to over 2 billion users without being a free service,” Koum said. Staying ad-free would set WhatsApp apart.

WhatsApp Surpasses 1 Billion Users in 2016

In February 2016, WhatsApp reached 1 billion monthly active users. This made WhatsApp the second app to ever cross the 1 billion user mark, after Facebook.

WhatsApp had gone from zero to a billion users in just seven years. Daily messages exceeded 100 billion across 60 countries. Engagement was staggering, with the average user checking WhatsApp more than 18 times per day.

The founders continued resisting ads or selling data to marketers. They remained determined to keep the app fast and clutter-free, without third-party tracking.

Hitting 1 billion users demonstrated WhatsApp’s unprecedented global reach. The app was becoming almost as ubiquitous as texting for mobile communication.

WhatsApp Hits 1.5 Billion Users by 2018

WhatsApp’s unprecedented growth showed no signs of slowing. By January 2018, the app crossed 1.5 billion monthly users.

This made WhatsApp larger than apps like YouTube, Facebook Messenger, and WeChat. Only its parent company Facebook was bigger.

By now, over 65 billion messages were sent via WhatsApp daily. Users were spending over 195 million hours on WhatsApp video calls each day.

WhatsApp’s global dominance was undisputed, as the app approached the 2 billion user mark. The app had become integral to daily life in virtually every country.

WhatsApp Reaches 2 Billion Users in Early 2020

In February 2020, WhatsApp officially surpassed 2 billion users worldwide. This milestone cemented WhatsApp as the top messaging platform globally.

Co-founder Jan Koum called hitting the 2 billion mark “an amazing achievement.” Daily WhatsApp messages had reached over 100 billion, rivaling global SMS volume.

By keeping the app free of ads and user tracking, WhatsApp stood out from platforms monetizing data. The founders’ commitment to simplicity kept users fiercely loyal.

Only Facebook and YouTube could compete with WhatsApp’s massive scale. But WhatsApp remained the primary daily communication app for one-third of humanity.

Key Factors in WhatsApp’s Global Growth

WhatsApp achieved unprecedented global adoption by laser-focusing on speed, reliability, and ease of use. But several other key factors enabled the app to scale:

• Minimizing regional fragmentation — WhatsApp unified messaging worldwide by working across iOS, Android, and the web with one codebase.
• Supporting weak networks — WhatsApp was robust on slow 2G networks in emerging markets where SMS dominates.
• Small localized data usage — Low data requirements opened WhatsApp to users with limited data plans or patchy connections.
• Native audio messages — Voice notes made WhatsApp accessible to non-text-centric cultures.
• Group chat features — WhatsApp made group chats seamless, enabling communication among close circles.
• End-to-end encryption — Encryption gave WhatsApp messaging privacy and security, gaining user trust.
• Quick syncing — Constant background syncing kept WhatsApp messages updated in real-time across devices.

By overcoming barriers to digital communication faced by global users, WhatsApp made mobile messaging truly universal.

Facebook Struggles to Monetize WhatsApp

Following Facebook’s acquisition, analysts wondered how WhatsApp would ever generate enough revenue to justify its astronomical $19 billion price tag.

Advertising remained off the table, as the founders insisted WhatsApp would never sell ads or user data. Driving revenue would require creativity.

In 2018, Facebook launched the WhatsApp Business API. This allowed businesses to communicate with customers via WhatsApp free of charge.

Businesses can send shipping confirmations, receipts, appointment bookings, and other notifications over WhatsApp’s platform. Companies like Uber rely heavily on the Business API.

While not hugely profitable yet, the WhatsApp Business API has shown promise getting companies to build workflows around WhatsApp messaging. More innovative monetization may follow.

WhatsApp Could Be Worth Over $100 Billion Today

Given WhatsApp’s unprecedented user base exceeding 2 billion people, experts estimate that if it were still an independent company today, its valuation could be above $100 billion.

For comparison, ByteDance — maker of TikTok — was valued around $140 billion in private funding rounds. And Snapchat’s parent Snap Inc. has a market cap nearing $100 billion.

As a standalone company, WhatsApp would command sky-high valuations from investors today. Its growth continues as mobile messaging becomes the primary global communication medium.

Though costly for Facebook initially, buying WhatsApp proved remarkably effective at neutralizing an emergent threat that may have prevented Facebook’s continued empire expansion.

Messaging Apps Face Challenges Ahead

While WhatsApp remains the dominant global messaging app today, the platform faces challenges in the years ahead.

One main issue is increasing regulator scrutiny over WhatsApp’s privacy and security policies, especially regarding encryption. Governments are pressuring WhatsApp to allow moretraceability.

Messaging apps also risk becoming overrun by misinformation and spam as bad actors exploit them to spread false content rapidly. Maintaining message quality at scale is difficult.

Slower user growth in saturated markets like the U.S. may compel WhatsApp to eventually add monetization features like commerce tools and premium add-ons. This risks diluting minimalism.

To remain widely loved worldwide, WhatsApp will need to carefully balance government compliance, content moderation, and revenue goals with user privacy and product simplicity going forward.

9 Key Takeaways from WhatsApp’s Wild Success

WhatsApp’s rise from rejected app idea to $19 billion startup remains one of the all-time greatest tech startup success stories. Here are the key lessons:

• Start by solving your own problem — WhatsApp scratch’s Koum’s itch to make a useful address book app. Create something you’d want to use yourself.
• Recognize platform potential early — Koum immediately saw the possibilities of Apple’s new App Store ecosystem in 2009.
• Pivot ruthlessly — WhatsApp pivoted from statuses to messaging once Koum saw users’ communication behavior.
• Maintain relentless focus — The founders’ singular focus on speed and reliability is WhatsApp’s foundation.
• Build for rapid growth — WhatsApp scaled fast thanks to user invites and notifications to drive engagement.
• Don’t sell out early — Facebook tried buying WhatsApp for years before the founders agreed. Their patience paid off.
• Hire carefully — WhatsApp had under 60 employees at acquisition. A small team enabled fast execution.
• Charge a fee to prove value — WhatsApp’s $1 subscription filtered out non-serious users.
• Evolve intelligently — Features like voice notes boosted engagement without bloating the app.

Despite its fair share of luck, WhatsApp shows how startups can change the world through clever design, user insight, and an unflinching vision.

Jan Koum’s No Ads Policy Angers Yahoo

WhatsApp founders Jan Koum and Brian Acton developed a strong stance against ads from their days at Yahoo in the late 1990s.

At the time, Yahoo was rapidly expanding its advertising technology, which Koum and Acton viewed as cluttering the user experience.

“I had no exposure to the advertising world, and I wanted to just build something that people use,” Koum later recalled. “That was my idea from day one.”

Both founders wanted WhatsApp to focus entirely on users, not trying to monetize their data or attention. So when WhatsApp took off, Koum rejected injecting ads.

Yahoo’s leadership bristled at their ex-employees’ success with an ad-free model. But Koum refused to budge, setting the stage for keeping WhatsApp user-centric.

Switzerland Company Structure Reflects WhatsApp’s Humble Roots

To reflect WhatsApp’s humble beginnings, Jan Koum insisted on registering WhatsApp’s legal entity in Switzerland in 2010.

At the time, WhatsApp had just a handful of users and Koum coded the app from his couch. But Koum dreamed of global reach. “I wanted a company somewhere outside the U.S.,” he said.

Switzerland’s neutrality and reputation for security appealed to Koum. The logo’s Swiss cross motif reflects the founders’ early vision rather than their actual nationality.

“WhatsApp Inc. in Mountain View gets 500 million messages a day, and WhatsApp AG in Switzerland gets none, but it’s important it’s there and we have that independence,” Koum noted.

Even after the Facebook sale, WhatsApp remains technically registered in Switzerland. This demonstrates how much WhatsApp’s original principles still define it.

Early WhatsApp Kept Code Sloppy to Move Fast

During WhatsApp’s early years, Jan Koum intentionally resisted rewriting code to keep engineers moving fast. Efficiency mattered more than polish.

This sometimes led to sloppy internal software practices. But for Koum, optimizing code wasn’t as crucial as rapid iteration and scaling.

“Our mentality has always been about growth, about scale. It was never about good code or maintainability of code,” Koum said.

However, once WhatsApp gained more resources after being acquired by Facebook, engineers began refining the backend code for stability and security.

The early “move fast and break things” approach allowed WhatsApp to grow explosively. But Koum eventually instituted more rigorous engineering once growth stabilized.

WhatsApp’s Staff Ballooned After Facebook Sale

At the time Facebook acquired WhatsApp in 2014, the messaging firm had an astonishingly small team of just 55 employees.

Post-acquisition, Facebook began providing more resources and engineering support to improve WhatsApp’s infrastructure. This allowed the founders to ramp up hiring.

By early 2016, WhatsApp’s staff had ballooned to over 250 employees. This helped the app handle over 100 daily billion messages as it crossed 1 billion users.

But even as staff grew 20X, WhatsApp remained lean compared to tech giants. Facebook employed over 17,000 at this point. Google also had over 60,000 employees.

Keeping WhatsApp’s team tight-knit was crucial to preserving its signature focus and ability to innovate rapidly in response to user needs.

WhatsApp introduced free voice calling

WhatsApp introduced free voice calling WhatsApp introduced free voice calling WhatsApp introduced free voice calling

Adoption of WhatsApp’s high-quality voice calling was swift and broad. Within a year, users were already making over 100 million WhatsApp calls daily.

Voice calling was hugely popular particularly in emerging markets as a free alternative to cellular calls. Features like voice mail made it a full-fledged phone service.

According to WhatsApp, a missed call is often used as a messaging cue between users. Integrating calling made this communication channel seamless.

Enabling free calls strengthened WhatsApp’s positioning as an all-in-one mobile messaging and communication platform.

WhatsApp Web Provides Seamless Desktop Access

In early 2015, WhatsApp launched WhatsApp Web to allow users to seamlessly access messages on desktop and laptop computers.

This complemented mobile apps with a browser-based version by simply scanning a QR code to sync messaging history across devices.

The founders were careful to design WhatsApp for web to avoid cannibalizing the core mobile experience. Desktop usage only mirrors the phone, it doesn’t replace it.

Allowing web access opened WhatsApp to new use cases like customer support and gave a channel for reaching users who spend more time on PCs.

Expanding to web ultimately boosted engagement with the mobile app as well by making WhatsApp ubiquitous across screens.

WhatsApp Status Briefly Mimics Snapchat Stories

In early 2017, WhatsApp launched a new Status feature for sharing disappearing photos, videos, and texts — highly reminiscent of Snapchat Stories.

But this new Status tab confused users who were previously familiar with the old text-based Status feature. Mark Zuckerberg later admitted this was a mistake.

“I do think that one of the mistakes we made was focusing on copying some of the features from other apps over focusing on what WhatsApp was great at,” Zuckerberg said.

By mid-2018, WhatsApp began de-emphasizing its Snapchat clone in favor of improving core messaging functions and privacy.

This illustrated how straying too far from its core competency backfired for WhatsApp, resulting in it later pulling back on attempts to mimic hot new apps.

WhatsApp CEO Jan Koum Departs Facebook in 2018

In April 2018, WhatsApp co-founder and CEO Jan Koum announced he was departing Facebook and the company he created.

Koum had steadily become disillusioned with Facebook’s attempts to erode encryption and seek more user data. He feared the app was straying from its roots.

“It’s time. I’ve been talking about leaving Facebook since 2012 when they added terms of service that I didn’t like” Koum said.

Koum had gradually withdrawn from WhatsApp’s operations since late 2017. After a transitional period, he fully exited at the end of August 2018.

Koum’s departure marked the end of an era. But he felt confident leaving WhatsApp’s core philosophy intact for his successors.

Facebook VP Will Cathcart Becomes New WhatsApp Leader

Following Jan Koum’s departure, Facebook appointed executive Will Cathcart as the new head of WhatsApp in 2018.

Cathcart came over from leading Facebook’s main app, where he helped drive initiatives like the video push and Groups tab. He had been at Facebook since 2008.

The founders supported Cathcart’s promotion, trusting him to carry on WhatsApp’s mission. He was tasked with increasing small business communication while boosting privacy.

“I’m looking forward to working more closely with Will and the WhatsApp team to help connect more people and empower more small businesses,” Zuckerberg said.

Cathcart’s promotion signaled Zuckerberg’s desire to more closely integrate WhatsApp with Facebook’s family of apps after Koum’s exit.

WhatsApp Payments Launch in India First

In 2018, WhatsApp began slowly rolling out digital payments capabilities within the app, starting in India.

The peer-to-peer payments system was built natively into WhatsApp chats for seamless money transferring. Users can authenticate payments through SMS or fingerprint.

India was targeted first due to the country’s surging digital payments market following demonetization reforms in 2016. WhatsApp wanted to be users’ default payments method.

Expanding into payments represents a significant opportunity, as over 400 million WhatsApp users are in India alone. Enabling commerce can unlock major monetization.

But as a core feature expansion, payments also risk over-complicating WhatsApp’s famously simple interface. The company is taking a cautious approach to adding financial services.

WhatsApp Faces Worldwide Encryption Challenges

Governments worldwide continue pressuring WhatsApp to install backdoors in its end-to-end encrypted messaging system.

Law enforcement agencies argue they need access to WhatsApp messages to fight serious crimes. But Facebook remains reluctant, insisting encryption is vital for user privacy and safety.

In Brazil and India, WhatsApp has faced threats of outright service blockades unless it allows tracing of viral misinformation and criminal activity.

However, WhatsApp counters that weakening encryption would create more problems than it solves. Unfettered government access to private messages enables authoritarianism and abuse.

The encryption debate exemplifies the tightrope WhatsApp walks balancing government compliance with its mission to provide secure, private communication globally.

WhatsApp Business API Drives Communication Workflows

Since launching the WhatsApp Business API in 2018, adoption has exploded as companies use WhatsApp messaging to support customer conversations.

The WhatsApp Business API empowers over 175 million people to message businesses daily. And over 40 million companies rely on the platform across sectors like retail, airlines, banking, and ridesharing.

For example, Vodafone uses the Business API as the backbone of its customer support workflows. Customers can receive updates, make purchases, and get help via WhatsApp messaging.

The flexible API allows businesses to build automated chatting functions using AI. Everything from order confirmations to appointment bookings can happen over WhatsApp.

Leveraging business communication gives WhatsApp a steady monetization stream while increasing utility and keeping the core user experience untouched.

Key Factors That Make WhatsApp Dominant

WhatsApp has maintained its leadership in mobile messaging thanks to several key advantages:

• Ease of onboarding — WhatsApp uses just a phone number for automatic contact import and account setup.
• Strong encryption — Messages are secured with end-to-end encryption, protecting sensitive communication.
• Group chat functions — WhatsApp pioneered simple large group chats, enabling communities.
• Global ubiquity — WhatsApp works consistently across all countries, devices, and networks.
• Photo/video sharing — Multimedia messaging makes communication rich, intimate and expressive.
• Desktop support — Web and desktop access make WhatsApp always available.
• Business messaging — The WhatsApp Business API drives substantial enterprise adoption.
• Voice/video calling — Free high-quality calling over WiFi consolidates communication.
• Minimal design — The pared back interface allows lightning fast messaging.

By excelling at both usability and utility, WhatsApp has become entrenched as the de facto global messaging standard.

7 Key Lessons from WhatsApp’s Success

WhatsApp’s rise from rejected startup idea to world’s largest communication network holds invaluable lessons for entrepreneurs:

• Solve a problem you personally have
• Recognize and capitalize on new technological shifts
• Maintain intense focus on the user experience
• Build viral growth loops into your product
• Be patient in selling out or taking investments
• Scale gradually and deliberately
• Stick to principles even under pressure

WhatsApp exemplifies how a simple, well-executed idea can displace incumbent technology and change lives worldwide. By taking a user-centric approach and ignoring distractions, David can still take down Goliath.

Final Thoughts

WhatsApp’s success stems from its founders’ laser focus on creating the simplest, most reliable messaging app possible. By ignoring conventional advice and staying true to their vision, Jan Koum and Brian Acton built a communication empire that became intrinsic to daily life.

WhatsApp’s trajectory shows how revolutionary startups can transcend their underdog status through clean design, thoughtful engineering, and an obsessive focus on user benefits over profits.

Going forward, WhatsApp faces challenges balancing regulatory demands, platform misuse, and monetization with user privacy and preference for minimalism.

But by adhering to its core principles, WhatsApp is well-positioned to remain the global standard in messaging for the foreseeable future. Its beginnings as an underdog upstart underpin that durability.

After covering WhatsApp’s origins, exponential growth, and future outlook, this story has explored the full inside story of its unprecedented rise. The app’s success holds invaluable lessons for entrepreneurs seeking to build products people love.

At its heart, WhatsApp triumphed by always keeping user needs above all else. Its story is one of gambles paying off, persistence through failure, and maintaining focus when it matters most. By following its own playbook, this unlikely startup became an irreplaceable platform for billions worldwide.