The $19 billion deal to sell WhatsApp Inc. to Facebook Inc.
(FB) started at Yahoo! Inc. more than five years ago, when Jan Koum became
disillusioned at the way Internet companies were fixated on advertising.
He left Yahoo in 2007 with one of the company’s other
engineers, Brian Acton, and started a company by 2009 that shuns advertising
altogether. The strategy allowed them to concentrate on creating an easy-to-use
messaging product instead of developing new ways to glean customer information
for their marketing pitches, Koum said in a 2012 blog post.
“No one wakes up excited to see more advertising, no one
goes to sleep thinking about the ads they’ll see tomorrow,” Koum said in the
post. A hand-written note on the his desk reads: “No Ads! No Games! No
Gimmicks!”
Their approach paid off. WhatsApp amassed 450 million
monthly users -- twice as many as Twitter Inc. -- who send billions of messages
a day. Yesterday, Facebook Chief Executive Officer Mark Zuckerberg bought their
five-year-old company in the largest Internet deal since Time Warner’s $124
billion merger with AOL in 2001, a deal that will almost certainly make Koum
and Acton billionaires several times over.
For Koum, 38, the windfall would stand in stark contrast to
his years as a teenager, when his family relied on food stamps after emigrating
from Ukraine. The experience of living in a country where phone lines were
often tapped, instilled the importance of privacy in him, said Jim Goetz, a
partner with Sequoia Capital Ltd., WhatsApp’s lone venture capital investor.
’Contrarian Approach’
WhatsApp doesn’t collect information like name, gender,
address or age. Instead, users are approved after their phone numbers are
authenticated.
“It’s a decidedly contrarian approach shaped by Jan’s
experience growing up in a communist country with a secret police,” said Goetz
in a blog post yesterday on Sequoia’s website. “Jan’s childhood made him
appreciate communication that was not bugged or taped.”
Koum will join Facebook’s board of directors once the deal
goes through. Facebook declined to make him or Acton available for an
interview.
The partners are old enough to remember the first dot-com
bust. Acton, 42, grew up in Michigan and was employee No. 44 at Yahoo, working
on advertising, shopping and travel services, according to Wired. He invested
during the boom and lost millions of dollars when the market imploded,
according to Forbes.
Facebook Reject
He later hired Koum at Yahoo and served as his mentor,
inviting him over to his house and taking him skiing, Forbes said. After
exiting Yahoo, Acton said on Twitter that he was turned down for a job at
Facebook in 2009.
The two founded WhatsApp later that year with the idea that
smartphone users should be able to easily message each other without incurring
fees from phone carriers. The service is free for a year, then costs 99 cents
per year after that.
They eschewed marketing and didn’t employ a public relations
person, relying on the word-of-mouth recommendations of its users instead. The
service became popular with friends and family communicating in different
countries, especially in Europe, because it circumvents the fees charged by
phone carriers.
“While others sought attention, Jan and Brian shunned the
spotlight, refusing even to hang a sign outside the WhatsApp offices in
Mountain View,” Goetz said in his blog post. “As competitors promoted games and
rushed to build platforms, Jan and Brian remained devoted to a clean, lightning
fast communications service that works flawlessly.”
Koum’s aversion to advertising contrasts with Facebook’s
efforts to make more money from people using its service on mobile devices. He
said in a statement on the company’s website that WhatsApp will remain
autonomous and operate independently.
“There would have been no partnership between our two
companies if we had to compromise on the core principles that will always define
our company, our vision and our product,” he said.
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