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 $9.9 billion. Why someone hasn’t turned the life story of the father 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.
For entrepreneurs and business leaders, Jan Koum’s story serves as inspiration. But going beyond a source of motivation, Koum and his business partner Brian Acton also demonstrate how to grow an innovative startup company. Additionally, they are a prime example of building a business that serves others and creates a massive positive impact on the world.
Learn more about Koum and the WhatsApp story below—it’s one every business leader should know.
Living in Poverty
Jan Koum was born in 1976 to a Jewish family in Kyiv, Ukraine. His father worked in construction, while his mother stayed at home with her son. As a child, Koum experienced the negative effects of growing up in a Communist regime, which deeply influenced his strong commitment to privacy protection. When describing why his company is so serious about this facet of business, he tells Wired: “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. Although his father planned to join the family, he never did. Making matters worse, Koum’s mother received a cancer diagnosis shortly after their arrival in the U.S. 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.
Setting the Stage
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. He also received a hands-on education in cybersecurity by joining the elite hacking group, w00w00. “I had so much fun in the early days learning about networking, security, scalability, and other geeky stuff,” he explains to Reuters.
Joining tech moguls like Mark Zuckerberg, Jack Dorsey, and Larry Ellison, Koum went to college but didn’t make it to graduation day. While working his way through school at San Jose State University, he quit after only a year due to the demands of his job at Yahoo.
Meeting His Business Partner
Jan Koum worked on the security team at Ernst & Young in his freshman year at San Jose State. During this time, he met his future business partner, Brian Acton, while working on a project at Yahoo. The two immediately hit it off. Several months later, Koum applied for a job with Yahoo and ended up working there for nearly a decade.
Feeling unfulfilled at their jobs, the duo quit on Halloween in 2007 and headed to South America for a year-long adventure. During this time, they both applied for jobs at Facebook, but to no avail. Ironically, neither could predict that in a few years, Facebook would come knocking on their door, increasing Koum and Acton’s net worth by billions.
Developing the Idea for WhatsApp
The story of Whatsapp goes like this. 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 his soon-to-be Whatsapp co-founder, Acton, for ultimate frisbee—one of their favorite past-time activities. It was here that he shared his idea for the messaging service. The same day, the business was legally established as WhatsApp Inc.
Adapting for Success
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. Brian Acton tells Wired that after this, 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.
Scaling the Company
With the success of the new launch, the company began seeking investors who could help their messaging service scale. That October, Acton got several former colleagues at Yahoo to invest $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 $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 $8 million from Sequoia, which was followed by $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.
Selling to Facebook
In 2014, Facebook made WhatsApp’s co-founders an offer they couldn’t refuse: $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 $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.
Making a Difference Through Philanthropy
After leaving, Whatsapp co-founder Brian Acton and his wife Tegan established Wildcard Giving, an umbrella organization for their three charities: Sunlight Giving, Acton Family Giving, and Solidarity Giving. As explained on Wildcard’s website, these nonprofits collectively support “an individual’s right to dignity, agency, justice, and self-determination. Together, they work to further civic values, collective responsibility, and our common humanity.” Thus far, the couple has reduced their net worth but given back in tremendous ways by donating $1 billion dollars to philanthropic causes.
Additionally, Jan Koum supports charitable causes. Established in 2016, The Koum Family Foundation donated $10 million dollars to Stanford University in 2018 and has given tens of millions of dollars to Jewish and Israeli-related causes.