Jan Koum became a billionaire in the very building he used to pick up food stamps for himself and his mother. Why someone hasn’t turned the co-founder and former CEO of WhatsApp life story 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, his story serves as an 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.
Get Koum and WhatsApp’s entire story below—it’s one every business leader should know.
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Living in Poverty
Jan Koum was born in Kyiv, Ukraine, to a Jewish family in 1976. 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 was so serious about this facet of business, he replied: “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, his new life in Mountain View, California, wasn’t easy by any means. Although his father planned to join the family, he never could. Making matters worse, Koum’s mother received a cancer diagnosis shortly after they moved to 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 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 later 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 tells 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 as he paid his way through his first year of college. 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 the company and worked there for almost an entire decade.
Feeling unfulfilled at Yahoo, 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 at their door with a couple billion dollars.
Developing the Idea for WhatsApp
After the pair returned to the U.S., they considered their next moves: join another company or start their own. As new technologies emerged such as Skype, Jan Koum began ideating on how to improve user experience. He was also influenced by his own personal experiences. When he was a teenager, communication with his family was irregular, as 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 his 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.
Adapting for Success
WhatsApp launched on May 3, 2009, only a few short months after its initial 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 the strategy to build the app around people’s social networks. Additionally, before the relaunch of WhatsApp, Acton joined in by helping 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 quick growth, which resulted in experimentation with various business models. “We’d grow superfast 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 the organization scale. That October, Acton got several of their former colleagues at Yahoo to invest $250,000 in the business. While Acton handled the 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 to them. 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 played a significant role in why they walked away from the company they built 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 the company, which was followed with $50 million in 2013.
The additional money provided room for more growth. The company upgraded their office space, expanded their 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 Jan Koum and Brian Acton both stuck around for a couple of years, both left due to issues regarding advertising and users’ privacy protection. They were the two tenants the business partners founded the company upon. In the process, Acton cited he left $850 million dollars on the table. It was clear there was some bad blood. After he left, he even participated in the #DeleteFacebook movement. Koum’s departure was more friendly, but also happened due to disputes regarding core foundational beliefs established under his leadership with Acton.
Making a Difference Through Philanthropy
After leaving Whatsapp, Brian Acton and his wife established Wildcard Giving, which serves as the umbrella organization to their three charities: Sunlight Giving, Acton Family Giving and Solidarity Giving. As explained on Wildcard’s website, the 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 have donated $1 billion dollars to philanthropic causes.
Additionally, Jan Koum supports charitable causes. Established in 2016, The Koum Family Foundation has given tens of millions of dollars to Jewish and Israeli-related causes and donated $10 million dollars to Stanford University in 2018.