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WhatsApp Co-Founders Jan Koum and Brian Acton

Earlier today, Facebook announced its acquisition of WhatsApp for $16 billion. It’s a

spectacular milestone for the company’s co-founders Jan Koum and Brian Acton, and their

remarkable team.

From the moment they opened the doors of WhatsApp, Jan and Brian wanted a different kind

of company. While others sought attention, Jan and Brian shunned the spotlight, refusing

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even to hang a sign outside the WhatsApp offices in Mountain View. As competitors

promoted games and rushed to build platforms, Jan and Brian remained devoted to a clean,

lightning fast communications service that works flawlessly.

This approach has served WhatsApp well and its users better. WhatsApp has done for

messaging what Skype did for voice and video calls. By using the Internet as its

communications backbone, WhatsApp has completely transformed personal

communications, which was previously dominated by the world’s largest wireless carriers.

For the past three years, it’s been our privilege to work shoulder-to-shoulder with Jan and

Brian as their close business partner and investor. It’s been a remarkable journey, and we

could not be happier for these talented underdogs whose unshakeable beliefs and maverick

natures epitomize the spirit of Silicon Valley.

Those less familiar with WhatsApp and its wonderful product will marvel at how a young

company could be so valuable. Many of those people will be in the U.S. because there’s no

other home grown technology company that’s so widely loved overseas and so under

appreciated at home. WhatsApp reminds us of other companies that we partnered with —

like PayPal, and YouTube — whose founders chose a similar path to Jan and Brian. Today

PayPal and YouTube are both household names around the world. Tomorrow the same will

hold true for WhatsApp.

Here are four numbers that tell the story of WhatsApp: 450, 32, 1 and 0.

450. WhatsApp has more than 450 million active users, and reached that number faster than

any other company in history. It was just nine months ago that WhatsApp announced 200

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million active users, which was already more than Twitter. Every day, more than a million

people install the app and start chatting, and they remain more engaged with WhatsApp than

on any other service. Incredibly, the number of daily active users of WhatsApp (compared to

those who log in every month) has climbed to 72%. In contrast the industry standard is

between 10% and 20%, and only a handful of companies top 50%.

WhatsApp has tapped into our insatiable appetite for personal communication. It is part of a

chain that over the past 150 years reaches from the Pony Express, Telegraph and airmail

letter to the telephone and email. WhatsApp has become today’s flag-bearer for personal

communications.

Jan and Brian’s product caters to those you care about most: the people in the address book

on your phone. WhatsApp is simple, secure, and fast. It does not ask you to spend time

building up a new graph of your relationships; instead, it taps the one that’s already there.

Jan and Brian’s decisions are fueled by a desire to let people communicate with no

interference.

32. Even by the standards of the world’s best technology companies, WhatsApp runs lean.

With only 32 engineers, one WhatsApp developer supports 14 million active users, a ratio

unheard of in the industry. (WhatsApp’s support team is even smaller.) This L E G E N D A

R Y crew has built a reliable, low-latency service that processes 50 billion messages every

day across seven platforms using Erlang, an unusual but particularly well-suited choice. All

that, while maintaining greater than 99.9% uptime, so users can rely on WhatsApp the way

they depend on a dial-tone.

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The note on Jan’s desk

1. Jan keeps a note from Brian taped to his desk that reads “No Ads! No Games! No

Gimmicks!” It serves as a daily reminder of their commitment to stay focused on building a

pure messaging experience.

This discipline is reflected in WhatsApp’s unconventional approach to business. After one

year of free use, the service costs $1 per year — with no SMS charges. This can save

users trapped in expensive data plans up to $150 per year.

It’s easy to take this novel model for granted. When we first partnered with WhatsApp in

January 2011, it had more than a dozen direct competitors, and all were supported by

advertising. (In Botswana alone there were 16 social messaging apps). Jan and Brian

ignored conventional wisdom. Rather than target users with ads — an approach they had

grown to dislike during their time at Yahoo — they chose the opposite tack and charged a

dollar for a product that is based on knowing as little about you as possible. WhatsApp does

not collect personal information like your name, gender, address, or age. Registration is

authenticated using a phone number, a significant innovation that eliminates the frustration of

remembering a username and password. Once delivered, messages are deleted from

WhatsApp’s servers.

It’s a decidedly contrarian approach shaped by Jan’s experience growing up in a communist

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country with a secret police. Jan’s childhood made him appreciate communication that was

not bugged or taped. When he arrived in the U.S. as a 16-year-old immigrant living on food

stamps, he had the extra incentive of wanting to stay in touch with his family in Russia and

the Ukraine. All of this was top of mind for Jan when, after years of working together with his

mentor Brian at Yahoo, he began to build WhatsApp.

Facebook has assured Jan and Brian that WhatsApp will remain ad free and they will not

have to compromise on their principles. We know that Jan, as a new member of Facebook’s

board, will continue to champion the rights of WhatsApp users.

0. There may be no greater testament to the viral nature of WhatsApp than the fact that the

company has accomplished all this without investing a penny in marketing. Unlike their

smaller competitors, it hasn’t spent anything on user acquisition. The company doesn’t even

employ a marketer or PR person. Yet like the world’s greatest brands, it’s created a strong

emotional connection with consumers. All of WhatsApp’s growth has come from happy

customers encouraging their friends to try the service.

***

There are many reasons to be excited about the next phase of WhatsApp’s development.

Mark Zuckerberg makes a compelling case for how Facebook and WhatsApp fit together like

hand in glove, much as he did with Instagram, which has flourished as part of Facebook. As

with Instagram, which we were fortunate to back with others, for us today’s announcement is

bittersweet. Our excitement about the opportunities that lie ahead for WhatsApp and

Facebook is tinged with a little sadness, and a lot of nostalgia, for the pleasure and

satisfaction that all of us at Sequoia have felt working with the company over the past three

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whatsapp facebook

years.

From the time WhatsApp had fewer than ten users, Jan and Brian have been committed to

building an enduring service. Now, on their way to a billion, they are just getting started.

— Jim Goetz, on behalf of Sequoia

2/19