“In the midst of every crisis, lies great opportunity.” This quotation by the father of Modern Science, Albert Einstein, completely justifies how the birth of dozens and dozens of brand new multi-billion dollar businesses (like Whatsapp, Airbnb, UBER) emerged from the financial downturn and are a great success today. No doubt a crisis brings in problems. Lots of them! But along with a number of threats, it also creates opportunities. Let’s recall the big hit of 2008.
It is often said, amongst the uncertainty, disruption and in many cases heartbreak there are success stories. These are the tales which come out of the darkness and remind us all that there is hope! Some of the biggest startups in the space today (Instagram, WhatsApp, Uber, Airbnb, Dropbox, Slack, etc.) didn’t waste the 2007-2009 opportunity window. All of them were started by young minds who would probably make it for jobs at PwC or some established bank!
This article focuses on the success story of the most used app today: WHATSAPP!
This innovative app was brought to us by friends Brian Acton and Jan Koum. The two became friends whilst they were working for Yahoo! They both worked for almost 9 years together. They travelled around South America together and formulated the idea for Whatsapp but didn’t initially push the idea as their savings started sinking. They both decided to apply for jobs with Facebook but both were not successful! This arose disappointment in them and so Brian Acton tweeted “Facebook turned me down. It was a great opportunity to connect with some fantastic people. Looking forward to life’s next adventure.” Who would have known the next adventure of their lives would be a life changer!
Back in 2009, the idea of creating whatsapp came when koum bought an iphone. At that time app store of Iphone was just a few months old. Koum saw this as a new industry of app creation. From here the seeds of whatsapp were sown and a hassle-free instant Messaging app came into picture. Koum and Acton then began visiting Koum’s friend Alex Fishman in West San Jose to discuss a new type of messaging app that would “show statuses next to individual names of the people”. They realized that to make the idea successful, they would need an iPhone developer. So they found a Russian developer Igor Solomennikov, friend of Fishman.
The app was named as WhatsApp because Koum wanted it to sound like “what’s up”. Finally, on 24 February, 2009, the duo created the encrypted messaging app ‘WhatsApp’ as a way for people around the world to connect in a click of a second. WhatsApp Incorporated in California. However, when Koum found that early versions of WhatsApp kept crashing, he thought of giving up the idea and looking for a new job. Acton on the other hand encouraged him to wait for a “few more months”. In June 2009 when Apple launched push notifications, Whenever a user’s status was changed, everyone in the user’s network was notified. Then came WhatsApp 2.0 with a messaging component. With its release, the number of active users suddenly increased to 250,000. Although Acton was already working on another startup idea, he decided to join the company. Acton convinced five of his former friends at Yahoo! to invest $250,000 in seed funding, and he became a co-founder and was given a stake. On 1st November 2009, he officially joined WhatsApp.
By early 2011, WhatsApp became one of the top 20 apps at Apple’s U.S. App Store and by February 2013, WhatsApp had about 200 million active users and 50 staff members. Whatsapp started with two and in 2014, they were a team of a total 55 people. 32 of them were a part of the engineering department and the rest were working for customer support. In December 2013, WhatsApp had 400 million active users who used the service each month. Its viewership was growing crazy! Months after a venture capital financing round at a $1.5 billion valuation, On February 19, 2014, Whatsapp was purchased for a record of $19 Billion! Guess who purchased? The company that had rejected the two yahoo veterans just 5 short years earlier; FACEBOOK! Days after this announcement, WhatsApp users started experiencing a loss of service. The acquisition induced a considerable number of users to shift to other message services: Telegram declared that it acquired 8 million new users and Line, 2 million.
After this, Koum started working to introduce voice calls. His ultimate goal was that all smartphones are sold with the Whatsapp brand. In January 2015, WhatsApp had 700 million monthly users and over 30 billion messages were sent in a single day. Later in April, Forbes predicted that the telecommunications industry would lose approximately $386 billion between 2012 and 2018 because of OTT services like WhatsApp and Skype. That month, WhatsApp registered over 800 million users. By September it had grown to 900 million and by February 2016, it had total one billion.
In November 2016, Facebook was ceased for collecting WhatsApp data for advertising in Europe. Later In May 2017, it was reported that the European Commission would charge a fine against Facebook for €110 million for “misleading” it during the 2014 takeover of WhatsApp. The Commission alleged that in 2014 when Facebook acquired the messaging app, it “falsely claimed it was technically impossible to automatically combine user information from Facebook and WhatsApp”. However, in the summer of 2016, WhatsApp had begun sharing user information with its parent company, allowing information such as phone numbers to be used for targeted Facebook advertisements. Facebook acknowledged the breach, but said the errors in their 2014 filings were “not intentional”.
Symbian-based Nokia N95 released in March 2007 was the oldest device capable of running WhatsApp. (After June 2017, WhatsApp was no longer compatible with it.)
WhatsApp’s co-founder Brian Acton decided to leave the company to start a non-profit group in September 2017. Later the nonprofit group was revealed as the Signal Foundation, which now develops the WhatsApp competitor Signal. Six months after Acton left Whatsapp, Jan Koum (WhatsApp co-founder and CEO) also announced that he would be leaving the company. Facebook later announced Chris Daniels as Koum’s replacement. Through a partnership with Startup India, WhatsApp announced an investment of $250,000 into the startup ecosystem on November 25, 2019, where it will provide 500 startups with Facebook ad credits of $500 each.
Earlier this year, WhatsApp registered over 5 billion installs on Google Play Store which makes it the second non-Google app. Who would have thought a startup idea would achieve this milestone! In partnership with the WHO and UNICEF, Whatsapp is even used to provide messaging hotlines to people to get information on the 2019-2020 coronavirus pandemic. Today WhatsApp competes with a number of messaging services like iMessage, WeChat, Viber, Telegram, and LINE. Telegram in particular is known to be the best Whatsapp competitor for a while now.
Koum and Acton worked as brilliant partners and both had an idea of creating whatsapp advertisement free. They wanted their product to stand out from the crowd yet it should be simple for everyone to use it. They never ran for fame. Both of them worked with different mindsets and made their product successful today. Their innovation ‘Whatsapp’ has made many people addicted to it today. Koum with 45% stake in the company and Acton’s stake being at 20% values them directly at a whopping $8.3 Billion and $4.9 Billion respectively.
The current coronavirus outbreak is a crisis on a scale many of us have never experienced in our lifetime. This stage accounts for unprecedented growth. The millennial generation is hitting its stride financially this decade. The boomers are heading to semi or total retirement. They have more wealth than any other generation in history and they intend to spend it while they are healthy. Technology is also laying the foundations for every business to have global opportunities, and governments of the world are pumping money into the economy. Behavioral changes after the pandemic could mean more opportunities for entrepreneurs to render meaningful services. Many are expecting the world to be forever changed after this pandemic. This change may be seen in a way of more opportunities for entrepreneurs with ideas for tools and services that can help people adapt to new trends.
This can prove to be a great time for the entrepreneur, the salesperson and anyone with a great idea! Covid19 can also prove to be a perfect storm for startups and investors just like the previous recessions. Looking at the challenging funding environment, this year may lead to fewer entrepreneurs starting up but it is important to remember that some of the greatest companies today were found during the recessions, be it Apple and Microsoft during the 1970’s recession or Whatsapp, Airbnb, Uber during the global financial crisis of 2008-09.