Home Amazing Business Stories Amazing Business Story: Jan Koum

Amazing Business Story: Jan Koum

by Valentine Ogbamebor

Jan Koum was born in a small village outside Kyiv, Ukraine, on the 24th of February, 1976. His father was a construction manager involved in the building of hospitals and schools while his mother was a housewife. Growing up for Jan was tough, as his home had no hot water and even his school didn’t have toilets within the building. Jan’s parent hardly talked on the phone for fear of their conversation being listened to by the government.

At the age 16 (1992), Jan and his mother and grandmother immigrated to Mountain View, California, as a result of a troubling political and anti-Semitic environment. His father was supposed to join them later, but this was never to be, as he died in 1997. With the help of government assistance, they were able to secure a two-bedroom apartment and for some time lived off food stamps. His mother had stacked their suitcases with pens and Soviet-issued notebooks so she wouldn’t have to pay for school supplies in the United States.

Jan’s mother got a job as a babysitter while Jan worked as a cleaner for a grocery store to make ends meet. When his mother was diagnosed of cancer, they lived off her disability check. Jan was not particularly fond of school and was regarded as a trouble maker, but he found great interest in computer, and by 18 he had taught himself computer networking by purchasing manuals from a used book store and returning them when he was done. He joined the hacker group wOOwOO on the Efnet internet relay chat network and hacked his way into Silicon graphics servers.

He enrolled at the San Jose University while working at night as a security tester at Ernst & Young. While working at Ernst & Young, inspecting Yahoo!’s advertising system, Jan met Brian Acton, a computer science graduate from Stanford University, who was Yahoo! Employee No. 44. Just like Google boys Sergey Brin and Larry Page, Jan and Acton instantly bonded; they seemed to be two a kind, both lacking an ability to bullshit.

Six months later Jan interviewed at Yahoo! and got a job as an infrastructure engineer. Two weeks into his job as Yahoo! one of the company’s sever broke and David Filo, one of the founder of Yahoo! called Jan on his mobile. He whispered that he was in class at San Jose University.

“What the fuck are you doing in class?” Filo asked, “Get your ass into the office”.  Jan had never been fond of school from the beginning so he dropped out.

In 2000 Jan’s mother succumbed to cancer. Jan was all alone, having lost just three years before. Acton was however near to offer the needed comfort and reassurance. For the next nine years the pair worked at Yahoo. Although they were paid well they found little joy in what they were doing. So in 2007, with $400,000 Jan felt it was time to quit, Acton, too. The pair took one year off to decompress, travelling around South America and playing ultimate Frisbee. They both at one time applied for positions in Facebook but were rejected. Jan realized he was eating deeply into his $400,000 savings and knew he urgently needed to do something.

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In 2009, he bought an iPhone and realized that the seven month old app was about to spawn a whole new industry of apps. He visited his Russian friend, Alex Fishman, and shared the idea with him. The two of them stood for hours talking about Jan’s idea for an app.

“Jan was showing me his address book. His thinking was it would be really cool to have statuses next to individual names of the people”. The statuses were to show if the person was on call, in a meeting, or if battery was low. Jan could build the backend but he needed an iPhone developer to help make the app work on iPhones. Alex introduced Jan to Igor Solomennikov, a Russian developer. Jan instantly chose the name “Whatsapp” because it sounded like “what’s up”, and a week later, on his birthday, Feb. 24, 2009, he incorporated Whatsapp Inc. even when no code for the app had been written yet.

For the next few months Jan spent his time writing the backend code for the app making sure the app would be able to work with any phone number in the world. But despite how much work Jan put into the new app Whatsapp seemed to be going nowhere. During a game of ultimate Frisbee with Acton, Jan admitted the repeated failings of Whatsapp and expressed his intentions of quitting and looking for a job. Acton was furious with him for thinking of quitting and advised him to give the app a few more months.

Things changed when Apple lunched push notification letting developers ping users when they weren’t using an app. Jan updated Whatsapp so that each time a user changed status, it would ping everyone in that user’s network. Soon early users began to use the app to ping each other with custom statuses like “I woke up late” or “I am on my way”. Jan watched the way his users changed statuses to communicate with each other and realized he had inadvertently created an instant messaging service.

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“Being able to reach someone half way across the world instantly, on a device that is always with you, was powerful” Jan said.

 He went ahead to release Whatsapp 2.0 which had a messaging component and watched his active users suddenly swell to 250,000. It was at this time that Acton, who had been working on another failing project, joined Whatsapp. But the pair needed capital to properly fund their project, so Acton got five ex-yahoo friends and convinced them to invest $250,000 in seed funding, and as a result was granted cofounder status and stake in the company.

As Whatsapp user base increased so did the number of mails they received from iPhone users who were excited about the app and wanted to ‘whatsapp’ their friends on Blackberry and Nokia devices. So Jan employed Chris Peiffer, who was on old friend, to build the Blackberry version of Whatsapp.

Despite the fact that both Jan Acton worked for free in the early years of Whatsapp, the cost of sending verification text was eating deep into the company’s bank account. But fortunately for the boys by early 2010 Whatsapp was generating an average of $5,000 every month and this helped to cover the cost of sending verification text. Today, SMS verification cost the company $500,000 monthly.

By 2011 Whatsapp was in the top 20 of all apps in the U.S App Store. But the company was not involved in any kind of major advertising; Jan and Acton hated advertising. And even when they knew they needed more seed funding to expand and had to receive financial help from venture capitalist firm, Sequoia, one of their major criteria was that the VC firm would not force advertising models on them. Sequoia would invest $8 million into Whatsapp in 2011 and in another round of funding round, invest $50 million.

By early 2012 Whatsapp’s user base had swelled to 200 million active users. That same year Jan met Facebook founder Mark Zuckerberg. It took several years of friendship with Jan for Zuckerberg to pop up the question regarding a buyout deal. Zuckerberg told Jan, “if we joined together, that would help us really connect the rest of the world”. Jan thought about it for a few days, and on 19th of February, 2014, in the former North County Social Services office, where Jan once stood in line to collect food stamps, Jan signed the agreement selling over his messaging app for a whopping $19 billion, which instantly made him a billionaire with worth $6.8 billion.

He currently sits on the board at Facebook.

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