This video is sponsored by Storyblocks. WhatsApp is the most popular messaging app in the world
— valued at over $1.5 billion. 100 billion messages are sent each day on the app by over
2 billion active users. And it all started
with a Ukrainian immigrant who dropped out of college and lost
both his parents. Growing up with little money
and no support, he worked as a janitor before learning
how to code and becoming a hacker. When he started WhatsApp, he had no choice
but to work in a cold office — clinging onto blankets for warmth
— and on cheap IKEA tables. On February 24, 1976, Jan Koum was born to a Jewish family
in Kyiv, Ukraine — then part of the Soviet Union — and was raised in Fastiv, a city
that was only a couple of hours away. His mother was a housewife and his father was a government
construction manager. Growing
up, Jan didn't see much of his father since work
kept him out late until 10:00 p.m. Still, his father held an attitude
that would leave a mark on him, starting from a young age
get s*** done at any cost. The Koums' everyday life in Ukraine
was extremely restricted. Their house had no hot water,
and they rarely spoke on the phone out of fear that the state was listening
to their conversations. His school
didn't even have an indoor bathroom, so Jan and the other kids would have to walk
across the parking lot to use one— even when the temperature dropped below
freezing. Still, Jan enjoyed the rural lifestyle. However, he wouldn't stay there for long. "No doubt it might have been possible
to avoid many mistakes — to have done much in a better way." When Jan turned 16,
the Soviet Union collapsed. "I wish all of you the very best." As the dust was settling,
the Jewish populations of many of the reeling Soviet
nations fled persecution — Jan's family among them. Jan's mother fled to the U.S., taking Jan
and his grandmother with her. The family settled in Mountain
View, California, except for Jan's father, who fell ill and couldn't join them. Left to raise Jan without his father, Jan's mother
got a small two-bedroom apartment through government assistance
and took work as a babysitter. However, the money she earned
wasn't enough to get by, and the two were left
waiting in the long lines outside the North County Social Services
Office to collect food stamps. Not long
after Jan received devastating news, his mother had been diagnosed with cancer. Still a teenager,
Jan started working as a janitor at a grocery store
to support his sick mother. By the time Jan was 18, he had developed
a reputation as a troublemaker at school. He spoke little English and had a tendency
to retaliate against people who tried to bully him. Still,
Jan wasn't disinterested in academics. In fact,
he had a strong passion for learning and was particularly interested
in computer programing. Before we get into
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by going to storyblocks.com/hook. Through manuals from a used bookstore, Jan managed to teach himself
about computer networking, the process of connecting computers and devices together
through specialized devices like routers. Once he was done with the books,
he'd returned them to the store. Jan later
joined the elite hacking group, w00w00 — the self-described largest non-profit
security team in the world at the time. Many of its members would later
become well-known in the tech industry, among them
Napster co-founder, Shawn Fanning. He learned about cybersecurity from them, and took those lessons with him
throughout his career. After barely graduating from Mountain View
High School, Jan enrolled in the San Jose State
University's computer science program. While he studied, Jan worked on the side
as a security tester for Ernst and Young. While working there,
Jan befriended a Yahoo employee named Brian Acton
thanks to his no-nonsense style, not hesitating to ask questions like "What
are your policies here?", "What are you doing
here?" Likewise, Brian impressed Jan since, "Neither of us has an ability
to bullshit." Six months later, Jan landed a job
as an infrastructure engineer at Yahoo. At the time,
Yahoo was a web directory startup competing with Google
that had been founded three years prior. Two weeks into the job,
one of Yahoo's servers broke, and Yahoo's co-founder
David Filo called Jan for help. "I'm in class," Jan responded, "What
are you doing in class?" demanded Filo. "Get your a** into the office." Jan dropped out of college. "I hated school anyway,"
he later admitted. Over the next few years, Jan found himself
dealing with more than just server issues. His father had passed away in Ukraine
the same year he had met Brian, and his mother succumbed
to cancer three years later. It was Brian
who got him through this difficult time. Brian made sure that Jan didn't feel alone
by inviting Jan over to his house and bringing him out to play sports —
with ultimate frisbee becoming a popular activity for the two. As Yahoo grew, both Jan and Brian began
to question their future at the company. Brian was emotionally drained
from working on Yahoo's advertising platform to the point
where Jan could see it when they were in the halls. After years, the two quit and traveled to South America
and played more ultimate frisbee. When the two returned a year later, they applied for jobs at Facebook
but were rejected. Brian then tried his luck at Twitter,
but was rejected once more. Afterward, Brian started to think
about pursuing his own startup ideas. Meanwhile,
Jan wasn't sure about what he'd do next, but it would still take some time for
something to come along and give him an idea. Jan had been living off his savings
since leaving Yahoo, and a year after he returned to the U.S.,
inspiration struck. Jan had bought a new iPhone and realized
that the seven-month-old App Store was about to introduce
a whole new industry of apps. He came up with the idea of an app
that would allow the people in his contact list
to see his status next to his name, like if he was on a call, at the gym,
or if his battery was low. Jan settled on the name WhatsApp
almost immediately after deciding to build the app
since it sounded like "what's up." Only one week
later, WhatsApp was incorporated. Jan worked on the backend code
while a developer he met through a friend, Igor Solomennikkov,
did the heavy lifting on iOS. Jan wanted WhatsApp to sync
with any phone number in the world. So he pored over a Wikipedia article
looking up every international dialing prefix, and spent months in frustration
working on regional dialing nuances. When Jan demoed the app to friends,
he received a cold response. The app crashed, got stuck,
and drained the iPhone's battery. Only a handful of friends on his contact
list ended up using the app. Enjoying the video so far? Be sure to like this video, subscribe
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about more videos on industry leaders. A month later, Jan was losing hope. "I should probably fold up and start
looking for a job," Jan admitted to Brian
after a game of ultimate frisbee together. Brian balked at Jan's plans. "You'd be an idiot to quit now," he said. "Give it a few more months." Jan took Brian's advice, and a few months
later, Apple implemented
a feature that changed everything. Apple launched push notifications
on iPhone, which allowed developers for iOS to ping users
even when they weren't using an app. Jan incorporated push notifications
into WhatsApp, pinging his friends
each time he changed his status. The feature was an instant hit. When it went live,
Jan's friends started to ping each other with custom statuses
like "I woke up late" or "I'm on the way." Watching his friends send statuses
back and forth, Jan realized that he had inadvertently
created a messaging app. One with great potential,
given that it could theoretically work with any phone number in the world. "Being able to reach somebody halfway
across the world instantly on a device that is always with you, was powerful,"
Jan explained. Jan shifted development, officially
making a fully fledged messaging service — something he wished he could have used
to keep in touch with family when younger. At the time,
the only other free texting service around was BlackBerry's BBM,
but that only worked among BlackBerries. While there were messengers
like G-Talk and Skype, those were more focused on desktop than mobile
and required users to make an account with their email instead of being able
to login with their phone number. Two months
later, Jan submitted WhatsApp 2.0 to the Apple App Store,
and it went live a couple of weeks later. This version allowed users
to send messages back and forth to each other directly, instead of just
pinging one another in status updates. It also introduced the famous double check
mark: one check mark appeared next to a message
to confirm it had been sent and another appeared to confirm
it had been read. Jan watched as WhatsApp's user base quickly grow from a handful to 250,000. His next step
was to get in touch with Brian. The two sat at Brian's kitchen table and sent messages back
and forth to each other. Brian recognized the potential WhatsApp
had to deliver a richer SMS experience
to users than its competitors. He was on board. At first, the two worked from tables
on the second floor of Red Rock Coffee, a Mountain View cafe with a reputation of
being a community hub in Silicon Valley. A month later, Brian secured $250,000
in funding for the fledgling app by getting five of his ex-Yahoo friends
to invest. As a result,
Jan gave him co-founder status and gave him a share of the company. Brian officially joined a month later. The potential of WhatsApp
wasn't lost on their users, either. At the time, the pair was being flooded
with emails from iPhone users excited by free international
texting and desperate to get in touch with their friends
on Nokias or BlackBerries. With Android
still a minor player in the market, Jan decided that BlackBerry
was the best platform to expand onto. So he contacted an old friend,
a BlackBerry developer named Chris Peiffer, to lead
WhatsApp's charge onto the platform. Chris was skeptical. "People have SMS right?" he asked. Jan explained that text messages
were measured and charged in different countries. "It's a dead technology," Jan continued,
"Like a fax machine left over from the 70s, sitting
there as a cash cow for carriers." Jan then showed Chris WhatsApp's
user growth. Chris was hooked. The next month, WhatsApp was updated
to let users send photos. The month
after that, it launched on BlackBerry, and seven months after that, Android. WhatsApp was growing,
and working from tables at a coffee shop was no longer an option. Eventually, Jan and Brian decided
to expand and use their former Yahoo connections to sublease some cubicles
in a converted warehouse in Mountain View. The workspace wasn't glamorous. They worked off cheap IKEA tables
and had to wear blankets for warmth. But such conditions were
the least of their problems. Just like their users had experience before them, WhatsApp was dealing
with the price of text messaging. Verification texts were costing
the company and draining Jan bank account. Even using cutthroat text messaging services like Click-A-Tell
who charged $0.02 for a text message to the United States, international texts
raised that price. For example, texts
sent to the Middle East cost up to $0.65. In order to keep costs low,
Jan and Brian would resort to occasionally switching WhatsApp
from being a "free" app to a "paid" one in an attempt to limit growth,
charging a one time fee of $0.99. But even then, WhatsApp continued to grow. One year later, WhatsApp had climbed the ranks to become
one of the top 20 apps in the App Store. But for Jan and Brian, it was business as usual. Yet, unlike most companies, "business as usual" meant no advertising. During a staff lunch,
someone chimed up and asked Jan why they weren't going to the press
about their success. Jan's response
summed up his view on advertising, "Marketing and press kicks up dust,"
Jan explained. "It gets in your eye and then you're not
focusing on the product." Besides, WhatsApp
didn't need the advertising, people could tell that it was big. It was going viral. And venture
capitalists wanted in on that virality. They tried to meet with Jan and Brian, but both of them shut down
every single request. Brian saw venture capital
as a bailout and wasn't interested, but one investor
wasn't so easily dissuaded. Jim Goetz, a partner at venture
capital firm Sequoia, had met
with other messaging companies, but none of them had the same impressive
growth as WhatsApp. He was even more impressed
when he discovered that they were already paying corporate income tax. It was the first time he had seen
that in his venture career. Jim saw what Jan and Brian were working
on, and he wanted in. He spent eight months
working on his contacts just to get a chance to sit down
with the two. When he finally succeeded,
the three sat down where it all began: Red Rock Coffee. Then, Jan and Brian unleashed
a torrent of questions upon him. He promised not to push ads
into their business model — something both Jan and Brian were adamant about. They wanted to keep WhatsApp as a service that people use
because it saved them money and made their lives better,
even if it was just in a small way. "Dealing with ads [at Yahoo]
was depressing," Bryan later explained. "You don't make anyone's life better
by making advertisements work better." Jim offered to act as a strategic adviser for the two and not interfere
with how they ran the company. Jan and Brian took his word,
and accepted an $8 million investment from Sequoia. Eight months later, WhatsApp
had grown to over 50 million active users — a 400% increase
compared to a year prior. Nine months later, WhatsApp
introduced encryption so that messages sent through
the app were no longer in plain text. Seven months after that, WhatsApp
grew to 200 million active users, overtaking Twitter. It wasn't only WhatsApp's user base
that had grown, though. The company itself now had 50 employees,
and Brian wanted to make sure they never had to worry
about making payroll. He'd seen what the stress had done
to his mother when she ran a business and lost sleep over making sure everyone got paid,
and even though they had more than Sequoia had invested,
he and Jan decided to raise more funds. This time, in secret. Sequoia came in with another $50 million, valuing WhatsApp at $1.5 billion
and making WhatsApp part of the 'Unicorn Club' — an independently owned startup
worth over $1 billion. Two months later,
it had reached 250 million users. Two months after that, WhatsApp introduced
voice messages and attracted another 50 million users despite introducing a yearly
subscription fee of $0.99. And just as WhatsApp had caught the attention of Jim
before now, they attracted the attention of the largest social media network
in the world. Facebook predicted
that WhatsApp was on track to connect 1 billion people and offered
to buy them out for 19 billion, the largest sum
they had ever offered to a company. When Mark Zuckerberg made the offer,
Jan asked Brian for his opinion. Brian replied, "I like Mark. We can work together. Let's make this deal." Overnight, the two became billionaires. It seemed a strange agreement, given
Jan's notorious hatred of advertising and Facebook's entire business model
being built on targeted ads. It was such a strange pairing,
that some in Silicon Valley asked if there was a way
WhatsApp could have not sold. "The answer is no," Brian would later say. "I had 50 employees,
and I had to think about them and the money
they would make from this sale. I had to think about our investors and
I had to think about my minority stake. I didn't have the full clout to say no
if I wanted to." Behind the scenes, WhatsApp had more than doubled its year
over year losses — from losing $54 million to 138 million — mostly because of stock-based
compensation. Two years after the acquisition, Facebook gave WhatsApp the green light
to drop its subscription fee. A month later, WhatsApp reached Facebook's
prediction, the app hit 1 billion active users. Two months after hitting this incredible
milestone, WhatsApp introduce end-to-end encryption,
keeping messages on their service secure by refusing
to keep plain text logs on their servers so that only the people in the
chat can decrypt messages. The relationship between Facebook and WhatsApp
soon started to fray. Facebook wanted the app to make money,
so Jan and Brian suggested charging registered businesses a small fee to send
messages directly to their customers. Facebook insisted that it wouldn't be enough and pushed them
to sell targeted ads instead. Then Facebook ordered WhatsApp to change
its terms of service in order to use people's phone numbers to link
their accounts on the two services, justifying it as wanting to offer
Facebook users better friend suggestions. Jan and Brian had other ideas, however. According to employees,
they used an assignment to replicate Snapchat's stories
feature inside WhatsApp as an excuse to delay
working on generating revenue. Not long after Brian left,
he didn't even take his final batch of Facebook
stock, leaving $850 million behind. Six months later, Facebook landed knee
deep in controversy. The social media giant had allowed a data
mining company called Cambridge Analytica to obtain the personal information
of 87 million users. Cambridge Analytica then used this
information to try and sway the 2016 U.S. elections. Brian tweeted a simple message. "It is time. #deletefacebook"
One month later, Jan also left WhatsApp. He had been worn down by differences
with its parent company. Jan had been against Facebook's insistence
on sharing user data,
and the idea of ads invading the platform. Facebook had also looked
at removing end-to-end encryption, a move which Jan opposed. Today, WhatsApp is the world's
most popular messaging app, having grown to 2 billion users
worldwide—double the prediction that drew
Mark to the company. WhatsApp has also raised concerns
about sharing user data with Facebook, especially since a pop up alert
informed users that the terms of service had been rewritten to reflect
the fact that WhatsApp had begun sharing certain user data with Facebook years ago,
such as phone numbers. However, WhatsApp does not share
contact lists, and thanks to the platform's end-to-end encryption, messages are never read
by WhatsApp or Facebook staff. And ironically, Facebook decided to monetize the app
through Jan and Brian's rejected idea: charging registered businesses
instead of introducing targeted ads. If registered businesses
do not respond to a user within 24 hours, they are charged a fee for each
delayed response, which varies by countr. Registered businesses are also charged
for large volumes of messages and will later be able to create
and manage ads from inside the app. As for WhatsApp's founders,
the two set out on different paths after leaving the company. Jan decided to take time off to do things
he enjoys outside of technology, such as working on his cars
and playing more ultimate frisbee. Brian, on the other hand,
went straight back into the tech industry and launched Signal,
an end-to-end encrypted messaging app. Signal is one of the most popular
apps on the App Store, with over 40 million active users
and is even promoted by NSA whistleblower, Edward Snowden,
and the CEO of Tesla and SpaceX, Elon Musk. This is the story of how
a Ukrainian immigrant who lost everything taught himself how to code and created
the most popular messaging app in the world
— valued at over $1.5 billion. For more interesting stories about today's biggest companies,
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