The rise of startups built on WhatsApp
Following the no-code ethos, founders around the world are leveraging WhatsApp's gargantuan user base to supercharge their startups.
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The WhatsApp story
WhatsApp was founded in 2009 by two former Yahoo! employees, Jan Koum and Brian Acton. It started off as an app enabling users to update their status but reached new heights once it introduced its “killer” feature: the ability to send instant text over the internet. This allowed for cheap, instant, global communication, something that simply wasn’t possible using traditional SMS infrastructure. This feature, combined with Apple’s recently introduced push notifications, led to exponential growth that left the founders baffled and the VCs salivating.
In order to truly comprehend the WhatsApp story, it is important to understand the values on which it was built. As a child, Jan Koum moved to the US, fleeing Ukraine which was then part of the USSR. His experience with the communist regime and the suffocating surveillance imposed by the comrades in charge led him to place privacy and end-to-end encryption into WhatsApp’s core.
“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.” - Jan Koum for Leaders
Another element that sets WhatsApp apart from many of its Silicon Valley contemporaries is the founders’ disdain and reluctance towards using advertising as a monetization model. One of WhatsApp’s earliest mottos was “no ads, no games, no gimmicks”.
In order to circumvent that self-imposed restriction, the founders experimented with a few business models including a weakly enforced $1 annual fee, which applied in different ways to different users around the world. All in all, however, WhatsApp chose to survive the Silicon Valley way: continue raising to fund its expansion, while pushing back the issue of “revenue” to a later date.
WhatsApp became especially popular in emerging markets, where users benefitted from the simple and lightweight product which for many people was the first digital product they actually used. In 2014, WhatsApp had over 450 million monthly users, with an average growth of 1 million users a day. Its financials for the first half of that same year were not as impressive, with the company incurring a hefty $232.5 million net loss during the period.
Nevertheless, the user base’s outlandish growth, and the fact that WhatsApp was essentially bringing new swaths of the population onto the internet for the first time, was enough to convince a company that prides itself on “connecting the world” to get in on the action.