Sale of WhatsApp Reveals Story of Rags to Riches

The Facebook purchase of WhatsApp for $19 billion has made headlines in past 24 hours, and the tough beginnings of founder and CEO Jan Koum show the intelligence and spirit of a man coming from practically nothing and growing into a billionaire.

According to Wired Magazine, Koum, 38, grew up mostly in Communist Ukraine in a small village outside of Kiev. He grew up Jewish and as a described “rebellious little kid.” When discussing his education in Kiev, he can recall a school and town so poor that there wasn’t even a bathroom inside the school, and small children had to run across the parking lot in freezing temperatures just to use a bathroom.

His area and society was very cut off from what most U.S. 16-year-olds are accustomed to – the technology CEO did not even have his first computer until he was 19.

After moving to the United States in 1992 when he was 16 due to an unsafe and anti-Semitic setting, his family still didn’t have much and they depended on government assistance to survive. His mother babysat to make extra money and Koum worked in a grocery store. They also lived off his mother’s disability income when she was diagnosed with cancer. By 18, Koum had taught himself computer networking by reading manuals from used bookstores.

Koum struck up friendship with fellow ex-Yahoo employee and WhatsApp co-founder Brian Acton in 1997. They met at Yahoo and Acton offered Koum support when his mother died in 2000 – Koum was then alone, as his father had passed away in 1997.

In 2009, two years after leaving Yahoo, Koum’s own use of the iPhone made him think about the app age and how it would grow. Remembering how international calls were extremely expensive and how he and mother usually couldn’t afford to call relatives in Ukraine sparked the first idea of creating a service where international messages could be sent for a cheap price.

Growing up in Communist Ukraine also molded Koum’s idea of a communication piece that wasn’t bugged or recorded in any way. Because of this, messages sent via WhatsApp are not kept long-term on a server, and the company does not request personal information from its users.

After essentially working for free for the first few years, Koum and co-founder Brian Acton had created an app that by early 2011 was in the top 20 in the U.S. App Store.

Two years later in Feb. 2013, Koum and Acton agreed they needed to raise more money when WhatsApp’s user numbers grew to about 200 million with an employee base of 50. They held a second funding round and gained $50 million in investments from Sequoia, who also invested $8 million in 2011. WhatsApp’s value was at $1.5 billion in 2013.

Koum’s company has grown from a small two-man start up configuring the details in a Mountain View, California coffee shop to gaining 450 million active users –not bad considering he barely graduated from Mountain View High School and dropped out of San Jose State University.

Five years after leaving Yahoo! in 2007 with Acton, WhatsApp was sold to Facebook for a staggering 19 billion. Koum and Acton recently leased a new three-story building that is now under construction, and will house the new WhatsApp company and its staff of 100.