In addition to an acquisition deal worth $19 billion and a Facebook board seat, five-year-old WhatsApp received way more attention this week than it had ever gotten in the tech and business worlds.
- Facebook’s WhatsApp Deal Could Jumpstart Internet.org Plans
- Q&A With Sequoia’s Jim Goetz on Wassssup With the WhatsApp Deal
- Facebook Price for Having No Phone OS? $19 Billion. A Must-Have Apps Play? Priceless.
- Before Facebook Deal, WhatsApp Was Helping BuzzFeed and Shazam Go Viral With New Platform Tools
- What WhatsApp Did Right, According to Jan Koum (Video)
- WhatsApp: Sequoia’s Second Big Facebook App Deal
- Facebook to Buy WhatsApp for $16+ Billion
Some of that was for the remarkable quiet ruthlessness of the small WhatsApp team and its two co-founders, with Jan Koum having lived on food stamps and Brian Acton having been rejected from jobs at Facebook and Twitter even after being employee No. 44 at Yahoo.
There was also surprise about how a simple messaging app and its highly engaged audience of 450 million active users came to be valued so highly.
Last year, Koum appeared for an interview at our Dive Into Mobile conference, at a time when his company had more than 200 million active users. He talked about the larger opportunity in messaging, how much he hates advertising businesses, and why he wanted WhatsApp to stay an independent company.
Koum also, over the course of the half-hour interview, identified the four key things he thinks WhatsApp did right.
They are: Building on top of phone contacts, being mobile-only, slowing growth on purpose and splitting focus between platforms.
First, WhatsApp built its network of contacts from users’ phone address books, rather than making them build their contact lists themselves or using the crutch of importing contacts from another social network. This is much more common now, but WhatsApp did it super early. In fact, in the early days, if you switched from one phone to another, you would lose your entire WhatsApp message history.
One of the revolutionary things we did, if you look historically [at] how people have done instant messaging, you can look at ICQ, where you would have a random number, or BBM, where you would have an eight-digit number. There was always an exchange, a buddy exchange: “Can you please add me to your friends list?” Even on Skype you have to have their user name and a handshake.
We kind of looked at this and said, you have this address book on your phone, and the best thing about it is [that] it’s people who matter to you the most. It’s a contact you communicate with a lot, otherwise you wouldn’t have them in your address book. And we said, why can’t we take that as the basis of your contact list? Why do we always need to create a different graph?
Another thing WhatsApp did is ignore everything but phones.
We were mobile-only. A lot of people would compare us to Skype or Yahoo Messenger, ICQ, and we would kind of scratch our heads and say, “Why?” We’re an extremely mobile-oriented company on product; we don’t have a desktop client, we don’t have a Web client. And I think it’s a benefit to us, because the thing about SMS is [that] when you send a message to somebody you know, it’s going to their phone; their phone is always with them. When you give somebody your phone number, you let them interrupt you, be it with a phone call or SMS. So we said to ourselves, “We want to build a mobile experience because we know it will reach you in real time.”
WhatsApp also started charging 99 cents for its product very early on, a strategy that runs counter to prevailing “growth hacking” tactics.
We started out on an iPhone. We did something that is counterintuitive; we started charging on the iPhone early on. And it left a lot of people kind of scratching their head, and asking, “Why would they charge?” We actually had people walk in and tell us, “Don’t you want your network to grow faster?” And we’re like, “No.” We’ve always focused on organic growth: We never bought ads, we’ve never done user acquisition, we’ve never done any kind of promotion to grow our network. We always want our network to grow organically.
Everybody I meet who uses WhatsApp, I ask them a question: “How did you hear about it?” And they say my friends, my sister or my brother, somebody I know hounded me to install WhatsApp. We think there is more power to the network when it grows organically. There is more power to the application when you install it and use it because your friends are on it.
We started charging early on because it allowed us to provide better service, to buy more servers, to hire engineers, to keep the lights on. It actually grew our network at a slower pace, but it became a more powerful, connected, stronger network.
And then lastly, WhatsApp built for every different type of phone, splitting its tiny team into squads for each mobile platform.
We actually write native code on every platform. … We want as many people on our network as we can. We don’t want to exclude anybody. Think of a family somewhere in a third-world company where they don’t necessarily have Android or iPhone and the kids have lower-end Nokia phones, and they want to participate and communicate with their friends across the globe. For us it’s very important to include everybody. We’re a network of participation; we want everybody to participate. Everybody who wants to join WhatsApp, we’ll go out of our way to build a really awesome client for them.
Here’s the full video:
Please see the disclosure about Facebook in my ethics statement.