Facebook acquired WhatsApp for 19 billion dollars

Facebook acquired WhatsApp for 19 billion dollars

10 January 2020 Off By Oscar Giacomin

/ But it could have been its own project at no cost! /

Dear readers and colleagues, today I want to tell you the true story of one of the most sensational sales in recent years: the acquisition (starting in 2014 and ending in 2019) by social network Facebook of the most widely-used instant messaging service, and now increasingly used by businesses too: WhatsApp. This story should lead us to think about when we automatically reject the proposals our companies receive from time to time.

Born in 1976, Jan Koum, the inventor of WhastApp, is today a billionaire, yet he is a man of very humble origins. He was born in Kiev and grew up in the Ukraine during the Soviet era. At the age of 16 he moved to the United States with his grandmother and mother, in search of a better life. Making major sacrifices, and aided by a social assistance program, the family managed to afford a modest apartment in California. 

Just a couple of years after his arrival, Koum got hooked on computer science. Due to the lack of money at home, he began teaching himself using manuals borrowed from public libraries. Doing odd jobs he contributed to the upkeep of the family and at the same time managed to enrol in university.

There he met and joined a group of hackers; these included some of the people who have in some way changed our lives, such as the founders of Napster, Shawn Fanning and Sean Parker. In 1997, thanks to the knowledge he had acquired, he was given a job by Yahoo! and there came into contact with Brian Acton (the other founder of WhatsApp), becoming close friends, especially following the death of his mother from cancer in 2000.

Koum worked at Yahoo! for 9 years, before resigning in 2007 together with his friend. The two then began travelling around Latin America, and after having had the door closed in their face by Mark Zuckerberg, founder and CEO of Facebook where they dreamed of working, started getting interested in the world of apps. In particular, they want to study a way of putting people in contact quickly and easily, without the need for passwords and accounts, but simply using their mobile phone number.

In 2009 Jan created the application he had dreamed of, and convinced Acton to start a partnership together: they managed to get a $250,000 loan to get WhatsApp up and running. 

In February 2014, negotiations began for the acquisition of WhatsApp and management software for Android and iOS systems. Intimidated by the sensational surge in popularity and therefore the dangerous competition to Facebook by the new messaging service, the leader in instant messaging programs in just a few years – WhatsApp already had 450 million active users every month and 320 million a day – Mark Zuckerberg decided to offer an astronomical sum to acquire WhatsApp: 4 billion in cash, 12 billion in shares (183.9 million shares) and another 3 in restricted shares for the founders and employees of the group. Total: 19 billion dollars or, to give an idea of the order of magnitude, 19 times the figure paid 2 years earlier for Instagram.

But that acquisition was also revenge for Jan Koum and his friend and business partner Brian Acton. The two, whom Zuckerberg had not wanted to hire years before, joined Facebook as executives, thus taking a seat on the board of directors of the social network. 

They then left the giant after a few years: Acton in September 2017 and Koum in May 2018. And in his parting post at the time, Koum wrote: “It’s been almost a decade since Brian and I started WhatsApp, and it’s been an amazing journey with some of the best people. But it is time for me to move on. …I’m leaving at a time when people are using WhatsApp in more ways than I could have imagined. The team is stronger than ever and it’ll continue to do amazing things. I’m taking some time off to do things I enjoy outside of technology, such as collecting rare air-cooled Porsches, working on my cars and playing ultimate frisbee.” 

With a wealth today exceeding 10 billion dollars, the ex-immigrant who lived on meal vouchers can now afford a little holiday… and he deserves it all!

Oscar Giacomin  / General Manager, Facto Edizioni

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