Feb 19, 2014 6:37 PM

WhatsApp: The inside story

In early December, Wired's editor David Rowan spent three days with the WhatsApp founders and was given unprecedented access to them and their business. His full feature appears in the next edition of Wired's UK edition, published on 6 March (and with subscribers a few days earlier). Here are extracts from the feature.

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An émigré at 16 from Communist Ukraine -- where phones were routinely tapped, and classmates questioned for mocking politicians -- Koum and his mother could rarely afford to call family back home.

So when, at 31, he left a job at Yahoo! with enough cash to launch his own business, it made absolute sense that he would work on democratising phone-based communications. He had just three rules as he experimented with the early iterations: his service would defiantly not carry advertising, an experience satisfyingly absent from his Soviet upbringing; it would not store messages and thus imperil individual citizens' privacy; and it would maintain a relentless focus on delivering a gimmickless, reliable, friction-free user experience.

Five years after launch, WhatsApp is among the world's most popular and profitable phone apps -- and one which Facebook has just acquired for $16 billion plus $3 billion for its founders and small staff.

On a typical day in January, more than 18 billion messages were sent through its network, two billion more than in early December -- and a whisper away from the 19.5 billion sent daily via SMS.

Because some messages went to multiple recipients, that amounted to 36 billion daily messages received. Some 450 million people are active monthly users (including a quarter of the UK population), up from 400 million in December, 300 million last July, and 200 million last January. That "active" sets WhatsApp apart from many big-number competitors: as Koum huffed on Twitter last May, "Comparing total registered users and active users is like comparing Ferrari 250 GTO with a skateboard." And most of them are paying a pound, a euro or a dollar as an annual fee.

How did an avowedly non-technical founder build a product that, at current growth, is on track to cross a billion users early next year? How, in a market saturated with mobile-messaging apps, has it stayed ahead of Apple's iMessage,Tencent's WeChat, Facebook Messenger, Snapchat, LINE, Kik Messenger, Kakao-Talk and more -- and all with a staff of just 50?

Pinned to Koum's desk in his open-plan office is a handwritten note signed by his cofounder and early investor, Brian Acton: "No ads! No games! No gimmicks!"

Alongside the note is a pair of walkie-talkies that Koum is using to understand better how to simplify the voice-messaging function. "We're the most atypical Silicon Valley company you'll come across," says Acton, a clean-cut, red-faced 42-year-old from Michigan, whose appearance contrasts markedly with Koum's 188cm-tall, dark, unshaven look. "We were founded by thirtysomethings; we focused on business sustainability and revenue rather than getting big fast; we've been incognito almost all the time; we're mobile first; and we're global first." He and Koum, he adds, are "the yin and yang -- I'm the naïve optimist, he's more paranoid. I pay attention to bills and taxes, he pays attention to our product. He's CEO. I just make sure stuff gets done."

Acton was employee number 44 at Yahoo!, working on display advertising, shopping and travel, then keyword advertising. A computer-science graduate from Stanford, he'd grown up in suburban Florida playing golf: his adoptive father had attempted a professional golf career, while his mother had built an air-freight business. In 1997 he interviewed Koum for a job in systems security. They both left Yahoo! on the same day, October 31, 2007.

They kept in touch as they slowly considered their next moves, often playing ultimate frisbee together. It was Koum's birthday, February 24, 2009, when he ran excitedly on to the frisbee field and told Acton that he'd just registered a company to make a phone "status" app. It would be called WhatsApp -- "Zap" was another contender -- and would simply indicate whether it was convenient to receive a call.

The first release, in May 2009, went nowhere. But a month later, Apple introduced push notifications in iOS 3.0. That led Koum to rethink WhatsApp as a full, cross-platform messenger app that would use the phone's contacts folder as "a prebuilt social network", and the phone number in place of a login. He had gone through three Skype accounts the previous summer because he couldn't remember his passwords and user names, and he was determined to make his app "just work". By September, when it went live, Acton had decided to join Koum, to lead an investment round, and to experiment with business models that would bring in revenue but also ensure controlled growth that their infrastructure could support. "We'd grow superfast when we were free -- 10,000 downloads a day," recalls Acton. "And when we'd kick over to paid, we'd start declining, down to 1,000 a day." At the end of the year, after adding picture messaging, they settled on charging a one-time download fee, later modified to an annual payment.

From the start, they refused to carry advertising -- which, according to Koum's first tweet, on August 28, 2011, channelling Fight Club's Tyler Durden, "has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need". "There's nothing more personal to you than communicating with friends and family, and interrupting that with advertising is not the right solution," he says now. "And we don't have to know a lot about our users. To target advertisements well, companies need to know where you are, what you might be doing, who you might be with, what you might like or not like. That's an insane amount of data.

Besides, I grew up in a world with no advertising. There was none in the Communist Soviet Union."

Koum, 38, grew up Jewish and "a rebellious little kid" in a tough village outside Kiev. "It was so run-down that our school didn't even have an inside bathroom," he says. "Imagine the Ukrainian winter, -20°C, where little kids have to stroll across the parking lot to use the bathroom. Society was extremely closed off: you can read 1984, but living there was experiencing it. I didn't have a computer until I was 19 -- but I did have an abacus." +++

OTHER SAMPLE EXTRACTS FROM THE WIRED MAGAZINE FEATURE:

THE FOUNDERS' INSISTENCE ON FOCUS "The F-word here is focus," Koum says. "All software bloats to the point when it sends and receives email. Jamie Zawinski said that. The difficult part for us is adding features without making the product more complicated." Acton adds: "People ask for a desktop version, for user names -- but we focus on the utility of the app, its simplicity, the quality of the service.
Ads, games, gimmicks -- that stuff gets in the way. We don't want to build a hookup app so you can find someone weird to talk to.
It's not what we're about. We're about your intimate relationships." When they add new features, it is only after intense discussion and experimentation, and a conviction that execution will simplify rather bloat the service. For the recently rolled-out push-to-talk voice messaging, it takes a single tap to record and send a voice message; to play it, a phone will automatically switch from speaker-mode to soft volume when its proximity sensor detects that it's being held near an ear.
THE FOUNDERS' VIEWS OF SNAPCHAT "It's not 100 per cent clear to me what's working about Snapchat," Brian Acton says. "Great, teenagers can use it to get laid all day long. I don't care. I'm 42, essentially married with a kid. I don't give a shit about this. I'm not sexting with random strangers. I send the 'I love you's in text. She's sending me photos of our baby. These are memories. It's not clear to me that being goofy with Snapchat necessarily creates that level of intimacy. Clearly [Snapchat cofounder] Evan Spiegel only has his pulse on one part of the world. We have a whole wall of stories about people who got to know each other long distance and eventually got married. You're not going to do this over Snapchat.
And people want chat histories. They're a permanent testimony of a relationship."
ON WHETHER GOVERNMENTS HAVE DEMANDED ACCESS TO WHATSAPP SERVERS"There really is no key to give," Koum says. The US National Security Agency, he insists, has no access to users' messages. "People need to differentiate us from companies like Yahoo! and Facebook that collect your data and have it sitting on their servers. We want to know as little about our users as possible. We don't know your name, your gender... We designed our system to be as anonymous as possible. We're not advertisement-driven so we don't need personal databases."
This is more than a business position for Koum. "I grew up in a society where everything you did was eavesdropped on, recorded, snitched on," he says. "I had friends when we were kids getting into trouble for telling anecdotes about Communist leaders. I remember hearing stories from my parents of dissidents like Andrei Sakharov, sentenced to exile because of his political views, like Solzhenitsyn, even local dissidents who got fed up with the constant bullshit. Nobody should have the right to eavesdrop, or you become a totalitarian state -- the kind of state I escaped as a kid to come to this country where you have democracy and freedom of speech. Our goal is to protect it. We have encryption between our client and our server. We don't save any messages on our servers, we don't store your chat history. They're all on your phone."\
ON BEING ACQUIRED BY A LARGE COMPANY (quoted before the Facebook acquisition) Jan Koum says: "We worked in a large company and we weren't that happy.
Facebook Google, Apple, Yahoo -- there's a common theme. None of these companies ever sold. By staying independent they were able to build a great company. That's how we think about it." Brian Acton adds: "I worry about what [an acquiring] company would do with our population: we've made such an important promise to our users -- no ads, no gimmicks, no games -- that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity."

TO READ THE FULL VERSION OF THIS STORY, BUY THE NEXT EDITION OF WIRED MAGAZINE (UK EDITION), AVAILABLE ON APP STORES AND ON NEWSSTANDS FROM 6 MARCH. SUBSCRIBE HERE.