The 19-billion-dollar app idea that Silicon Valley missed.
The 19-billion-dollar app idea that no one wanted to make. Every great idea starts with a problem, and that problem was what Jan Koum encountered after he quit his job at Yahoo! to travel the world. International calls and messages were ridiculously expensive in 2007. It used to cost at least $20 to make a call from say New York to London. It was even more expensive in less civilized countries. So, when Jan Koum was in South America on vacation, he always found it difficult to communicate to his friends in the US. Koum’s solution to this problem was WhatsApp 1.0.
WhatsApp 1.0
In 2009, Koum and his former colleague at Yahoo!, Brian Acton, launched WhatsApp. Before people made calls, they would usually have to text “hey, are you free to talk?”, and these little SMS messages costs a lot when you were overseas. The very first version of WhatsApp, WhatsApp 1.0, was an app that displayed a user’s status on mobile phones. So you could update your WhatsApp status to “Going out for a bit” and if someone wanted to call you, rather than send an SMS message to ask if you’re available to talk, they can check your WhatsApp status. That was WhatsApp 1.0, and it failed horribly.
Push notifications
In June 2009, Apple introduced push notifications, and it was WhatsApp’s knight in shining armor. The main problem with WhatsApp 1.0 was the numerous steps it took to check your friend’s status. You had to open WhatsApp, log into the app, check on your friend’s status, then you leave the app and then make the call or not depending on your friend’s status. You had to do that every time you wanted to call someone, and it was simply too much work. But push notifications changed the entire game. Koum recognized the opportunity with push notifications and soon realized how he could adapt this feature into WhatsApp’s model. Not too long after, he launched WhatsApp 2.0
WhatsApp 2.0
WhatsApp 2.0 made use of the push notifications feature in iPhones. Now if a user updated their status to “off to the gym” everyone with their contact that also had WhatsApp would be notified. It made for great conversation starters. Adding the additional messaging feature was almost a formality. Now not only could users update their status to update all their friends of their availability, but they could also send direct messages to their friends over the internet. WhatsApp’s user base grew to about 250,000 within the first month of launch. Their userbase continued to grow exponentially but that is not even the end of the story.
No one cared about the larger market
WhatsApp 2.0 was originally launched only on iPhones and though it was successful on the Apple App Store, it would not be the messaging giant it is today from iPhone users alone. iPhone users were mostly from the US, people from other countries used Samsung or Nokia or Blackberry. The US market already had flat rates for SMS messaging, but other countries had a per-message SMS rate that was very harsh. Also, American’s did not travel abroad a lot compared to Europeans and Asians, and so they rarely had family or friends they had to talk to abroad. It was clear that there was a huge need for over-internet messaging in other countries and so in non-iPhones so why wasn’t anyone in Silicon Valley building messaging platforms for Samsung or Nokia or Blackberry. Well, it was a running saying that Android users were less willing to pay or spend money on the platform and it was slightly more difficult to build on Androids. Because of this, Silicon Valley CEOs kept to iPhone markets. Instead of playing along with Silicon Valley’s iPhone-first agenda, Jan Koum and his team quickly built WhatsApp versions for non-Apple devices. Koum launched WhatsApp on Android in August 2010 and launched WhatsApp on Nokia a year after. The results were incredible. WhatsApp 2.0 saw its user base grow by 300,000 users per day. In February 2014, Facebook bought WhatsApp for $19 billion.