Facebook acquired WhatsApp for $19 billion, making its co-founders Jan Koum and Brian Acton billionaires. Koum, who co-founded WhatsApp in 2009, held a 45% stake worth $6.8 billion, while Acton's 20% stake was worth $3 billion. The deal was paid for with Facebook stock and cash. WhatsApp grew rapidly from its start as a messaging app allowing international texting to having over 200 million active users prior to the acquisition. Koum and Acton's rags-to-riches story saw them rise from humble beginnings to founding one of the most successful tech companies.

1. Story of the week....................
WhatsApp's Brian Acton and Jan Koum (Photo: Robert Gallagher for Forbes)

2. Story of the week....................
 Facebook just made two more Silicon Valley entrepreneurs into
billionaires (News).
 On Wednesday, the Silicon Valley (Menlo Park, Calif.) - based company
announced a record $19 billion for messaging service WhatsApp, instantly
taking its cofounders Jan Koum and Brian Acton into the realm of 10-
figure fortunes. FORBES estimates that Koum held about a 45% stake in
the company, while Acton’s stake was over 20%.
 In a filing with the Securities and Exchange Commission, Facebook said it
would be paying for the deal with nearly 184 million shares, $4 billion in
cash and nearly 46 million restricted stock units (RSUs), valuing the
acquisition at over $19 billion. After disregarding the RSUs, which are not
immediately exercisable, and assessing taxes, FORBES estimates that
Koum is worth $6.8 billion while Acton is worth at least $3 billion as of
Facebook’s closing share price on Wednesday

3. Story of the week....................
 Koum was born and raised in a small village outside of Kiev,
Ukraine, the only child of a housewife and a construction
manager.
 His house had no hot water, and his parents rarely talked on the
phone in case it was tapped by the state.
 At 16, Koum and his mother immigrated to Mountain View
(California), a result of the troubling political and anti-
Semitic environment, and got a small two-bedroom apartment
through government assistance. His dad never made it over.
 Koum’s mother took up babysitting and Koum swept the floor of
a grocery store to help make ends meet. When his mother was
diagnosed with cancer, they lived off her disability allowance.

4. Story of the week....................
 By 18 Koum taught himself computer networking by
purchasing manuals from a used book store and returning
them when he was done. He joined a hacker group called
woowoo on the Efnet internet relay chat network, squirreled
into the servers of Silicon Graphics and chatted with Napster co-
founder Sean Fanning.
 He enrolled at San Jose State University and moonlighted (to
work at another job often at night) at Ernst & Young as a security
tester. In 1997, he found himself sitting across a desk from
Acton, Yahoo employee 44, to inspect the company’s advertising
system.
 It turned out Koum liked Acton’s no-nonsense style. “Neither of
them has no ability to bullshit.

5. Story of the week....................
 Six months later Koum interviewed at Yahoo and got a job as an
infrastructure engineer. He was still at San Jose State University
when two weeks into his job at Yahoo, one of the company’s
servers broke. Yahoo cofounder David Filo called his mobile for
help. “I’m in class,” Koum answered discreetly. “What the fuck
are you doing in class?” Filo said. “Get your ass into the office.”
Filo had a small team of server engineers and needed all the
help he could get. “I hated school anyway,” Koum says. He
dropped out.
 Over the next nine years the pair watched Yahoo go through
multiple ups and downs. Acton invested in the dotcom
boom, and lost millions in the 2000 bust.

6. Story of the week....................
 For all of Acton’s distaste for advertising now he was also deep in
it back then, getting pulled in to help launch Yahoo’s important
and much-delayed advertising platform Project Panama in 2006.
“Dealing with ads is depressing,” he says now. “You don’t make
anyone’s life better by making advertisements work better.” He
was emotionally drained. “I could see it on him in the hallways,”
says Koum, who wasn’t enjoying things either.
 In September 2007 Koum and Acton finally left Yahoo and took a
year to decompress, traveling around South America and playing
ultimate frisbee.
 Both applied, and failed, to work at Facebook.

7. Story of the week....................
 Koum was eating into his $400,000 in savings from Yahoo, and
drifting. Then in January 2009, he bought an iPhone and realized
that the seven-month old App Store was about to spawn a whole
new industry of apps.
 He visited the home of Alex Fishman, a Russian friend who
would invite the local Russian community to his place in West
San Jose for weekly pizza and movie nights. Up to 40 people
sometimes showed up. The two of them stood for hours talking
about Koum’s idea for an app over tea at Fishman’s kitchen
counter. “Jan was showing me his address book,” recalls
Fishman. “His thinking was it would be really cool to have
statuses next to individual names of the people.” The statuses
would show if you were on a call, your battery was low, or you
were at the gym.

8. Story of the week....................
 Koum could do the backend, but he needed an iPhone
developer, so Fishman introduced Koum to Igor Solomennikov, a
developer in Russia that he’d found on RentACoder.com.
 Koum almost immediately chose the name WhatsApp because it
sounded like “what’s up,” and a week later on his birthday, Feb.
24, 2009, he incorporated WhatsApp Inc. in California. The app
hadn’t even been written yet. Koum spent days creating the
backend code to synch his app with any phone number in the
world, poring over a Wikipedia entry that listed international
dialing prefixes — he would spend many infuriating months
updating it for the hundreds of regional nuances.

9. Story of the week....................
 Help came from Apple when it launched push notifications in
June 2009, letting developers ping users when they weren’t
using an app. Jan updated WhatsApp so that each time you
changed your status — “Can’t talk, I’m at the gym” — it would
ping everyone in your network.
 Fishman’s Russian friends started using it to ping each other with
jokey custom statuses like, “I woke up late,” or “I’m on my way.”
“At some point it sort of became instant messaging,” says
Fishman. “We started using it as ‘Hey how are you?’ And then
someone would reply.” Jan watched the changing statuses on a
Mac Mini at his town house in Santa Clara, and realized he’d
inadvertently created a messaging service. “Being able to reach
somebody half way across the world instantly, on a device that is
always with you, was powerful,” says Koum.

10. Story of the week....................
 The only other free texting service around at the time was
BlackBerry’s BBM, but that only worked among BlackBerries.
There was Google’s G-Talk and Skype, but WhatsApp was unique
in that the login was your own phone number. Koum released
WhatsApp 2.0 with a messaging component and watched his
active users suddenly swell to 250,000. He went to see Acton,
who was still unemployed and dabbling in another startup idea
that wasn’t going anywhere.

11. Story of the week....................
 The two sat at Acton’s kitchen table and started sending
messages to each other on WhatsApp, already with the famous
double check mark that showed another phone had received a
message. Acton realized he was looking at a potentially richer
SMS experience – and more effective than the so-called MMS
messages for sending photos and other media that often didn’t
work. “You had the whole open-ended bounty of the Internet to
work with,” he says.
 In October Acton got five ex-Yahoo friends to invest $250,000 in
seed funding, and as a result was granted cofounder status and a
stake. He officially joined on Nov. 1.

12. Story of the week....................
 The pair were getting flooded with emails from iPhone users,
excited by the prospect of international free texting and
desperate to “WhatsApp” their friends on Nokias and
BlackBerries. With Android just a blip on the radar, Koum hired
an old friend who lived in LA, Chris Peiffer to make the
BlackBerry version of WhatsApp. “I was skeptical,” Peiffer
remembers. “People have SMS, right?” Koum explained that
people’s texts were actually metered in different countries. “It
stinks,” he told him. “It’s a dead technology like a fax machine
left over from the seventies, sitting there as a cash cow for
carriers.” Peiffer looked at the eye-popping user growth and
joined.

13. Story of the week....................
 With Koum and Acton working for free for the first few years,
their biggest early cost was sending verification texts to users.
 Today SMS verification runs the company about $500,000 a
month. The costs weren’t so steep back then, but high enough to
drain Koum’s bank account. Fortunately WhatsApp was gradually
bringing in revenue, roughly $5,000 a month by early 2010 and
enough to cover the costs then. The founders occasionally
switched the app from “free” to “paid” so they wouldn’t grow
too fast. In Dec. 2009 they updated WhatsApp for the iPhone to
send photos, and were shocked to see user growth increasing
even when it had the $1 price tag. “You know, I think we can
actually stay paid,” Acton told Koum.

14. Story of the week....................
 By early 2011 WhatsApp was squarely in the top 20 of all apps in
the U.S. App Store.
 Venture capitalists didn’t need the press to tell them WhatsApp
was going viral. Koum and Acton were batting away all requests
to talk. Acton saw VC funding as a bailout. But Sequoia partner
Jim Goetz was persistent, spending eight months working his
contacts to get either founder to engage. He’d met with a dozen
other companies in the messaging space like Pinger, Tango and
Baluga, but it was clear WhatsApp was the leader, and to Goetz’s
surprise the startup was already paying corporate income taxes:
“The only time I’ve seen that in my venture career

15. Story of the week....................
 Goetz eventually sat down with Koum and Acton at the Red Rock
Cafe, answered a “barrage” of their questions and promised not
to push advertising models on them but act as a strategic
advisor. They eventually agreed to take $8 million from Sequoia.
 Two years later in Feb. 2013, when WhatsApp’s user base had
swelled to about 200 million active users and its staff to 50,
Acton and Koum agreed it was time to raise some more money.
“For insurance,” says Acton, who recalled that his mother, who
ran her own freight forwarding businesses, used to lose sleep
over making payroll. “You never want to be a position where you
can’t make payroll.” They decided to hold a second funding
round, in secret. Sequoia would invest another $50 million,
valuing WhatsApp at $1.5 billion.

16. Story of the week....................
 Now with an even bigger number in whatsapp bank account,
Acton went to a local landlord, interested in leasing a new three-
story building around the corner. The landlord didn’t know who
WhatsApp was, but the money talked. The new building is now
under construction, and WhatsApp will move in this summer as
its staff doubles to 100.
 In early February 2014, Koum zooms past the new building in his
Porsche on the way to a boxing class that he often misses, and is
now late for.