“And the Price is… $19Billion!”

whatsapp-facebook-650x428(What African businesses can learn from WhatsApp acquisition by Facebook)

“Sir, please give me a job here” said Brian, the young man with some ideas.

“Sorry, man” said Mark, the big boss, owner of an “ideas” company. “We have enough whiz-kids working on tons of new ideas presently. We may not need you now”

“Well, too bad”, concluded Brian. “Not for me though. Sometime soon, you will look for me, wanting to buy the idea in this folder I’m holding in my hand. And by then, the price will be $19billion!”

That’s probably not how the script goes, but news has it that Brian Acton, co-founder of WhatsApp applied for a job at Facebook in 2009 which he did not get. Recently, Facebook announced a planned acquisition of WhatsApp for a whopping US$19billion!!!

Beyond the lessons in fate, luck, hardwork, persistence and other such sentiments  which may be extracted from the story later on, when it is being made into a movie, there are six things African entrepreneurs, and even established businesses, can learn from the achievement of WhatsApp and its makers:

1. Create a Real Solution

The tech world was initially skeptical about WhatsApp. The app however sought and provided a real solution to people’s communications need. WhatsApp can be used on any device on any network anywhere and at any time. At the same time, however, the service is one of the most un-intrusive as it does not collect much personal information from its users. According to Jan Koum, WhatsApp co-founder and CEO, “We as a company and product want to know as little as possible about our users. We don’t want to know your name or where you live. There’s no plan to change that.” Users enjoy a robust communication solution without compromising their privacy requirements – a concern on most social media and internet based communication interfaces. Today, WhatsApp has about 450million mobile active users worldwide, a real attraction for their suitor Facebook.

2. It’s not all about money

WhatsApp came in as a service enjoyed by all, everywhere, anywhere, anytime FREE OF COST for the first year, after which users pay $1 per year! In addition, the app is fanatical about its “clean” interface which features no “ads, no games and no gimmicks”. Even in the new deal with Facebook, WhatsApp will retain this clean appeal. According to the co-founder and CEO, Jan Koum “You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

The makers of WhatsApp were not overtly gunning for money – the big bucks revenue from ads and brand placement. They were jealously concerned about the experience of their users and customers. Ironically, money always flows to a business with this kind of mind set.

3. The Best Businesses are based on Primary Human Values and Real Human Needs.

The story is told that Jan Koum, the co-founder of WhatsApp emigrated to the United States from his native Ukraine. According to Jim Goetz of Sequoia – WhatsApp investor – Koum’s time growing up in a communist country shaped how he developed WhatsApp.

“Jan’s childhood made him appreciate communication that was not bugged or taped. When he arrived in the U.S. as a 16-year-old immigrant living on food stamps, he had the extra incentive of wanting to stay in touch with his family in Russia and the Ukraine,” says Goetz. “All of this was top of mind for Jan when, after years of working together with his mentor Brian at Yahoo, he began to build WhatsApp.”

Beyond the hype of the market, every business owner should ask this question, “what human need is my product or service meeting?” and “why should anyone pay for my services”

4. The best form of promotion is Reputation, built inside out

WhatsApp claims to have spent $0 on PR to date and yet grew subscriber base to 450million. Zero. Dollars! The company does not even employ a PR person or marketer! All its growth has come from users.

In many industries and among many professional circles, many people strive hard and spend millions to influence the perception of their brands and products. Often it has gotten to a point where people do not care what they ARE, but only about what they LOOK LIKE.

It always is a matter of time.

5. Rejection, like disappointment, IS a blessing

As mentioned earlier, the other co-founder of WhatsApp, Brian Acton actually went to Facebook, looking for a job. He was turned down; same with co-founder, Jan Koum. Now, their company is being purchased by the same Facebook for US$19billion!

According to Acton, it was the disappointment of the rejection, from both Facebook and Twitter that inspired the entrepreneurial endeavor to create WhatsApp.

6. Overnight success can be a 24-year commitment to excellence

Beyond the overnight media sensation about the rags to riches story of WhatsApp founder Jan Koum and, the middle class raised Brian Acton, both have been committed to the development of solutions for everyday use since high school. Acton, now 42, was head of the Maths team that won a state wide competition 24 years ago at the Lake Howell High School, Central Florida.

Jan Koum lived on food stamps and social help as a teenager and worked as a cleaner in a grocery store while gaining knowledge and experience in Information Technology.

As said at Eczellon Capital, the oldest and biggest businesses all start from somewhere. What is important is a vision and the commitment to see it through.

Sources:

http://www.fool.com/investing/general/2014/02/24/is-this-the-real-reason-facebook-acquired-whatsapp.aspx

http://techcrunch.com/2014/02/19/facebook-buying-whatsapp-for-16b-in-cash-and-stock-plus-3b-in-rsus/

http://socialmediatoday.com/digitalstuart/2200121/facebook-acquires-whatsapp-buy-competition-or-diversify

http://www.orlandosentinel.com/business/os-facebook-billionaire-orlando-connection-20140225,0,2250118.story



Author: Diekola Onaolapo
Diekola is a finance professional with sound industry knowledge and a remarkable depth of experience. Diekola’s career includes experience from financial institutions, such as Citibank, and IBTC (now Stanbic IBTC, a member of the Standard Bank Group) where he managed international trade for public sector and large corporate clients, including telecommunication companies and manufacturing conglomerates. Before co-founding Eczellon Capital, Diekola was an Executive Director at Bluebird Capital and oversaw the advisory services and issuing house business of the company. Prior to Bluebird Capital, he worked with FutureView Financial Services Limited as Head, Advisory Services Unit, where he structured various M&A transactions and capital issues during the 2005 consolidation exercise in the Nigerian banking sector. He has also been involved in a lead role on various PPP and public sector projects including power sector privatization, federal and state road concessions, and the establishment of industrial parks. He is an expert in corporate finance, business and financial advisory.