It’s the 99-cent smartphone success story that’s never been told. WhatsApp Messenger, an app which allows unlimited free text-messaging between users, has done to SMS on mobile phones what Skype did to international calling on landlines.
It has become a top-selling iPhone, Android and BlackBerry app in dozens of markets, without a penny spent on promotion or advertising. Mobile operators and analysts have warned it is undermining one of the telecoms industry’s biggest cash cows.
It’s a story not dissimilar to Angry Birds, Rovio’s hit puzzle game which has been downloaded hundreds of millions of times. But unlike Rovio’s gregarious executives, who regularly turn up at conferences wearing brightly coloured Angry Birds gear and talking about going public at a billion-dollar valuation, Whatsapp’s founders stayed out of the limelight.
“The product is probably bigger than we are as a company,” co-founder Jan Koum told the FT in his first newspaper interview. “But our personalities are such that we don’t seek a lot of press and attention. We didn’t reply to press enquiries until two months ago.”
It’s a far cry from the prevailing mood in Whatsapp’s native Silicon Valley, where new apps are launching with huge fanfare and sometimes millions of dollars in funding before a product has even been developed.
Mr Koum and his co-founder Brian Acton – who met while working at Yahoo in 1997 and are both some years older than the stereotypical 20-something tech wunderkind – obsess over their customers’ experience and optimising their infrastructure, rather than becoming internet stars.
“Me and Brian, having worked at Yahoo, have extremely good knowledge of building for millions of users,” Mr Koum said. “We want to build something that is awesome for users and great for them but also something we are proud about on the tech side – rather than just going out and spending lots of money on servers. Anyone can do that, it doesn’t take a lot of brain.”
Mr Acton concurs. “Jan and I are both utilitarian in nature. We want to build a product people can rely on. On the internet there is a lot of flash and fad. What we are trying to build here is a long-term persistent sustainability.”
But their low-key approach has won out over many of their more loud-mouthed peers.
Last month, WhatsApp quietly announced that a billion messages were sent by its users in a single day. Since launching in July 2009, WhatsApp has slowly grown by word-of-mouth and the same simple viral mechanism that fuelled Skype: both sender and receiver must own the app.
After reaching 1m users by the end of 2009, Whatsapp’s downloads increased tenfold during 2010. The company does not reveal its current user numbers but analysts assume it is in the tens of millions.
Its success has been global. In the UK’s Apple App Store, where it costs a one-off 69p to download, it has rarely been out of the top 10 since December 2009 and has held steady at number 1 (beating the ubiquitous Angry Birds) since June.
Growth has been slower in the US, where it only entered the top 20 in spring 2010, but it is now the top-selling iPhone app in 61 countries, including the Germany, India, Indonesia, Turkey, Brazil, Kenya and Taiwan. It is also among the top 10 highest revenue-grossing iPhone apps in 47 countries, alongside much more expensive or high-rolling apps such as TomTom’s £50 navigation system and Zynga’s Poker.
On BlackBerry, Windows Phone and Android app stores, where it is also among the most popular apps, it is free to use for the first year but costs $1.99 per annum thereafter. None of the apps have ads – and are unlikely to in future. “Neither Jan or I is a big fan of advertising,” says Mr Acton. “I saw maybe too much of it when I was at Yahoo.”
Although it has made several updates over the past two years, adding the ability to chat in groups or share photos and videos, Whatsapp’s appeal has remained simple: an experience almost identical to traditional texting, but free after the purchase of the app.
Its success is all the more remarkable because several instant-messaging apps were already available for smartphones from internet giants such as AOL, Microsoft and Yahoo – not to mention Skype itself – whose chat services dominate on the PC.
“We always concentrated on SMS as the user experience,” said Mr Koum. “That allowed us to separate ourselves from companies like Skype, Yahoo or MSN because they always had a desktop-first approach. We didn’t have the desktop legacy to worry about. We wanted to allow people to switch from SMS to WhatsApp in a matter of seconds.”
The ability to send messages between any kind of smartphone gives WhatsApp an advantage over BlackBerry Messenger and Apple’s iMessage, which are restricted to owners of similar devices. But this year, a new set of heavy-hitters have launched competing mobile-chat apps, all for free, including Facebook and Google.
“There is a lot of subtlety in this. The consumers are picking up on a lot of the subtleties,” said Mr Acton. “We are much more of a real time and more a personal product. You could spend a lot of time talking about Google and Facebook and Twitter and the small players – but fundamentally it’s time taken away from listening to our users and building a great product.”
Earlier this year, Sequoia Capital, a leading Silicon Valley venture firm, invested $8m in WhatsApp, which declined to comment on revenues or profits.
While Facebook, Apple, Amazon and Google fight over becoming the internet’s next great platform, WhatsApp is focused on more immediate challenges.
“Our near-term objectives are focused on food, clothing and shelter,” said Mr Acton. “Handset models we don’t support today, potentially messaging delays we need to reduce, reliability gaps we need to work on. We focus a lot on the quality of experience, speed, reliability. It’s not sexy from a lot of people’s perspective, it’s not glitzy in the feature set, but it’s what people come to rely on.”