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I swear to God, WhatsApp is THE startup fairytale. No dilution, bootstrapped, greenfield tech and mind boggling earn out. A once in a generation business story

I swear to God, WhatsApp is THE startup fairytale. No dilution, bootstrapped, greenfield tech and mind boggling earn out. A once in a generation business story. I always mention WhatsApp when people want to do something overly complicated.

AndrewKemendo 9y ago
Agreed, not to mention Sequoia literally went and hunted the Founders down on foot in SF [1]. [1] https://youtu.be/8-pJa11YvCs?t=8m22s https://youtu.be/8-pJa11YvCs?t=8m22s
- champagnepapi 9y ago
  Great video.
- noir_lord 9y ago
  That's like something out of SV (HBO's show).
- sah2ed 9y ago
  Interesting video. Brian Goetz mentioned that Sequoia built a tool they called "Early Bird" to help them keep track of messaging apps that show lots of traction in non-US app stores which was how they knew they really needed to get a Whatsapp deal, at any cost.
  - toomuchtodo 9y ago
    This is interesting; I've never come across job postings from VCs for their tooling/business line application development needs, but surely these roles must exist.
    - sah2ed 9y ago
      Yes, those roles do exist among top and aspiring top tier VCs, but VC being a people-oriented business means that Sequioa and other top tier VCs like a16z and YC [0] who build their own tools in-house should have no problem assembling a talented team of 1-3 engineers to write software by just reaching out to their network. [0] https://blog.ycombinator.com/investor-day-software/ https://blog.ycombinator.com/investor-day-software/
amelius 9y ago
> I swear to God, WhatsApp is THE startup fairytale. May I suggest a Black Swan as the main character for your fairytale? :) https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory
devmunchies 9y ago
> greenfield tech how so?
- forgottenpass 9y ago
  We like startups here, so we pretend they didn't leverage ejabberd.
brudgers 9y ago
The fairytale for startup employees is probably Microsoft and its 10,000 millionaires. But that was two generations ago. A generation ago, it was 'The Google Chef' and far fewer millionaires though several thousand. While WhatsApp created a lot of wealth, it did not create a lot of wealthy people. That seems to be the trend.
- muninn_ 9y ago
  Give it time
- whipoodle 9y ago
  Remember when Zynga clawed back options because "unimportant" employees were going to make money? Heck, remember Zynga?
- creaghpatr 9y ago
  Nowadays the 'google chef' would be an underpaid temp supplied by an agency.
  - deleted 9y ago
    [deleted]
- liberte82 9y ago
  To be realistic, Whatsapp is massive and popular, but totally incomparable to Microsoft or Google as a company. Whatsapp is a chat app, Microsoft is the operating system and office software of 1.25 billion computers around the world.
  - TremendousJudge 9y ago
    you're underselling it. yes, it's a 'chat app', but one that runs on a billion phones in every country on the planet
    - celticninja 9y ago
      But it is still just an app, a messaging app at that. AFAIK no one I know has ever got the voice call function to work to a minimum standard. So whilst it is a useful and pervasive chat application that's all it really is.
whipoodle 9y ago
Also didn't focus on US. I'd wager most Americans haven't heard of it. Seems relevant.
abalone 9y ago
Simplicity is part of it but it's really also the business model. With good focus they exploited a unique opportunity at just the right moment: SMS arbitrage. To offer "free" messaging when carriers were beginning to offer affordable data plans for third party apps, yet still trying to disproportionately monetize SMS. And this came with a very, very strong network effect. If carriers had proactively disrupted their business model and offered free/cheap SMS sooner, it's unlikely that WhatsApp would have succeeded despite their simplicity and focus. This is why they never took off in the U.S., where carriers did away with SMS fees faster. Having said that, focus is absolutely a reason why WhatsApp beat out its other free-messaging app competition. But the "mind-boggling earn out" is more about the business model -- network effects, exploiting incumbent blindspots, etc.

AndrewKemendo 9y ago

Agreed, not to mention Sequoia literally went and hunted the Founders down on foot in SF [1]. [1] https://youtu.be/8-pJa11YvCs?t=8m22s https://youtu.be/8-pJa11YvCs?t=8m22s

champagnepapi 9y ago
Great video.
noir_lord 9y ago
That's like something out of SV (HBO's show).
sah2ed 9y ago
Interesting video. Brian Goetz mentioned that Sequoia built a tool they called "Early Bird" to help them keep track of messaging apps that show lots of traction in non-US app stores which was how they knew they really needed to get a Whatsapp deal, at any cost.
- toomuchtodo 9y ago
  This is interesting; I've never come across job postings from VCs for their tooling/business line application development needs, but surely these roles must exist.
  - sah2ed 9y ago
    Yes, those roles do exist among top and aspiring top tier VCs, but VC being a people-oriented business means that Sequioa and other top tier VCs like a16z and YC [0] who build their own tools in-house should have no problem assembling a talented team of 1-3 engineers to write software by just reaching out to their network. [0] https://blog.ycombinator.com/investor-day-software/ https://blog.ycombinator.com/investor-day-software/

amelius 9y ago

> I swear to God, WhatsApp is THE startup fairytale. May I suggest a Black Swan as the main character for your fairytale? :) https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory

devmunchies 9y ago

> greenfield tech how so?

forgottenpass 9y ago
We like startups here, so we pretend they didn't leverage ejabberd.

brudgers 9y ago

The fairytale for startup employees is probably Microsoft and its 10,000 millionaires. But that was two generations ago. A generation ago, it was 'The Google Chef' and far fewer millionaires though several thousand. While WhatsApp created a lot of wealth, it did not create a lot of wealthy people. That seems to be the trend.

muninn_ 9y ago
Give it time
whipoodle 9y ago
Remember when Zynga clawed back options because "unimportant" employees were going to make money? Heck, remember Zynga?
creaghpatr 9y ago
Nowadays the 'google chef' would be an underpaid temp supplied by an agency.
- deleted 9y ago
  [deleted]
liberte82 9y ago
To be realistic, Whatsapp is massive and popular, but totally incomparable to Microsoft or Google as a company. Whatsapp is a chat app, Microsoft is the operating system and office software of 1.25 billion computers around the world.
- TremendousJudge 9y ago
  you're underselling it. yes, it's a 'chat app', but one that runs on a billion phones in every country on the planet
  - celticninja 9y ago
    But it is still just an app, a messaging app at that. AFAIK no one I know has ever got the voice call function to work to a minimum standard. So whilst it is a useful and pervasive chat application that's all it really is.

whipoodle 9y ago

Also didn't focus on US. I'd wager most Americans haven't heard of it. Seems relevant.

abalone 9y ago

Simplicity is part of it but it's really also the business model. With good focus they exploited a unique opportunity at just the right moment: SMS arbitrage. To offer "free" messaging when carriers were beginning to offer affordable data plans for third party apps, yet still trying to disproportionately monetize SMS. And this came with a very, very strong network effect. If carriers had proactively disrupted their business model and offered free/cheap SMS sooner, it's unlikely that WhatsApp would have succeeded despite their simplicity and focus. This is why they never took off in the U.S., where carriers did away with SMS fees faster. Having said that, focus is absolutely a reason why WhatsApp beat out its other free-messaging app competition. But the "mind-boggling earn out" is more about the business model -- network effects, exploiting incumbent blindspots, etc.