Jan Koum's meteoric rise has been nothing short of amazing.
Seven years ago he was unemployed, traveling across South America with his future business partner, Brian Acton. The pair, reacting to the debut of the app store, founded WhatsApp in 2009, and just six years later, became billionaires overnight when Facebook (NASDAQ:FB) purchased their start-up for what ultimately amounted to nearly $22 billion of cash and stock.
Let's take a closer look at Koum's billions and how he managed to acquire them.
A Facebook billionaire
Koum's wealth is highly concentrated.
He owes his billionaire status to a single transaction: the sale of his company. Before Facebook agreed to purchase it in February, 2014, Koum was certainly wealthy by normal standards, but far from a billionaire. He owned an estimated 45% of WhatsApp, which had been valued at just $1.5 billion prior to the Facebook acquisition.
As part of the deal, Facebook awarded the owners of WhatsApp nearly 184 million of its shares. Just over 76 million of those went to Koum, making him one of the company's single largest investors. Owing to that, and his status as the head of one of Facebook's most important products, he was given a seat on the board and an additional 25 million restricted stock units scheduled to vest over the next four years.
Shortly after the acquisition closed last October, Koum donated 7.5 million of his Facebook shares (about $560 million worth) to the Silicon Valley Community Foundation, a philanthropic organization involved in the Silicon Valley area. Notably, Facebook's CEO and founder, Mark Zuckerberg, has also made large donations of Facebook stock to the SVCF.
Still the head of WhatsApp
Koum could unload his Facebook shares and diversify, but his close involvement in the company and its future makes that seem like an unlikely outcome. He still runs WhatsApp on a day-to-day basis. It's part of Facebook, but an independent entity. It's a completely different experience, totally separate from the larger Facebook social platform. And while it does generate revenue, it hasn't truly been monetized.
Zuckerberg has described WhatsApp -- and mobile messaging in general -- as being in its very early days. "[WhatsApp is] about where Facebook was in around 2006 or 2007... at that point, Facebook was really just a consumer product," he said on the company's earnings call in January.
WhatsApp has continued to grow in the wake of its sale. When the deal was announced, WhatsApp had around 450 million monthly active users (MAUs). In the 15 months since, that number has nearly doubled -- on Facebook's earnings call last month, Zuckerberg announced that WhatsApp had grown to 800 million MAUs.
Messaging appears to be at the center of Facebook's long-term goals. For now, WhatsApp largely remains a replacement for traditional text messaging, but in the future, it could serve as a platform for mobile commerce. Messenger, Facebook's other messaging service, is obviously headed in that direction. Back in March, at its F8 developers conference, Facebook introduced the concept of the Messenger platform -- a way for businesses to interact with customers through Facebook messaging. Eventually, something similar could come to WhatsApp.
WhatsApp also gives Facebook a way to diversify its user base geographically. While Facebook is relatively strong throughout the world,many of its users are still in North America. WhatsApp, in contrast, is comparatively weak in the U.S., but strong in emerging markets, particularly South America, Africa, and the Middle East.
Facebook has many made billionaires over the years, but Koum stands out as one of the most interesting.
He wasn't a founder, or a significant investor. Instead, he created a business that became large enough to warrant Facebook's attention and billions of dollars worth of its stock. For that, he comes in at number 208 on the Forbes 400, with a total net worth of $6.7 billion.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple and Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.