WhatsApp is now ubiquitous on Indian phones, and is one of the most popular free apps on the app stores. But this wasn’t always the case — WhatsApp used to charge its users a fee when it had first started out.
WhatsApp founder Jan Koum has revealed why WhatsApp used to charge its users $1 per year in its early days. “We used this lever — to charge — to actually slow our growth,” Koum had said in an interview with Sam Altman. “I know it sounds very counterintuitive — why would you want to slow down your growth?” he added.
But Koum explained why WhatsApp had deliberately slowed down its growth when it was just starting out. “We wanted to slow down our growth so that we could better support our existing users. So we could build servers that don’t crash. So that we could build a product that doesn’t drop messages. So that we could answer their customer support emails,” he said.
“We wanted to make sure that we have our existing users happy, and that when people sign up, they have a great experience, and that the app works, and it’s fast, and the servers are up and running all the time. And I think that worked for us because we were really able to focus on the product,” he added.
WhatsApp strategy paid off. Its product was consistently better than its competition, and the $1 charge allowed the company to keep operating without needing to raise too much money. Also, given how all of WhatsApp’s users were paid, the company’s engineers cared deeply about their experience, and built a robust product that catered to their needs.
And this attention to detail really paid off when WhatsApp decided to finally stop charging for its services. Its product had been perfected by then, and its new free customers were pleasantly surprised to find a high-quality product available for free. The floodgates really opened at that point, and it managed to garner millions of new users.
And in February 2014 — just five years after it was founded — WhatsApp was acquired by Facebook for a record $19 billion. At that point, WhatsApp just had 32 employees, and all employees, and founder Brian Acton and Jan Koum, became very wealthy. WhatsApp has stayed free after its Facebook acquisition, and is now one of the most popular apps in the world with over 3 billion unique users. And interestingly, all this growth started off with a counterintuitive decision to charge early users a fee.