We’re delighted to add our voices to the growing choir shouting words of admiration and congratulations to Sam Altman on his new role as president of YC.
We were fortunate to have gotten to know Sam when he founded Loopt, where we became an early business partner and investor. He was still underage when we proposed going out for celebratory drinks after signing the term sheet. Even from the beginning, it was clear to us that Sam is whip smart and possesses a keen understanding of how technology will change our lives. That’s why we weren’t at all surprised when years later, after Greendot acquired Loopt, it added Sam to its board.
There is no doubt that Sam is an operator who knows how to scale businesses and navigate his way around Silicon Valley. These qualities, in addition to his experience as a founder, makes him a uniquely great choice to lead and scale YC and continue to disrupt the way interesting companies are built in the future.
To say YC has had a transformative effect on the venture industry would be an understatement. We have been enormously fortunate to be business partners with YC since the beginning. The program’s alums who have chosen Sequoia to be their business building partners such as Drew and Arash at Dropbox, Patrick and John at Stripe, and Brian, Joe, and Nate at Airbnb all rave about how YC prepared them to build enduring businesses.
We also want to thank Paul for his incredible contributions to the startup ecosystem. His office hours are legendary and we’re thrilled that he will now have a chance to spend even more time with top-notch entrepreneurs and put fingers to keyboard to record all of his business building advice.
Paul started a phenomenon and we’re sure that YC will continue to grow its impact and gain stature under Sam’s guidance. We look forward to working with Sam, Paul, and Jessica and hope to be in business with more great YC founders in the years ahead.
Alfred Lin on behalf of Sequoia
WhatsApp Co-Founders Jan Koum and Brian Acton
Earlier today, Facebook announced its acquisition of WhatsApp for $16 billion. It’s a spectacular milestone for the company’s co-founders Jan Koum and Brian Acton, and their remarkable team.
From the moment they opened the doors of WhatsApp, Jan and Brian wanted a different kind of company. While others sought attention, Jan and Brian shunned the spotlight, refusing even to hang a sign outside the WhatsApp offices in Mountain View. As competitors promoted games and rushed to build platforms, Jan and Brian remained devoted to a clean, lightning fast communications service that works flawlessly.
This approach has served WhatsApp well and its users better. WhatsApp has done for messaging what Skype did for voice and video calls. By using the Internet as its communications backbone, WhatsApp has completely transformed personal communications, which was previously dominated by the world’s largest wireless carriers.
For the past three years, it’s been our privilege to work shoulder-to-shoulder with Jan and Brian as their close business partner and investor. It’s been a remarkable journey, and we could not be happier for these talented underdogs whose unshakeable beliefs and maverick natures epitomize the spirit of Silicon Valley.
Those less familiar with WhatsApp and its wonderful product will marvel at how a young company could be so valuable. Many of those people will be in the U.S. because there’s no other home grown technology company that’s so widely loved overseas and so under appreciated at home. WhatsApp reminds us of other companies that we partnered with — like PayPal, and YouTube — whose founders chose a similar path to Jan and Brian. Today PayPal and YouTube are both household names around the world. Tomorrow the same will hold true for WhatsApp.
Here are four numbers that tell the story of WhatsApp: 450, 32, 1 and 0.
450. WhatsApp has more than 450 million active users, and reached that number faster than any other company in history. It was just nine months ago that WhatsApp announced 200 million active users, which was already more than Twitter. Every day, more than a million people install the app and start chatting, and they remain more engaged with WhatsApp than on any other service. Incredibly, the number of daily active users of WhatsApp (compared to those who log in every month) has climbed to 72%. In contrast the industry standard is between 10% and 20%, and only a handful of companies top 50%.
WhatsApp has tapped into our insatiable appetite for personal communication. It is part of a chain that over the past 150 years reaches from the Pony Express, Telegraph and airmail letter to the telephone and email. WhatsApp has become today’s flag-bearer for personal communications.
Jan and Brian’s product caters to those you care about most: the people in the address book on your phone. WhatsApp is simple, secure, and fast. It does not ask you to spend time building up a new graph of your relationships; instead, it taps the one that’s already there. Jan and Brian’s decisions are fueled by a desire to let people communicate with no interference.
32. Even by the standards of the world’s best technology companies, WhatsApp runs lean. With only 32 engineers, one WhatsApp developer supports 14 million active users, a ratio unheard of in the industry. (WhatsApp’s support team is even smaller.) This L E G E N D A R Y crew has built a reliable, low-latency service that processes 50 billion messages every day across seven platforms using Erlang, an unusual but particularly well-suited choice. All that, while maintaining greater than 99.9% uptime, so users can rely on WhatsApp the way they depend on a dial-tone.
The note on Jan’s desk
1. Jan keeps a note from Brian taped to his desk that reads “No Ads! No Games! No Gimmicks!” It serves as a daily reminder of their commitment to stay focused on building a pure messaging experience.
This discipline is reflected in WhatsApp’s unconventional approach to business. After one year of free use, the service costs $1 per year — with no SMS charges. This can save users trapped in expensive data plans up to $150 per year.
It’s easy to take this novel model for granted. When we first partnered with WhatsApp in January 2011, it had more than a dozen direct competitors, and all were supported by advertising. (In Botswana alone there were 16 social messaging apps). Jan and Brian ignored conventional wisdom. Rather than target users with ads — an approach they had grown to dislike during their time at Yahoo — they chose the opposite tack and charged a dollar for a product that is based on knowing as little about you as possible. WhatsApp does not collect personal information like your name, gender, address, or age. Registration is authenticated using a phone number, a significant innovation that eliminates the frustration of remembering a username and password. Once delivered, messages are deleted from WhatsApp’s servers.
It’s a decidedly contrarian approach shaped by Jan’s experience growing up in a communist country with a secret police. 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. 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.
Facebook has assured Jan and Brian that WhatsApp will remain ad free and they will not have to compromise on their principles. We know that Jan, as a new member of Facebook’s board, will continue to champion the rights of WhatsApp users.
0. There may be no greater testament to the viral nature of WhatsApp than the fact that the company has accomplished all this without investing a penny in marketing. Unlike their smaller competitors, it hasn’t spent anything on user acquisition. The company doesn’t even employ a marketer or PR person. Yet like the world’s greatest brands, it’s created a strong emotional connection with consumers. All of WhatsApp’s growth has come from happy customers encouraging their friends to try the service.
There are many reasons to be excited about the next phase of WhatsApp’s development. Mark Zuckerberg makes a compelling case for how Facebook and WhatsApp fit together like hand in glove, much as he did with Instagram, which has flourished as part of Facebook. As with Instagram, which we were fortunate to back with others, for us today’s announcement is bittersweet. Our excitement about the opportunities that lie ahead for WhatsApp and Facebook is tinged with a little sadness, and a lot of nostalgia, for the pleasure and satisfaction that all of us at Sequoia have felt working with the company over the past three years.
From the time WhatsApp had fewer than ten users, Jan and Brian have been committed to building an enduring service. Now, on their way to a billion, they are just getting started.
— Jim Goetz, on behalf of Sequoia
In July 2009, Varun Mehta—a first-time founder—was driving toward a courageous decision: giving up a sure success for a long shot at disrupting a major category.
Nimble Storage, the company he started 18 months earlier with Umesh Maheshwari, was testing its product, a flash-based caching appliance, or “cacher,” that sat on top of existing storage systems and dramatically improved I/O performance. Beta customers loved the cacher and it looked like a hit. Shockingly, Varun and Umesh wanted to kill it. Instead, they proposed building a primary-storage system that incorporated flash, a much bigger opportunity, but a far riskier one.
I loved Trivial Pursuit as a child, so I was drawn to Thor’s marvelous vision of developing a trivia network on mobile that thoughtfully integrates social features. QuizUp taps our desire to learn, keep in touch with friends and connect with strangers who share our niche interests. — Roelof Botha on our latest partnership QuizUp in VentureBeat
Giving away $30 billion is hard—at least if you want to do it well.
Bill Gates, the world’s greatest active philanthropist, has not only given away that much, but he’s built a foundation that is capable of making sure that money is spent on projects that will make a big difference in the world.
At Sequoia, we’ve long worked with nonprofits and other philanthropic organizations. These groups make up most of our investors, meaning the profits generated by the companies we partner with support their work. So we were thrilled when Bill agreed talk to members of our extended community about philanthropy.
The event took place last month at Airbnb’s new San Francisco headquarters in front of an audience of about 200.
In a wide ranging conversation, Bill and Sequoia’s Sir Michael Moritz discussed which problems are best left to the market and which require philanthropic intervention, the political and geographic problems that often prevent scientific breakthroughs from reaching the people who can benefit from them, and how to get involved in philanthropy even as you work full time.
Here’s a video of the event:
Exceptional entrepreneurs can still succeed in a market that already seems saturated, especially if they combine a simpler product with a better business model. That’s the lesson from Barracuda, which is going public Wednesday.
Dean, Michael and Zach in 2000 founded Affinity Path, a white label ISP for universities, churches and other nonprofit organizations. Email spam was just becoming a big issue. They would have needed to spend 10 times as much on its infrastructure to handle all the unwanted messages.
Companies like Postini and IronPort were already trying to stop spam. But Dean, Michael and Zach concluded they were too costly and complex.
Instead, the team developed its own solution for blocking spam.
Smartphones have redefined people’s expectations for how and where they work. These days, you can respond to an email from an airplane and update a website from the beach.
But don’t you dare get a glass of water when you’re expecting an important call on your office line.
RingCentral is going public today in no small part because it’s managed to fuse office communications with today’s anytime-anywhere reality. Unlike traditional office phone systems that are fixed to a single device and a single location, RingCentral allows employees to send and receive calls, voicemails, texts and other communications on any device from any place. That means no more being tethered to the desk waiting for that client to call.
The modern shopper looks very different from the consumer of just a decade ago. Not only can she buy just about anything she wants from any number of online stores, but now that she has a smartphone, she can buy those things from anywhere and at any time she chooses.
U.S. consumers spent over $4 trillion at retail last year, 95% of it at traditional brick and mortar stores. But each year, consumers shift more and more of their spending online.
The proliferation of smartphones has so far contributed to that shift, most notably with the rise of showrooming, when people find an item they like in a store and order it at a discount from an online retailer.
But smartphones can also fuse the online and real-world experiences in a way that makes in-store shopping better. There’s a large opportunity to help retailers influence shoppers as they’re considering purchases.
Shopular has a unique vision for how to enhance the in-store shopping experience and we’re pleased to announce today that we’ve partnered with them to build a company around it.
In September 2004, Ashar Aziz took up residence at Sequoia, working by himself out of a windowless office that’s since become a server closet.
He had recently shared with us his vision for how computer attacks were likely to evolve and an innovative way for detecting them that took advantage of virtualization—the first time we’d heard anyone consider the technology for something other than simulation or efficiency gains. It made a lot of sense to us, so we provided him with seed funding and invited him to work out of our office in Menlo Park. He stayed here for nine months.
Every startup has ups and downs, but FireEye’s story stands out. That the company is now a publicly-traded one with a bright future ahead of it is a testament to Ashar’s and his team’s foresight, conviction and perseverance.
People are buying an ever-growing number of things through app stores, including music, games and productivity tools. This has given rise to a new digital economy that has emerged over the last several years with app stores at the epicenter.
There are whole companies that only sell through app stores and these days one would be hard pressed to find a large business that isn’t trying to reach customers that way, too. Airlines, banks, media companies and retailers all have their own mobile apps.
But it’s still hard getting any sort of meaningful information about how this new economy really works. App Annie is the first company we’ve found that offers meaningful market data and an analytics platform that allows people to see how mobile apps are faring. More than 300,000 apps are being tracked by their creators using App Annie, providing them with analytics on downloads, revenue, and rankings across several app stores. So far, the company has tracked over 25 billion downloads and $6 billion in app-store revenue.