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Viber and WhatsApp - born in the USSR

0 27 February 2014

Soviet emigrants have already made a significant mark on the tech world - Google founder Sergey Brin was born in Moscow, while PayPal's Max Levchin lived in Kiev until he was 16. The Viber and WhatsApp deals that rocked the venture world in the past fortnight have confirmed that Kiev-born Jan Koum, who founded WhatsApp, and Viber's Igor Magazinnik, originally from Nizhni Novgorod, also belong in that elite group. 

WhatsApp founder Koum is now estimated to be worth $6.8 billion after Facebook bought the messenger service for $19 billion, while Viber co-founder Magazinnik, is sure to have made a fortune from the $900 million sale of the company to Japanese firm Rakuten. 

Jan Koum was born and spent his first 16 years in a small town near Kiev in Ukraine. His father worked as a building site overseer, and his mother stayed at home with Jan, their only child. 

Koum left Ukraine with his mother in 1992, when he was 16 years old, and they settled in Mountain View, California.  They arrived with a single suitcase packed with notebooks and pencils for Jan’s education, and the government provided them with a two room flat. Jan’s mother found work as a nanny, while Jan worked as a cleaner in a grocery store. 

He didn’t get on very well at school, but taught himself computer networking using manuals from a used book store. While studying at San Jose State University he got himself a job at Ernst & Young as a security tester, and it is there that he met WhatsApp co-founder Brian Acton in 1997. They liked each other’s no-nonsense style - “neither of us has the ability to bullshit”, says Koum, which may explain their resistance to introducing advertising on the service. 

When Koum's mother died of cancer in 2000 Acton reached out to the 25 year-old, who was alone in the world (his father, who never made it to the US, died in 1997). They skied and played soccer and ultimate frisbee together while working for Yahoo. However, both were depressed by the focus on advertising at the company and in 2007 they left and spent a year travelling around South America and playing frisbee. Both applied for, and failed to get, a job at Facebook. 

Then, in 2009 Koum spotted his niche, and he honed his idea at the weekly Russian emigre gatherings at Alex Fishman’s house in West San Jose. In the first few months after launching WhatsApp, Koum's Russian friends were amongst the only ones to actually use the service. But eventually it started to catch on, and that was when Koum approached Acton again. Acton helped raise seed funding, the service’s popularity exploded and the two friends soon had to switch the service to ‘paid’ to try and slow the growth. But it kept growing, so they stuck with their $1 per year model. By early 2013 they had passed the 200 million user mark, and it now has more than 450 million. Koum is a billionaire, and that small Ukrainian village must seem a long, long way away.

Igor Magazinnik, who co-founded Viber, was born in the Russian city of Nizhny Novgorod (although it was called Gorky back then). Like Koum, he left his homeland at the age of 16, when he moved to Israel, where he completed school and university and served in the army. It was there that he met Viber co-founder Talmon Marco, and they were drawn together by their mutual love of gadgets. Having completed their military service they launched their first startup - file-sharing service iMesh. 

They then decided to create a mobile-friendly version of Skype. Like WhatsApp, Viber allows users to send text messages, but the priority is voice calling. They raised money from family and friends - and before the sale to Rakuten 11.4% belonged to Marko’s family and 55.2% belonged to the Shabtai family - and got to work developing the app. 

In order to keep costs down, the pair hired developers in Belarus. This helped, as the company took a long time to find a way to make money. It was only in November 2013 that they allowed users to buy access to a greater variety of icons to attach to their messages. Then in December they enabled users to make cheap calls to mobiles and landlines. The service’s user base is now around 280 million. 

We asked Oleg Seydak, Partner at Flint Management and Flint Capital and Managing Partner at Bull Ventures, whether he thought that the time will come when individuals from Russia and the CIS will be able to build world beating companies at home.   

"Tech skills aren’t limited by borders, and Russian and Ukrainian programmers have been successful outsourcing their talents to international companies for years. The problem in Russia and the former Soviet states is the way that these bright minds are developed, and in particular their relationship with private business.

In the USA the entrepreneurial gene has existed ever since the first settlers arrived, and when quick-witted young migrants come to the country, they only need 5-7 years to become a better entrepreneur than they could ever have been at home.

The task we face in the post-Soviet space is to create a environment in which good ideas can be turned into good businesses. Russia, Ukraine, Kazakhstan and other CIS countries now have dozens of business incubators and programs to help teams develop their projects. 

While it will take some time yet before we can compete on a level playing field with our counterparts across the ocean, the situation here is improving and eventually I think that the need to emigrate to create a world-beating business will fade away."

Sources: Forbes, CNews

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