That is six times the population of the United States.

It is by far the most popular messaging up in the world with over 100 billion messages sent via WhatsApp every single day.

Even china with its 1.5 billion population can't compete with it.

The only problem is no one really knows how the world's most popular messaging up makes money unlike facebook or instagram.

What's up doesn't have ads and the app is free.

So the question is Why Facebook paid $19 billion dollars to purchase an app that doesn't make money or does it, let's take an inside look at the viciously profitable business of WhatsApp and how it makes billions of dollars behind its users back.

Yeah.

Mhm, mhm, mhm WhatsApp was founded by John Calm and Brian Acton both are former computer engineers at Yahoo but that's where the similarities and comb moved with his mother to the United States in 1992 from Ukraine, back when the Soviet Union had just collapsed to make ends meet his mother took up a babysitting job while Jan worked at the grocery store clerk.

But john was interested in something else back in the 19 nineties, an interest revolution was taking place and Jan was all into computers eventually became a self taught programmer when Youtube and google didn't even exist.

He climbed his way to get a job at e Y where he was sent to work at yahoo's advertising system where he ended up meeting acting.

The two men quickly became close friends.

Acting, got him a job at yahoo as a computer engineer.

But in the early two thousand's, yahoo wasn't doing great.

It made a few huge mistakes such as buying broadcast dot com for over $5 billion and it was losing ground for other emerging companies such as Google and Amazon.

The two friends were assigned to work on advertising platform that Yahoo was developing.

However, both of them hated ads so they got frustrated and left the company and applied to Facebook but didn't get a call back around the beginning of 2009.

Conan purchases first ever iphone and realized the potential of the app store.

They knew that an entire industry would be built upon Apple's ecosystem.

That's where the next opportunity is going to be.

The brainstormed multiple ideas but eventually settled on the messaging up back then.

The only free messaging app was Blackberry's BBM which was only available to only blackberry holders.

So they decided to create an alternative option for the rest of the phones and named it What's up short for what's up.

The app took off immediately and the first few days, over 250,000 users downloaded the app.

The two friends realized that they have just stumbled on a gold mine.

They convinced their former employees to invest.

200 And $50,000 into the company and expanded their team drastically.

But what's up had one problem a big one in fact, Well other social media platforms such as facebook earned money by selling ads.

WhatsApp founders left.

Yahoo for hating ads.

They promised themselves to never derail the app with ads or other distractions.

So although WhatsApp was growing astronomically, the app was not making any money.

Therefore, to sustain the team, they charged users $1 a year, which at the beginning seemed like it would push away users but it didn't.

WhatsApp would rise to become a top 20 app in the U.

S.

App store by the beginning of 2011.

By 2013, WhatsApp had over 200 million monthly active users and a staff of only 50 people and was valued at $1.5 billion.

With that many active users, the company had a revenue of $200 million And with that kind of growth it was a matter of time before it crosses a billion users and it was clear how WhatsApp used to make money.

Meanwhile, facebook Silicon Valley's golden jewel also wanted a share of the market.

Well, facebook was popular on pc.

Everyone knew that mobile was the future.

So facebook launched the messenger but it didn't pick up as fast as other messaging updates.

So instead of improving the app, Zuckerberg did what he always does just by your biggest competitor In the spring of 2012 Combs, email inbox was hit with the following subject line.

Get together.

The recipient was none other than Mark Zuckerberg asking the WhatsApp founder to have a chat over dinner.

Zach tried to convince acting and come to sell WhatsApp to facebook for over a year.

But the founders didn't rush.

However, when zack discovered that google was about to make an offer, he got furious.

He offered an astonishing $19 billion to acquire 100% of WhatsApp, paying $4 billion in cash, $12 billion in stocks and another $3 billion in stock grants if the founders would stay on at facebook for at least four years.

The deal made the founders overnight billionaires and earned them a seat at the table.

But not everything was sunshine and rainbows.

Facebook had a completely different plan for WhatsApp since it was one of the biggest names in the industry, it made WhatsApp free.

Users could download the app and no longer had to pay the $1 fee Within the next three years, WhatsApp users exploded to 1.5 billion users.

It was probably Facebook's best ever bet.

While it looked great from the outside tensions inside the company were rising after paying $19 billion.

Facebook wanted a return on Silicon Valley's biggest investment ever.

They wanted to include targeted ads within the app and is the end to end encryption it became known for To which both founders opposed.

The disagreements grew so big that on September 17, 2017 often announced he would leave WhatsApp.

The founders gave up 904 $100 million in stock compensation respectively.

To show their disagreements with facebook's management of WhatsApp.

But that was just the beginning because what was about to come almost brought facebook to nice.

In March 2018, multiple media outlets broke the news of Cambridge Analytica.

The company had acquired and used the personal data of 50 million facebook users from a third party app.

Facebook made it extremely easy to 3rd Party apps to collect your data and your friends Facebook data without your knowledge.

That infuriated facebook users and pushed people to stop using facebook by publicly supporting delete facebook movement.

Often used this opportunity to criticize facebook despite the scandal that didn't stop WhatsApp from growing, especially when businesses realize that they could use WhatsApp to better connect with their customers.

Since the invention of the internet, email has been the dominant way for companies to interact with their clients.

But the problem with email is that that they're not as comfortable as messaging.

Is imagine interacting with your doctor the same way as you do with your friends.

That's what what's up.

Business comes into the picture while WhatsApp might be free for consumers.

It is not for businesses And that's how Facebook decided to make money from its $19 billion dollar investment, get as many people as possible to WhatsApp because wherever people are, businesses will follow.

The goal was to have people communicate directly with their banks, airlines, Doctors etcetera over the app.

It charges companies anywhere between less than a cents up to 90 cents for every message that's answered after 24 hours.

But what attracts businesses more is data.

WhatsApp provides businesses with statistics.

The tool offers the ability to sort messages and ultimate quick replies as well.

With its ability to label chats with customers, you can stay organized and easily find them again and pick the conversation back up.

You can also automate messages such as greeting messages or an away message.

That way, you can still provide customers with quick replies even when you aren't available.

In fact, businesses can create a catalog within their business profile to show off products and services.

Unlike emails, people already checked their WhatsApp regularly.

So interacting with businesses on the same platform just increases the engagement rates significantly.

More than 50 million companies are already using WhatsApp and their customer communication.

Forbes estimates potential revenue to be $5 billion $4 by 2020.

There might not be ads on WhatsApp, but WhatsApp users are almost the same as facebook users.

The only difference is that WhatsApp has access to your contacts, camera location and a lot more than facebook does.

Since people don't generally trust facebook but don't mind giving their data to WhatsApp, WhatsApp might claim that they don't misuse people's personal information.

But judging by Zac's personal records, he doesn't care about personal data until it turns into a scandal and even then nothing significant changes.

Facebook can use the data from WhatsApp and create more targeted ads, therefore charging more for its ads.

So what's up might not be earning much, but it increases facebook's overall revenue.

However, this is just the beginning because facebook's plans for WhatsApp are just starting.

Have you ever heard of Wechat?

It is China's super app.

You simply cannot exist in china without Wechat.

It is the two go app, not just to chat, but to order a cab shop called the police, make a doctor appointment, order a delivery and even use it as a payment system which it has combined in its Uber craigslist News, zero games and everything else you use on the internet, which had eased the internet in china.

And that is what WhatsApp is striving to become at least.

That's what Zack's plan is WhatsApp has been working on a payment products since 2018.

In June 2020, it has finally launched a payment service in Brazil that allows users to pay each other as well as other businesses on the platform.

Unfortunately, around 10 days later, brazil's Central Bank suspended the launch Mastercard and Visa WhatsApp's payment partners were asked to spend any money transfer within the app despite the fact that 1.2 billion people use WhatsApp each day for around four hours WhatsApp is struggling to become like Wechat because of its association with facebook Facebook was launched in 2004 when Mark Zuckerberg was still a teenager.

And after multiple mistakes and privacy scandals that Facebook went through over the last two decades, it is very unlikely that WhatsApp could one day turn into a wechat.