Yahoo! could have birthed WhatsApp

THE story of the rise of WhatsApp, a mobile phone instant messaging application company, the father to the increasingly popular mobile phone application that goes by the same moniker is rich with lessons our Zimbabwean business leaders need to take to heart.

The Human Capital Telescope with Brett Chulu

One such lesson is that if you do not fully engage your talent you may lose business opportunities. It goes deeper — your not-so-engaged talent may become your business rivals.

In 2009, two software engineers who had worked for Yahoo!, the former czar of internet-based information search, formed a company called WhatsApp. On June 18 last year, Jan Koum and Brian Acton, revealed in a blog why their business philosophy is radically different from their ex-employer’s.

Didn’t share Yahoo!’s vision

Koum and Acton saw weaknesses in Yahoo!’s business model, a model where Yahoo! made money by tracking what people were searching on the internet, using this information to sell advertising space.

Simply put, Yahoo! made money by telling companies: “We know what people are searching (for) on the internet, where and when. We also know how many, . These people seem interested in what your company offers. We can help you reach these if you pay us to advertise with us online.”

Ironically, Koum and Acton saw things in another light. They revealed in their June 18 2012 blog: “No one wakes up excited to see more advertising, no one goes to sleep thinking about the ads they’ll see tomorrow. We know people go to sleep excited about who they chatted with that day (and disappointed about who they didn’t).

“We want WhatsApp to be the product that keeps you awake… and that you reach for in the morning. No one jumps up from a nap and runs to see an advertisement.”

Koum and Acton might not have voiced their thoughts to their bosses when they were still with Yahoo! However, it is within limits of reasonableness that each day at Yahoo! when they were helping Yahoo! write better code to gather data and sell more ads, the software engineers could have been protesting in their minds.
Going to your CEO and telling him/her that the very business model which helps pay your salary and perks is fundamentally flawed is an unforgivable corporate insult that can earn one a hairdryer treatment from a peeved and grossly insulted CEO.

We have no record that Koum and Acton took this route. However, the fact that they left Yahoo! to birth WhatsApp, an innovation built on a business model that attacks the very heart of Yahoo! suggests giving the idea to Yahoo! could have been a non-starter.

If Yahoo! had been Google
If Yahoo! had been Google, Koum and Acton could possibly have started WhatsApp inside Google. It all comes down to culture. Google is well-known for its “20% time off” practice. The 20% time-off practice is a policy that allows a Google employee to set aside 20% of their paid time to pursue their own innovation projects.

Google are keenly aware of the gold mine of ideas resident in their talented employees. When you attract some of the world’s biggest minds in numbers and you think that giving them tonnes of money will keep them loyal to you just have a condescending attitude that insults them.

Google knows how frustrating it is for talented employees to do routine and predictable work. They also know that talented employees can simply leave with their ideas, either setting up rival businesses or bolstering competitors. For Google, it seems better to lose 20% of paid time than forfeiting business ideas that will possibly generate the next-generation products, big money spinners, possibly.

Had Koum and Acton been Google employees, they would have probably used their 20% time off to brew WhatsApp. Google and Yahoo! use similar business models; gather data on internet search patterns and use that proprietary knowledge to attract advertisers.

You can imagine how Koum and Acton felt when a Johnnie-come-lately like Google up-ended Yahoo! from glory. Koum, writing in a blog faintly hides his frustration: “We watched Yahoo! get eclipsed in size and reach by Google … a more efficient and more profitable ad seller. They knew what you were searching for, so they could gather your data more efficiently and sell better ads.”

If your bread and butter were advertising and one of your talented employees were to come to you as the CEO and says it plainly that “advertising isn’t just the disruption of aesthetics, it is an insult to your intelligence and the interruption of your train of thought”, what would you do? I guess you would ask the chap what they had been smoking.

The words just quoted are what Koum wrote in his blog, revealing the depth of his disdain for the ad-based internet business model, a thinly veiled jibe at his ex-employer’s business model.

If Yahoo!
were Google, they would have probably lauded Koum for his candidness and would probably have gladly funded his radical idea. They could have probably formed a separate company with an independently branded product, letting the idea get free reign, snuffing out the project if it would prove to be a commercial failure. That way Google’s brand equity would be kept intact.

I wonder what Yahoo! is thinking now that two of their gifted former software engineers have gone on to establish a well-loved business that is now processing 20 billion messages every single day, especially with rumours swirling that Google wants to acquire WhatsApp for about US$1 billion.

Reflect on it
In an innovation culture, leaders are not angered by employees who challenge and question how things are done. Questioning and challenging ideas is different from challenging the person.
Business leaders need to have the security and maturity to separate their personalities from ideas that challenge their beliefs.

Chulu is a strategic HR consultant who is pioneering innovative strategic HR practices in listed and unlisted companies in Zimbabwe. — brettchulu@consultant.com