Innovation & Immigration: The Lesson of WhatsApp
My partner Matt Fates and I have been traveling through Europe this past week as part of the fundraising process for our new fund. After a busy prior few weeks of domestic travel, I am eager to return home, but I do so with enhanced perspective.
While Putin intended the Sochi Olympics to dominate the news, his connection to events in another region captured the front page. Astonishing pictures from the Ukraine pervaded European media, as the popular revolt raged against President Yanukovych’s rejection of a path towards the European Community in favor of closer ties with Russia. But later in the week, a different Ukrainian story became the primary topic in our discussions: the incredible story of Jan Koum, the Founder of WhatsApp, who emigrated from the Ukraine to the U.S. as a teenager in 1997. Facebook’s acquisition of WhatsApp for approximately $19 billion defies comprehension, with the five-year-old company and just over 50 employees landing the fifth highest valuation tech merger ever recorded. (Yes, Facebook bears, I know the number is inflated by richly valued Facebook equity, but this would still be an extraordinary achievement at even 10 percent of the stated value). Jan’s personal story is even more extraordinary: fifteen years after bagging groceries as a supermarket clerk, he has a net worth of just under $7 billion. Scorekeeping is pretty silly in this neighborhood, but for perspective, this would place Jan in the top 60 of the wealthiest Americans.
As I contemplated the WhatsApp story during our whistle-stop tour through Europe, I recalled a memorable dinner conversation five years prior in Switzerland. My partner Luke Burns and I were fortunate to be guests for a sizable dinner party at a Swiss farmhouse. As per social norms, once the first course was cleared, dinner discussion ensued. There were citizens from several different European countries around the table, and the primary topic of interest was the distressed US economy. Most opined that the Great Recession was proof of the flaws endemic within American hyper-capitalism and that the collapse of our financial system presaged the decline and fall of the American Empire. Additionally, several added that excessive immigration was breaking down the historical strength of the United States. As my partners know, I thoroughly enjoy a robust debate and was happy to serve as lead counsel for the defense. I conceded the tales of greed and excess within the financial system preceding the crisis were impossible defend; some European-type limits on the system now appeared likely and were sensible. But rumors of America’s permanent demise were greatly exaggerated. I submitted that my esteemed friends were completely underestimating America’s great strength: the country’s resilience and capacity to reinvent itself. Further, they couldn’t be more wrong about the damage from “excessive” immigration. Far from weakening the U.S., immigration would always be a source of strength. I rhetorically inquired if they had ever heard of a 15-year-old company called Google. (Google has two sizable buildings in downtown Zurich). I noted that one of Google’s two founders, Sergey Brin, was a Russian emigrant. Further, I discussed my father’s family emigration from Slovenia through Ellis Island in the prior century. My story was far from unique, and as beneficiaries of our ancestors’ pursuit of the American Dream, we must not forget this history and moral responsibility to those who might follow. I submitted that citizens of all countries should welcome the benefits of immigration and cultural exchange.
As one who has worked in the venture industry for almost 20 years, I am thrilled that technology entrepreneurship has globalized. I love Jan Koum’s story. The intelligentsia of Silicon Valley and Boston hold no monopoly over creativity and ambition. My firm has evolved with this trend, and Ascent is very pleased to work with international entrepreneurs holding global aspirations. For practical purposes, we require that company headquarters are established in the East Coast of the U.S., but we expressly do not want them to become homogenized American companies. For example, our developing ties with the Israeli entrepreneurial community have been particularly rewarding. StartApp, ScaleBase, and CloudLock are just a few of the several Ascent portfolio companies that have strong Israeli roots. One of my favorite experiences was working with Gene Savchuk, the Russian co-founder of our former portfolio company Fidelis Security, who as a programming prodigy within the Soviet system harbored aspirations of emigrating to Silicon Valley. Lastly, the first entrepreneur I worked with 20 years ago was the embodiment of the American dream. Nick Grewal was an Indian immigrant to England, who paid his way through university as a cab driver before immigrating to the U.S. Nick was the CEO of Nashoba Networks, which sold to Cisco in the late the 1990s in a very successful exit. Nick and I remain very close to this day.
As we traveled through Europe this week, we had so many insightful and enjoyable discussions with our hosts. Yes, the travel can be physically exhausting, but the pleasure of good company and the fascinating exchanges of ideas with those residing outside our provincial echo chamber make this all worthwhile. I am convinced Matt and I returned home richer for the experience, if not in our wallets. We have only 10 Euros left between us.
P.S. I snapped the attached photo on the train between Zurich and Geneva. It’s from above Lake Geneva in Lausanne and I’m told it is a famous vista. I sent this to my kids and promised I’d bring them here someday. It’s important that they too appreciate the incredible world outside their borders.