WhatsApp

WhatsApp was built by two founders who got rejected for jobs at Facebook - then sold the company to Facebook for $19 billion with just 55 employees. The entire strategy was resource constraint turned into competitive advantage. Jan Koum and Brian Acton allocated 90% of effort to reliability engineering and 10% to everything else. They refused advertising, kept burn under $500,000/year, and built a product competitors couldn't match on quality.

The business model was parasitic: WhatsApp grew by eating SMS usage while carriers subsidized the infrastructure. It's the ultimate 'nurse log' strategy - growing on the decaying remains of an older technology. Once the company hit critical mass around 500 million users, network effects accelerated. At 2 billion users, WhatsApp isn't just 1,000× more valuable than a 2 million user app because the technology is better - it's more valuable because the network is larger.

The $19 billion exit with 55 employees demonstrates monocarpic reproduction - a single reproductive event that maximizes value extraction. But WhatsApp's regional monopoly has limits: it dominates messaging outside China while WeChat dominates within. Cultural preferences create impenetrable boundaries that network effects cannot cross. The lesson: network effects compound within boundaries, but boundaries matter more than most founders think.