Photo from flickr
Does WhatsApp has a business model? Yes, the first year is free, but the subsequence subscription fee is USD1 per year. WhatsApp is just a small size company with 55 employees now. WhatsApp has more than 400 million monthly active users.
Last year there was a rumour that Google and WhatsApp in talk of acquisition, but WhatsApp has denial that (refer here Won't sell-out to Facebook or Google: WhatsApp). WhatsApp never need to worry about money, they were funded 8 million by Sequoia Capital, should be enough for them to operate for some time.
There is a story of how Koum and Acton co-founded Whatsapp. Koum and Acton working in Yahoo before the co-founded WhatsApp. Both of them applied job in Facebook but rejected. Read the story here.
Rumor saying that Google offered 10B for WhasApp.