Editor’s note: parmy Olson, the author of this article, is a columnist of Forbes magazine. He mainly reports on artificial intelligence, robotics and the digital transformation of European enterprises. He is the author of “we are anonymous organizations”. After in-depth communication with Brian Acton, co-founder of WhatsApp, the author wrote this article. This article describes the cause and effect of Acton’s selling WhatsApp to Facebook and finally choosing to leave Facebook.
Brian Acton, 46, is the co-founder of WhatsApp. Earlier this year, he decided to leave Facebook and jump out of the wealth circle.
“This is what I want people to do with WhatsApp,” he said of the world’s largest instant messaging service. WhatsApp has more than 1.5 billion users, and its core function is to provide users with ad free, encrypted instant messaging services. “Using WhatsApp can meet people’s information needs and help.”
WhatsApp founder calls for Facebook to be uninstalled
Four years ago, Acton and his co-founder Jan koum sold WhatsApp to Facebook for $22billion. At that time, WhatsApp was not profitable. This acquisition has become one of the most shocking acquisition cases in this century.
Ten months ago, Acton left Facebook and said he wanted to focus on a non-profit organization. In March this year, when the details of the Cambridge analysis company and the scandal surfaced, he tweeted: it is time# Deletefacebook. (it’s time to delete Facebook).
This tweet quickly received public response, and even shocked Zuckerberg, his former employer. Acton did not explain his twitter content. Since then, there has been no update on his twitter account.
This is his first public conversation on this matter. Under the pressure of Zuckerberg and Sheryl Sandberg to monetize WhatsApp, Facebook questioned the encryption technology Acton helped establish. At the same time, they laid the foundation for targeted advertising and promoting the dissemination of business information.
Acton chose to leave Facebook a year before he was eligible for a stock award. “You want to do what I don’t want to do,” Acton said. “Then I’d better not get in your way. So I left.”
This is probably the most expensive moral stance in history. Acton took a screenshot of the stock price before leaving, which meant that the decision cost him $850million.
He still follows a similar moral code. Obviously, he didn’t like the attention it brought him, and he soon stressed that Facebook was “not a bad person”. However, he paid a high price for the right to express his ideas.
Acton said, “as part of the final settlement, Facebook management tried to reach a confidentiality agreement. This is part of the reason why I dare not reconcile with these guys.”
Differences between Facebook and WhatsApp
Facebook may be the most watched company on earth, while controlling its image and internal information with a Kremlin like hardline attitude.
A Facebook spokesman said: “as the team has been committed to developing valuable functions, WhatsApp has now become an important part of the lives of more than 1 billion people, and we are excited about the future.” This answer masks some questions that prompted the founder of instagram to resign suddenly.
According to reports, instagram co founders Kevin systrom and Mike Krieger were angry with Facebook and Zuckerberg’s “tough measures”. Facebook is not only the arbiter of global privacy standards, but also the guardian of facts. However, the company is also increasingly deviating from its entrepreneurial foundation.
Acton’s description of WhatsApp and Facebook’s plan for WhatsApp provide a rare window for people to understand the company.
Acton’s narrative is also a story that any idealistic entrepreneur can agree with: what happens when you create something incredible and sell it to someone who has a different plan for your “child”? Acton said, “in the end, I sold my company. I sold the privacy of users and gained greater benefits. I made choices and compromises. I am immersed in such thinking every day.”
Acton said that although he and Zuckerberg have billions of dollars of capital exchanges, he has never established friendly relations with Zuckerberg. He said, “I can’t tell you much about Zuckerberg.” Zuckerberg and Acton held more than a dozen meetings. At one of the meetings, he told Acton blandly that WhatsApp “is a product group for him, just like instagram”. WhatsApp has a certain degree of autonomy in the Facebook world and has continued to operate outside its original office for some time.
So when Zuckerberg motioned Acton to his office last September, Acton didn’t know what would happen. At that time, Acton told Facebook that he was going to leave. Acton and combe have a clause in the contract that if Facebook starts “implementing the monetization plan” without their consent, they will be able to obtain all shares, which will be issued within four years.
The pairing of Facebook and WhatsApp was confusing from the beginning.
- Facebook has one of the largest advertising networks in the world; And Kum and Acton hate advertising.
- Facebook’s added value to advertisers lies in its understanding of users; The founders of WhatsApp are enthusiasts who support privacy. They feel that their encryption technology is indispensable to their almost unprecedented global growth.
This discord frustrated Zuckerberg. Acton said that Facebook has decided to make money from WhatsApp in two ways.
First, by displaying targeted ads in WhatsApp’s new status function, Acton felt that this broke the social contract with users. “Targeted advertising makes me unhappy,” he said. His motto in WhatsApp is “no advertising, no games, no gimmicks” – which is in direct contrast to 98% of the parent company’s revenue from advertising. His other motto “take the time to do things well” is also incompatible with Facebook’s “act quickly and break the rules”.
Facebook also hopes to sell a business tool to chat with WhatsApp users. Once companies get involved, Facebook also hopes to sell them analysis tools. However, the challenge lies in the impeccable end-to-end encryption technology of WhatsApp, which can prevent WhatsApp and Facebook from reading user information. Acton said that although Facebook did not intend to crack the encryption, its managers did raise doubts and “explored” ways to provide enterprises with analytical information about WhatsApp users in an encrypted environment.
At present, Facebook’s plan is still unclear. In early September, when U.S. congressmen asked Facebook CEO Sandberg WhatsApp whether she was still using end-to-end encryption technology, she didn’t directly answer yes or no. she said, “we firmly believe in encryption technology.” A spokesperson for WhatsApp confirmed that WhatsApp would add advertisements to its status function from next year, but he added that although more and more enterprises began to chat with people on the platform, “messages will still be encrypted using end-to-end encryption technology. There are no plans to change this situation.”
As for Acton, he once proposed monetizing WhatsApp through a metering user model, for example, charging users 0.1 cents after using a certain amount of free information. Acton said, “once built, this model will run everywhere. You don’t need a mature sales team. It’s a very simple thing.”
Acton’s plan was rejected by Sandberg. Her original words were that it would not expand.
Acton realized that it might be their greed. He said, “once I called her out and said to her, ‘on the surface, you say it won’t expand its scale, but in fact you are saying it doesn’t earn much.’ she hesitated a little. We continued to communicate a lot. I think I have explained my point. They are businessmen, and they are excellent businessmen. They just represent a set of business practices, principles, ethics and policies, and I don’t necessarily agree with these.”
When Acton came to Zuckerberg’s office, a Facebook lawyer was also present. Acton clearly opposed the idea that Facebook wanted to make money through advertising and from a large number of users, although it meant that he could get all the shares. But Facebook’s legal team disagreed with him, saying that WhatsApp was only exploring monetization measures, not “implementation”. Zuckerberg just said a simple sentence, which roughly means “this may be the last time you talk to me.”
Acton didn’t go to a lawyer, nor did he try to think of other ways. He decided not to fight. “In the end, I sold my company,” he said. “I’m a betrayer. I admit it.”
Acton’s code of ethics
Considering that he should have expected a price of $22billion, Acton’s code of ethics may come from his family’s female parents. His grandmother once opened a golf club in Michigan; In 1985, his mother founded a freight forwarding company and taught him to take the responsibility of the owner of the enterprise with great seriousness. Acton told Forbes in an interview before selling the company to Facebook: “she will be unable to sleep at night because she pays employees.”
Acton graduated from Stanford University with a bachelor’s degree in computer science. In 1996, he became one of the first employees of Yahoo and made millions of dollars in the process. His biggest gain in Yahoo is to become friends with Kum. Kum is a Ukrainian immigrant. He and Kum hit it off at first sight because of their rigorous style.
“We are all nerds and geeks,” Acton recalled in the interview. “We go skiing together, play ultimate frisbee together, and play football together.” Acton left Yahoo in 2007 to travel, and then returned to Silicon Valley. Ironically, he was interviewed on Facebook. But it didn’t work, so he joined WhatsApp, a start-up company founded by Qom, and persuaded several former colleagues of Yahoo to carry out seed round financing together. At the same time, he became the co-founder of the company and finally obtained about 20% of the shares.
They operate in their own way, based on cash, and pay too much attention to the integrity of infrastructure. “A message is like your first child,” Acton said. “We can never miss any information.”
Hasty purchase has laid a curse
In April, 2012, Zuckerberg first contacted Qom by email and had lunch at a restaurant in Los Altos este. Kum showed the email to Acton, who encouraged him to go. “We have no plans to quit,” Acton recalled
But in early 2014, two things prompted Zuckerberg to make a huge takeover offer.
One of the news is that the founder of WhatsApp was invited to Google’s mountain view headquarters for negotiations. He doesn’t want Facebook to lose to its competitors.
The other is the document analyzing the valuation of WhatsApp written by Michael Grimes of Morgan Stanley, an international financial services company. According to the document, someone showed the valuation of WhatsApp to the trading team of Facebook and Google.
The largest Internet transaction was completed in a hurry in the office of WhatsApp’s lawyer on the weekend of Valentine’s day. There is little time to study details, such as the terms on monetization. Acton said, “I told Qom we didn’t want to put advertisements in our products.” He recalled that Zuckerberg expressed “support” for WhatsApp’s plan to launch end-to-end encryption, although it would prevent them from obtaining user data. If there is any difference, it is that he “reacted quickly” in the discussion. Zuckerberg “did not immediately assess the long-term consequences.”
When Zuckerberg offered $22billion, it was actually difficult to question his true intentions. “He brought a lot of money and offered us a condition we couldn’t refuse,” Acton said According to a source who participated in the discussion, the Facebook founder also promised Kum a seat on the board of directors, expressed appreciation to the two founders, and told them that they would have “zero pressure” on monetization in the next five years.
Facts have proved that Facebook hopes to complete the acquisition at a faster speed.
Even before the transaction was completed last November, there were warning signals. The deal needs to be vetted by Europe’s notoriously strict antitrust officials. Facebook asked Acton to meet with about 12 representatives of the European Competition Commission on a conference call. “They taught me to explain to the members that it was very difficult to merge or mix data between the two systems,” Acton said He told regulators a lot, adding that he and Qom had no intention of doing so.
Later, he learned that elsewhere on Facebook, there are “plans and technologies for mixing data”. Specifically, Facebook can use the 128 digit string assigned to each mobile phone as a bridge between accounts. Another method is mobile number matching, that is, accurately locate the Facebook account with the mobile number and match it with the WhatsApp account registered with the same number.
In less than 18 months, a new WhatsApp service terms connected these accounts, which made Acton look like a liar. “I think everyone is gambling, because they think that the European Union may have forgotten that a long time has passed.” However, they did not have such luck.
Facebook eventually paid a fine of $122million for providing “incorrect or misleading information” to the EU. This is the cost of doing business. Like this deal, such a connection continues today (although it has not yet been made in Europe). A Facebook spokesman said: “the mistakes we made in the documents submitted in 2014 were not intentional.”
Acton said, “it makes me so angry that I even want to start over.”
Connecting these overlapping accounts is a key first step in monetizing WhatsApp. The update of the terms of service will lay the foundation for WhatsApp’s profit-making mode. Acton said that in the process of discussing these changes, Facebook sought “broader rights” to WhatsApp user data, but the founder of WhatsApp reached a compromise with Facebook management. The terms of not advertising will remain, but Facebook will still link these accounts to Facebook’s friend suggestions and provide better advertising targets for its advertising partners. WhatsApp will be input and Facebook will be output.
Acton and combe spent hours helping rewrite the terms of service, but were overwhelmed by a section about enterprise information. Acton recalled, “we have been entangled in these two paragraphs.” It is here that they lost a battle with the advertising model. At that time, a lawyer strongly suggested that they join the subsidy of “product marketing”, so that if an enterprise does use WhatsApp for marketing purposes, WhatsApp will not be responsible.
The founder of WhatsApp then tried his best to postpone Facebook’s monetization plan. For most of 2016, Zuckerberg was addicted to dealing with the competitive threat of snapchat. This makes it easier for WhatsApp to put money on the back burner, and instead constantly plagiarize snapchat’s ideas to develop new product features. For example, in October 2016, WhatsApp launched a new camera that can add emoticons to photos; The status function was launched in February 2017, which is regarded by the public as a replica of the snapchat story function.
Zuckerberg’s urgent commercialization transformation of WhatsApp
Acton said that it had been three years since the transaction, and Zuckerberg became increasingly impatient. He expressed his dissatisfaction at the plenary meeting of WhatsApp employees. Acton recalled, “according to the CFO’s forecast and 10-year outlook, they not only hope, but also need WhatsApp’s revenue to continue to show growth to Wall Street.” Within the company, Facebook aims to achieve $10billion in revenue within five years, but these figures sound too high to achieve, and must rely on advertising.
Acton also proposed another response: invite enterprises to send “useful content” to WhatsApp users, such as text messages sent by his Honda dealers, but do not allow enterprises to publish advertisements or track data other than phone numbers. He also introduced a measurement user model. Neither will help.
Ten years ago, Acton resigned from the management position of Yahoo’s advertising department. He was disappointed that the portal “NASDAQ” pasted advertising banners all over the web. Acton said that the impulse to earn income at the expense of good product experience “left a bad impression on me”.
He saw history repeating itself. “This is what I hate about Facebook and Yahoo. If it makes us money, we will do it,” Acton said In other words, Acton is time to go.
But Kum stayed. Even if he rarely goes to the Office (in the words of Silicon Valley, he is either resting or exercising), he will accumulate time for the final stock options. Qom “survived” and finally left in April this year. In March, Acton sent a message on Twitter: it’s time# Deletefacebook announced that he would focus on collecting air-cooled Porsche cars. In August 2018, when Forbes magazine interviewed Acton, another source said that Qom was sailing on a yacht in the Mediterranean, away from everything. He could not be reached for comment.
If giving up $850million in assets makes people feel like a kind of atonement, Acton has gone further now.
He upgraded a small communication application called signal, which is operated by a security researcher named moxie marlinspike. His mission is to put users above profits. Acton provided $50million and set up a foundation.
Now, he is also working with people who develop open source encryption protocols. The open source encryption protocol is part of signal, which protects 1.5 billion users of WhatsApp. It is also an option for Facebook Messenger, Microsoft’s Skype and Google’s allo messenger.
In essence, he is re creating WhatsApp in a pure and idealized form, that is, providing free messaging and telephone services, using end-to-end encryption technology to protect user privacy, and has no obligation to the advertising platform.
Acton said that signal now has “millions” of users, but did not specify. The purpose of signal is to make “private communication everywhere”. Acton’s $50million should take a long time – before he joined, signal had only five full-time engineers – but the Foundation hopes to find a lasting business model, whether it is accepting donations from enterprises like Wikipedia or cooperating with a larger company, as Firefox did with Google.
Many other companies have also entered this field.
Anchorfree, a software company in Redwood, California, has used virtual private networks to hide users’ online activities, and the software has been downloaded 650million times. The company has received $358million in financing and is reported to be profitable. Duckduckgo, a private search engine, has an annual revenue of $25million. Although it advertises, it doesn’t use your search history to establish secret archives like Google.
Regulators in many countries are also resisting advertising tracking. Saul Klein, one of the leading venture capitalists in London, predicts that Facebook will eventually be forced to provide a subscription service without advertising. In other words, Acton’s econometric model may end up laughing.
Acton is trying to move forward. In addition to signal, he also invested $1billion of Facebook revenue into his charity department to support health care and early childhood development in poor areas of the United States. He also said that he was determined to raise his children normally, from public schools to the Honda minivan, to owning a relatively simple house.
Acton also pointed out that he was only a mile away from Zuckerberg’s residence. Extreme wealth seems “not as free as you want”.