He remained true to himself. And now he is not willing to attract too much attention to this, already past history, and he constantly emphasizes that Facebook “is not a bad guy” (“I think they are very good businessmen”). But he paid for his right to tell me what he thinks. “I finally management, Facebook have proposed a deal to include a nondisclosure clause he says. Partly the reason why I was afraid to negotiate with these guys”.
He was not vain speaking in the past tense: more than four years ago, Acton and the second co-founder of WhatsApp Jan koum’s $22 billion Facebook sold his brainchild – the company, which was then relatively little revenue. It was one of the biggest deals of the century. And in 2017, Acton withdrew from Facebook, explaining that she wants to have a nonprofit sector. Later, in March 2018, when the burst into a public scandal due to the leakage of user data Facebook in the company Cambridge Analytica, he posted a tweet that instantly went viral and really upset his former employers, which, incidentally, made him a billionaire: “it’s Time. #deletefacebook”. Explanations followed. New tweets too.
And here he first came into the public space. When the founder of Facebook mark Zuckerberg and his CEO Sheryl Sandberg decided to monetize WhatsApp, Acton resisted, because targeted advertising and targeted commercial offers to users questioned the reliability of the encryption in the messenger, which he has paid so much attention. Acton left the company before the agreed term of the contract, without waiting for the last tranche of payment for the transaction (shares).
“It was like this: OK, fine, you want it, and I’m not, says Acton. And it will be better if I don’t disturb you. And wouldn’t”. Moral choice has given him a high price – possibly the most expensive in history: he showed a screenshot of the stock price at the day or impulsive decision cost him $850 million.
No company in the world treated so rigidly as to Facebook. “Due to the fact that our team pays much attention to creating value of properties that WhatsApp has become an integral part of the lives of over a billion people, and we are encouraged by its prospects,” – said the representative of Facebook. Such statements mask the problems like those which from the company in September 2018 unexpectedly left the founders of Instagram Kevin Systrom and Mike Krieger – according to some reports, they did not want to put up with the pressure from Zuckerberg. Acton’s opinion on what happened in WhatsApp and what plans Facebook had for this service, and gives a rare glimpse through the eyes of the founder of what is happening in the company that sets the worldwide standard for privacy and protection of personal data, simultaneously more and more away from their entrepreneurial roots.
But it is also a story on “What happens when, making something delicious, you can sell it for those who have very different plans for the future of your offspring”. “I traded the privacy of my users a lot of money, says Acton. – I made a choice, compromise. I now live every day.”
Received from Zuckerberg’s multi-billion dollar Acton, as he says, never reached him understanding. “There’s not much I can tell you about this guy,” he says. They held more than ten meetings, and one of them Zuckerberg said that the WhatsApp messenger, the autonomy of which inside a global company was specifically noted, and which initially operated from the “native” office is just “food group, like Instagram”.
So when Zuckerberg in September, after Acton announced his intention to leave the company, called him to his office, he didn’t know what to expect here. In the contract of Acton and Kuma was a clause stating that they can take all due action in the event of abandonment due to the fact that Facebook “will start the monetization” of the service without their consent. And Acton saw no obstacles to apply this item. From the very beginning of “living together” Facebook and WhatsApp has not worked. From Facebook one of the largest ad networks, and the godfather with Acton on can not stand ads. Facebook received a windfall from advertising, since I knew a lot about their users, and the founders of WhatsApp fanatically defended personal information and realized that this was the reason for the unprecedented spread of the messenger around the world. And Zuckerberg didn’t know what to do with it.
According to Acton, Facebook saw two ways of obtaining money from WhatsApp. The first is to show targeted ads in the new “Status”, Acton considered it a violation of the social contract with users. “Targeted advertising makes me sad,” he says. His motto in the messenger was “No ads, no games, no gimmicks!” the complete opposite of the parent company, which is 98% of the income derives from advertising. His other motto is “it takes time to do well” contrasts strongly with the mantra Zuckerberg’s “Move fast and change”.
And besides, Facebook wanted to sell businesses with the tools to open chat sessions with users messenger. And once connected, they can be sold and analytical tools. The main snag was in a sealed end-to-end encryption of WhatsApp messages that guide and messenger, and social networks to read them. Until Facebook did not plan to hack, says Acton, his management was looking for ways to generate Analytics about the users that wrote the encoded message.
Final plans Facebook has remained obscure. Acton said that when in September 2018, us lawmakers have asked the CFO of the social network, Sheryl Sandberg, is used there is still end-to-end encryption in WhatsApp, she built a answer, not to say Yes or no: “We are the followers of encryption”. The official representative of WhatsApp confirmed that since the beginning of 2019 in the “status” of users will be posted advertising message, but added that, despite the appearance of “business chats”, “all posts will still be subject to end-to-end encryption”. “We have no plans to change,” he said.
For its part, the Acton proposed to monetize WhatsApp, introducing a limit on the number of free messages, and taking, for example, of 0.1 penny for every message over the limit. “You once enter it, and it works everywhere, in every country, he explains. – And do not need much effort to sell. This is a very simple business.” But the proposal stalled Sandberg. “Here are her words: it is impossible to scale. Once I pinned her to the wall, he continues the story. I said something like: because the meaning is not that it is impossible to scale, you mean that way less than… And she hesitated, confused. And we changed the subject. I think I understood correctly. They are businessmen, good businessmen. They just represent business practices, principles and ethics with which I’m not inclined to agree.”
When Acton came to the office Zuckerberg, there’s already been a lawyer Facebook. Acton made it clear that the nature of the dispute (Facebook wanted to monetize messenger through advertising, and WhatsApp to earn due to the large number of users) is the basis for it to have been due to him action. The legal Department of the social network disagreed, arguing that while WhatsApp just tested your suggestions for monetization, and not “used” them. The position of Zuckerberg in connection with this meeting was clear. “He made it clear – says Acton, perhaps the last time you came to talk to me”. Instead of hiring a lawyer or try to find a compromise, Acton decided not to get involved in a fight. “By the end of the day, I sold the company, he says. – I had betrayed her. Yes, I understand.”
The moral code of Acton formed by his family: his grandma had created a Golf club in Michigan, the mother, founded the freight forwarding business in 1985, they taught Brian a serious and responsible attitude to business. “When the mother filled out the payroll at the salary, she did not sleep at night”, he told Forbes shortly before the deal with Facebook. Acton bachelor of Economics at Stanford University in computer science and in 1996 became one of the first employees of Yahoo, which later on allowed to earn millions. The most important asset acquired during the work at Yahoo, – meeting with Jan Koum, an immigrant from Ukraine.
“We’re both nerds, geeks, recalls Acton those days. – Together, skied, played ultimate Frisbee, football.” In 2007, the Acton left Yahoo, he decided to travel around the world before you get a job in Silicon valley – ironically, he had an interview at Facebook. With the social network then nothing came of it, and they are the Godfather founded startup WhatsApp, persuading former colleagues from Yahoo to invest it at the seed stage. Acton co-founder with a share of 20%. They ran the business the way they liked, without taking loans and paying special attention to infrastructure. “To every message we were treated as his firstborn son, says Acton. – None of them escaped our attention.”
Mark Zuckerberg wrote the first letter Kumu in April 2012, he suggested to have Breakfast at “the German bakery” in Los Altos. The godfather showed the letter to Acton, he advised me to go. “We are not engaged in the sale of the company, explains now Acton. We had not planned out”. However, there were two circumstances which made Zuckerberg to make him a generous offer. The first is the rumor that the founders of WhatsApp are invited to the headquarters of Google in mountain view, and Zuckerberg did not want to give the messenger a competitor. And the second is an estimate of WhatsApp, made in Morgan Stanley’s Michael Grimes, which someone forwarded to relevant departments Facebook and Google.
The biggest deal of the decade was prepared in record time in the legal Department WhatsApp, and time for careful details like a point on monetization was not enough. “Just we Ian said I don’t want this product was the advertisement,” says Acton. He recalls that Zuckerberg advocated the plan of WhatsApp to provide end-to-end encryption in the messenger, even if it is worse to collect data about users, and that he “did not start immediately to calculate distant consequences.”
And who will question the true intentions of Zuckerberg when he offers a price, which in the end turned into a $22 billion? (Agreed to sell $19 billion, but part of the sum was to be disbursed in Facebook shares in four tranches, due to the growth of their cost, the final amount rose to $3 billion.) “He came in with a lot of money and made an offer we couldn’t refuse,” says Acton. Zuckerberg also promised Godfather a seat on the Board of Directors, strongly expressed his admiration for the founders of WhatsApp, according to a source who took part in the negotiations, told them that in the next five years they will experience the “zero pressure” in connection with the monetization. However, it appeared that Facebook was going to evolve much faster.
The first warning signs appeared before the closing of the transaction in November 2012. It was necessary to carry out the transaction so as not to find fault with EU officials with their tough antitrust stance, and Facebook was preparing Sochi to meet with dozens of representatives of the European Commission on competition issues. “I was taught how to explain to them that it would be extremely difficult to combine data from two different systems,” recalls Acton. All this he put to regulators, adding that he has a Godfather has no such plans. Later it became known that in the depths of Facebook was already “plans and technologies for merging data”, in particular it was possible to use the ID assigned to the phone number in the messenger, to match it in the client database of the social network. Another way is the mapping of your social network with your phone number and further reference to the account in WhatsApp on this phone number.
It’s been 18 months, and the updated “Terms of service” of WhatsApp have established a link between accounts. So Acton was exposed as a liar. “I think they took a chance, deciding that enough time has passed that the EU already forgotten”. But there is not forgotten, and Facebook had to pay $122 million penalty for what he had provided EU authorities with “inaccurate or distorted information”. It was a kind of fee for doing business, since the transaction was closed, and the connection between the accounts continue to install (though not in Europe). “The mistakes we made in the electronic archive, 2014, was not intentional,” – said the official representative of Facebook. “Evil takes me, even when I talk about it,” says Acton.
Mapping of accounts is the first and crucial step to monetize WhatsApp. Update the “Terms of service” was to create a basis for the monetization of messenger. In the course of discussions in connection with these changes, Facebook was looking for an opportunity to get close to the customer base of WhatsApp, but the founders of messenger each time rebuffed. In the end, a compromise was reached. The point about the absence of advertising left in WhatsApp, but Facebook can associate the accounts to suggest new friends to the participants of the social network and give advertisers the ability to send more precise targeted offers to Facebook. That is, the messenger provided the input data and the social network received a result.
Acton Cooperative has spent a lot of time rewriting the “Terms of service”, and section about the business message put them at a standstill. “In these paragraphs we’re stuck,” recalls Acton. Then they gave up the slack: the lawyer urged them to prescribe the possibility of “product marketing”, to WhatsApp not be considered responsible in case the business will use messenger for marketing purposes.
The founders of WhatsApp were doing everything in their power to delay plans to monetize Facebook. In 2016, for example, Zuckerberg feared competition from Snapchat. And WhatsApp has postponed plans for making money, taking up instead the development of new features, which copied what was in Snapchat camera, which allows you to personalize photos by adding emoticons (October 2016), and “Status”, in which he saw the clone “stories” from Snapchat (February 2017).
Three years after the deal, Zuckerberg began to show impatience. According to Acton, he expressed his dissatisfaction at the General meeting of employees of WhatsApp. “He needed a financial plan, prospects for ten years – all that can be presented to wall street as proof of growth,” he recalls. For its part Facebook has approved the estimated revenue growth for $10 billion over five years to monetize, but Acton considered that such high numbers are not achieved without advertising. He suggested another plan: allow businesses to send out “informational, useful content” to users messenger like SMS from the Honda dealer, but not allowed to just send advertising or collect user data. He also introduced paid targeted services. But tangible results were not.
At the time Acton left Yahoo, because they could not accept the approach to advertising this online portal that the entire network had planted their banners. The desire to increase revenue at the expense of product quality, “left a bad taste” from the work, he recalls. And then he saw that the old story is repeated. “What I didn’t like and in Facebook and Yahoo, he says, is their position: if there can be a dollar earned, we will do it”. In General, he knew it was time to leave.
And the godfather yet there are, though, and rarely appeared in the office. He was buying time, waiting for the final reckoning. Kum lasted until last April and was gone in a month after Acton had posted a tweet with the tag #deletefacebook, saying on his Facebook that he intends to devote himself to collecting Porsche cars with air cooling. In August 2018, the source said that the godfather sailed on a yacht in the Mediterranean sea. Contact him Forbes could not.
In search of anonymity
If forgone due to the premature dismissal of $850 million to be regarded as penance, we can say that Acton did not stop there. He restarted a small application messenger Signal, which was ruled by the moxie Marlinspike, a computer security expert. His mission is to guard the interests of users, and it has allocated a $50 million, establishing a Fund. He now works with the team that created the encryption, open source, based on which Signal and which protects the 1.5 billion users of WhatsApp (it can also be used in Facebook messenger, Skype and messenger Allo from Google). In fact, this is a remake WhatsApp in its pure, ideal form as it was intended: free messages and calls with end-to-end encryption and without any obligations to advertisers.
Acton says that the Signal is already “millions” of anonymous users and that its goal is to make “private communications available everywhere.” This is what can be spent, they made $50 million (previously Signal could only afford five permanent employees). The objective of the Fund is to develop a permanent business model for the messenger. For example, it can be corporate sponsorship, as is the case with Wikipedia, or partnership with a larger company, based on what the Union Firefox with Google.
There are other players in this field. Software company AnchorFree, for example, has developed a corporate virtual network that helps to “hide” the network activity and has more than 650 million downloads. The company has raised $358 million investment and, according to reports in the press, is already working with profit. A private search engine DuckDuckGo earns $25 million a year on advertising, but does not use data about their clients and does not create a “shadow profile” clients like Google. In many countries, the regulators forbid the collection of data about Internet users for marketing purposes. Saul Klein, one of London’s leading venture capitalists, has predicted that Facebook eventually will be forced to offer subscribers of the social network of her “ad free” option.
In General, Acton was in the forefront. In addition to Signal that it has invested $1 billion received from Facebook money in charity projects related to health and education.
Even Acton says he wants to properly educate their children: conventional public school, the most democratic of the minivan, modest housing. Excessive wealth, as it seems, “never set anyone free”.