This article seems a little unfair to the WhatsApp founders when it suggests they should have known that any assurances Facebook made to them as part of the acquisition were obviously lies. Sure in 2018 it might be obvious to most of us that nothing Facebook says or promises can be trusted but I don't think that was necessarily as obvious when the acquisition happened and they can be forgiven for thinking they weren't being lied to.
Nah, 2014 makes no material difference. It's not the recent scandals that have somehow revealed Facebook to be the spiritual successor to Microsoft's "embrace and extend" strategy; this has been obvious for at least a decade. Maybe the public didn't realize it yet, but anyone in tech, especially a successful founding team would have been well aware.
That said, I'm not going to demonize these guys. Brian Acton clearly is repentant and putting his money where his mouth is in terms of supporting Signal, and that's worth a lot more than some principled nobody who never has enough clout to further his own principles in society.
there was an anti-monetization clause in the contract. you don’t put that there out of an over abundance of caution. they knew exactly FB’s intentions. they maybe didn’t expect it to come home to roost so quickly, but they should have. again, these are smart guys. they just couldn’t get past the billions, plain and simple.
Facebook's entire business model is ads. Of course, it was going to a) include advertising or b) add more user info to better target ads in other apps.
Facebook has been lying to us since at least 2007. People were always okay with it because they perceived it as being okay and supportive of the right people and policies.
To be fair acquisition assurances are always temporary at best. They are buying the company for a reason, not to leave it alone forever. I've been a part of two acquisitions over the past decade and most of the devs I know have been in at least one. The assurances are never more than temporary.
This seems less Facebook specific and more "that's simply what happens with all acquisitions".
Wait a minute... FB had exactly the same business model in 2014 like today. Of course they understand the mechanics of that business model already back then. Shouldn’t they have known better?
Well, yes and no. Back the day, Facebook and Zuckerberg were the shining examples of successful Silicon Valley companies and founders with a good mission.
That Zuckerberg, at the young age, managed to retain control of facebook all the way up to, and beyond, the ICO should have given them pause so. That hints a certain personality (no judgement intended in that assessment). But that is 20/20 hindsight which is always easy.
sorry, but that is very naive of you 2018 / 2010 / 1990, no business can be trusted to tell the truth if it is not written down in a legally binding way.
They will always do what is in their best interest when it is in their interest to do so
That, and I'm sure they thought they could still stay in control of their product. When it's your first buy-out, there's a lot of delusions about autonomy and power post-acquisition.
Come. On. You don’t get to that kind of valuation with a basically free product without ad targeting. An accelerated vesting clause is not an assurance. If they wanted assurances they could have made it a condition of the deal, ok? They didn’t. Accelerated vesting just means they were telegraphing that they wanted to leave before the shit hit the fan.
The movie "The Social Network" came out in 2010 for goodness sake. It was already mainstream knowledge among non-tech people in 2010, let alone successful tech billionaires in 2014, that Facebook was an organization run by sociopaths.
I'm sure Acton and Koum told themselves they were also keeping the power to be in control. I'm sure they went into it thinking they could avoid this end. The brain is a powerful rationalizer when it sees generational wealth within reach.
The indignant tone of the comments here make me laugh. There are very few things I can imagine readers of HN not doing for a billion dollars. People may say otherwise, but until they've been tested I choose not to believe them.
I feel like I'm coming across more of these "exit, then atone" profiles and none of them seem to have any teeth. They read like self-help articles for the ultra-rich: "Broken moral compass keeping you up at night? Try driving a Honda Odyssey."
I get it; you took the money. I'd sure as hell take the money. One anecdote about sniping at Sheryl Sandberg is washed away by this milquetoast sentiment:
“It was like, okay, well, you want to do these things I don’t want to do,” Acton says. “It’s better if I get out of your way. And I did.”
Acton is being incredibly disingenuous and it is disappointing. When you sell your company to another for $19B, you should surely know that the expectations for monetization will be very heavy indeed. Well beyond Acton's suggested metered-user model.
I'm certainly no great fan of Facebook, but anyone who thinks that they deserve to use a service free of charge and also avoid advertising is extremely entitled and disconnected from reality. There is no free lunch.
None of this is to excuse FB's bad behavior. The fact that they claimed they wouldn't attempt to link accounts but had teams elsewhere in FB working on that very task is yet another example of the true nature of that company and its highest ranking people.
> [...] anyone who thinks that they deserve to use a service free of charge and also avoid advertising is extremely entitled and disconnected from reality. There is no free lunch.
We are using Hacker News, free of charge, without advertising. Or for a bigger example, most Wikipedia users have never donated and yet use the service with zero advertising. Or there's Signal, as mentioned in the article, and countless other examples.
I want to tell a story about Whatsapp that is unrelated to that, but incidental, and the reason why this seems too much to me. I don't like the company even if I use Whatsapp every days since the start, because when it started to spread in Europe, at the start of the iPhone and Apple store era, Whatsapp was the worst thing ever in the app store in terms of how strongly they advertised their platform, almost in a spammy way, everywhere. Moreover the application was pure garbage. It was not just unencrypted, but the IMEI of the phone hashed with the phone number, or something like that, was used to authenticate to the service. There was zero attempt at privacy. Later when they made big money they fixed it, but still... Fast forward the acquisition, there was another element I did not like: they really did a big noise about how scalable was Whatsapp 'cause it was FreeBSD + Erlang based, one thing that I believe was not honest. Whatsapp was very scalable fundamentally because they just acted as a bridge without storing anything. The backends were probably also decently designed, but not because FreeBSD + Erlang, you could do it differently with the same results. Moreover many times here in Europe where it is massively used, during like xmas or at the new year party time, it goes down, so... like everybody else on earth. And now that story. I never liked the company vibe, and I think he should stop with this Facebook story, because you are the actions you make: don't trust the big social network model? Well, develop your company and find a business model you like. Now it's late to cray. Besides I don't think Facebook is doing anything terrible with Whatsapp.
> The company is also set to charge businesses for messages they receive from potential customers via the WhatsApp platform — of between a half a penny and 9 cents, depending on the country.
Didn't knew this and takes back to the outrageous SMS pricing of 10 cents per SMS.
I as a consumer can change easily but it's sad to see that business will have to deal with this crap.
Now I find myself in the unfortunate position of defending Facebook, a site I barely use and whose founder does not to me represent the best of Silicon Valley. He took their money. He should just shut up. There was never any question about what Facebook was dealing with its data. Never. They have always been explicit about it in their user agreement. He didn’t seem to mind when he took billions from them. I have an old-fashioned sense of ethics and cannot understand how someone would like that would bad-mouth the public company he benefited so richly from, when he knew all along what they were doing. There are no heroes in this story.
I get the frustration of seeing your pride and joy used in ways that you hoped to avoid. But he likely would have retained more control of WhatsApp if he stuck around and played ball. Now he has some money, zero control, and he has absolutely scorched the earth for his co-founder or anyone else who wants to minimize ads or find alternate monetization options.
I can't help but go back to Mark Zuckerberg's letter when Facebook was preparing to IPO:
"... we don’t build services to make money; we make money to build better services.
"And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits." [1]
I mean, there was no way he was going to drop $22 billion dollars on something and not get a return. But I can't help but notice how the article depicts him as someone who is thinking more strategically, contractually, and businesslike (i.e. profit-driven) than someone who would write something like the quote above. Whatever he was then, he seems to have taken a step away from it and become... a CEO.
If you think about it, there was no other way this could have played out. Acton (and maybe Koum) are privacy idealists, but could never have gone to the next level of philanthropy via massive wealth just by organic Whatsapp growth and revenue.
They needed the FB acquisition to supercharge their wallets, needed the pound of flesh to be demanded for the price that was paid in order to revisit their original mission, and now we're seeing Acton at least refocus on easy-to-use encrypted communications via Signal and potentially other platforms. The FB money has allowed for potentially more investments in the privacy tools sphere, if Acton continues his work in that area.
Whatsapp is a massively dominant messaging service, but the drive for privacy amongst consumers will continue to increase. It'll be interesting to see how we all communicate with the next evolution of all these apps in 10 years.
On one hand I wonder if money should really be apportioned to people who’d sell their user base to FB, like, will they make the best decisions down the road? Another part of me thinks well, better the money in a good person’s hands than FB’s. But you have to assume Acton et al are truly better people than FB, and still the user base is offered up as a sacrifice to that. Doesn’t feel great to me.
i have little sympathy for such actors. i’ve known people who got rich on stock options in the ‘00s and then fled california while decrying the rat race. this is the same thing.
if you really mean it, donate all the money to charity, an ed foundation, or some such. i’ll even forgive you for keeping 10mm for yourself. otherwise, cry me a river.
One does not "use" the CEO (or whatever his title was) of a billion dollar company. Either it was part of his duty and responsibility to the company or he willingly cooperated with deceiving a regulator.
To portray it otherwise is just a spin.
At least he admits to “At the end of the day, I sold my company. I am a sellout. I acknowledge that,”. I'm sure it's much easy to be remorseful with a few billion dollars in the bank.
"“I called her out one time,” says Acton, who sensed there might be greed at play. “I was like, ‘No, you don’t mean that it won’t scale. You mean it won’t make as much money as . . . ,’ and she kind of hemmed and hawed a little. And we moved on. I think I made my point. . . . They are businesspeople, they are good businesspeople. They just represent a set of business practices, principles and ethics, and policies that I don’t necessarily agree with.”"
Would have loved to be a fly on the wall in that room!
It really does not scale. Charging users after a certain threshold of messages is a silly idea. Can you imagine if Facebook charged after a certain number of status updates and photos shared? It's not that it doesn't make as much money, it's that people would have quickly jumped ship.
He tried to do what he thought was right and lost. Then tried to maximize the cash per his agreement and lost. So he did the math and realized that he could spend a chunk of his life most likely either fighting in court and/or being made miserable in exchange for a sum of money he absolutely didn't need. I think he made the right call given his situation. Though this should be (yet another) cautionary tale: when you sell your company, the deal is that you are giving up control in exchange for cash/stock. You can generally stand either on the moral high ground or a mound of cash, rarely can you do both.
Mark Zuckerberg seems to be the master of putting things in contracts that play out in his favor.
The article says they wanted a clause that granted them approval over monetization strategies. So Zuckerberg gave them some version that he knew had no teeth in order to close the acquisition. But he got exactly what he wanted in the end, without any real compromise.
This falling out with Acton and Joum seem like just another case in the long line of bad relationships: Saverin, and perhaps the Winklessvoss twins, although that "business" relationship was for the sole purpose of ripping them off.
Alternative reading: "Mark and Co. don't think twice about breaking laws or contracts, as long as any fines end up being less than the money they stand to make."
If I understand correctly, Zuckerberg forced Acton to hold onto his Facebook shares - and the value of those shares then doubled in a three-year period. Surely that must mollify Acton's animosity somewhat.
It reminds me of the scene in The Big Short where at one point the investors a clamoring to withdraw their money from Michael Burry's fund. They hate him and call him names, but he refuses to let them withdraw. Later when he pays out a huge profit he emails them saying, "You're welcome".
> At the end of the day, I sold my company. I am a sellout. I acknowledge that
I think he's acknowledging that his company was un-monetizable and selling was obviously the best thing they could do. And 10 years later, it remains unmonetizable, that's sad.
I find the article interesting from a cryptographic perspective--specifically have they implemented searchable encryption or such a "encrypted environment" where they able to capture more than meta-data.
These quotes specifically:
The challenge was WhatsApp’s watertight end-to-end encryption, which stopped both WhatsApp and Facebook from reading messages. While Facebook didn’t plan to break the encryption, Acton says, its managers did question and “probe” ways to offer businesses analytical insights on WhatsApp users in an encrypted environment.
...
When Sandberg, Facebook’s COO, was asked by U.S. lawmakers in early September if WhatsApp still used end-to-end encryption, she avoided a straight yes or no, saying, “We are strong believers in encryption.” A WhatsApp spokesperson confirmed that WhatsApp would begin placing ads in its Status feature next year, but added that even as more businesses start chatting to people on the platform, “messages will remain end-to-end encrypted. There are no plan
[+] [-] mattnewport|7 years ago|reply
[+] [-] dasil003|7 years ago|reply
That said, I'm not going to demonize these guys. Brian Acton clearly is repentant and putting his money where his mouth is in terms of supporting Signal, and that's worth a lot more than some principled nobody who never has enough clout to further his own principles in society.
[+] [-] jiveturkey|7 years ago|reply
there was an anti-monetization clause in the contract. you don’t put that there out of an over abundance of caution. they knew exactly FB’s intentions. they maybe didn’t expect it to come home to roost so quickly, but they should have. again, these are smart guys. they just couldn’t get past the billions, plain and simple.
[+] [-] tumetab1|7 years ago|reply
It's not their fault as it was not their responsibility to provide a private message service for free to millions of people.
This is just how it works, if want to be principled you can't make agreements with the devil.
[+] [-] caseysoftware|7 years ago|reply
Facebook has been lying to us since at least 2007. People were always okay with it because they perceived it as being okay and supportive of the right people and policies.
[+] [-] BinaryIdiot|7 years ago|reply
This seems less Facebook specific and more "that's simply what happens with all acquisitions".
[+] [-] baxtr|7 years ago|reply
[+] [-] hef19898|7 years ago|reply
That Zuckerberg, at the young age, managed to retain control of facebook all the way up to, and beyond, the ICO should have given them pause so. That hints a certain personality (no judgement intended in that assessment). But that is 20/20 hindsight which is always easy.
[+] [-] scarface74|7 years ago|reply
[+] [-] espeed|7 years ago|reply
Who's PR firm is behind this and the originally posted TC piece [1]? What's their angle? And Why?
[0] http://www.paulgraham.com/submarine.html
[1] https://techcrunch.com/2018/09/26/whatsapp-founder-brian-act... https://news.ycombinator.com/item?id=18076008
[+] [-] senorjazz|7 years ago|reply
They will always do what is in their best interest when it is in their interest to do so
[+] [-] steve1977|7 years ago|reply
[+] [-] konschubert|7 years ago|reply
I had 0 knowledge about business back then and even u could figure out that something didn't add up.
[+] [-] madrox|7 years ago|reply
[+] [-] abalone|7 years ago|reply
[+] [-] snthd|7 years ago|reply
[0] https://www.businessinsider.com/well-these-new-zuckerberg-im...
[+] [-] colordrops|7 years ago|reply
[+] [-] grey-area|7 years ago|reply
- Mark Zuckerberg in 2003
[+] [-] windows_tips|7 years ago|reply
[deleted]
[+] [-] madrox|7 years ago|reply
The indignant tone of the comments here make me laugh. There are very few things I can imagine readers of HN not doing for a billion dollars. People may say otherwise, but until they've been tested I choose not to believe them.
[+] [-] deleted_account|7 years ago|reply
I get it; you took the money. I'd sure as hell take the money. One anecdote about sniping at Sheryl Sandberg is washed away by this milquetoast sentiment:
“It was like, okay, well, you want to do these things I don’t want to do,” Acton says. “It’s better if I get out of your way. And I did.”
[+] [-] xibalba|7 years ago|reply
I'm certainly no great fan of Facebook, but anyone who thinks that they deserve to use a service free of charge and also avoid advertising is extremely entitled and disconnected from reality. There is no free lunch.
None of this is to excuse FB's bad behavior. The fact that they claimed they wouldn't attempt to link accounts but had teams elsewhere in FB working on that very task is yet another example of the true nature of that company and its highest ranking people.
[+] [-] taormina|7 years ago|reply
[+] [-] b3n|7 years ago|reply
We are using Hacker News, free of charge, without advertising. Or for a bigger example, most Wikipedia users have never donated and yet use the service with zero advertising. Or there's Signal, as mentioned in the article, and countless other examples.
Perhaps there is a free lunch after all.
[+] [-] antirez|7 years ago|reply
[+] [-] slig|7 years ago|reply
[+] [-] notyourwork|7 years ago|reply
[+] [-] tumetab1|7 years ago|reply
Didn't knew this and takes back to the outrageous SMS pricing of 10 cents per SMS.
I as a consumer can change easily but it's sad to see that business will have to deal with this crap.
[+] [-] lpolovets|7 years ago|reply
[+] [-] tomcam|7 years ago|reply
[+] [-] jamesmcnalley|7 years ago|reply
[+] [-] leothekim|7 years ago|reply
"... we don’t build services to make money; we make money to build better services.
"And we think this is a good way to build something. These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits." [1]
I mean, there was no way he was going to drop $22 billion dollars on something and not get a return. But I can't help but notice how the article depicts him as someone who is thinking more strategically, contractually, and businesslike (i.e. profit-driven) than someone who would write something like the quote above. Whatever he was then, he seems to have taken a step away from it and become... a CEO.
[1] https://www.yahoo.com/news/mark-zuckerberg%E2%80%99s-ipo-let...
[+] [-] forgingahead|7 years ago|reply
They needed the FB acquisition to supercharge their wallets, needed the pound of flesh to be demanded for the price that was paid in order to revisit their original mission, and now we're seeing Acton at least refocus on easy-to-use encrypted communications via Signal and potentially other platforms. The FB money has allowed for potentially more investments in the privacy tools sphere, if Acton continues his work in that area.
Whatsapp is a massively dominant messaging service, but the drive for privacy amongst consumers will continue to increase. It'll be interesting to see how we all communicate with the next evolution of all these apps in 10 years.
[+] [-] sixstringtheory|7 years ago|reply
[+] [-] jiveturkey|7 years ago|reply
i have little sympathy for such actors. i’ve known people who got rich on stock options in the ‘00s and then fled california while decrying the rat race. this is the same thing.
if you really mean it, donate all the money to charity, an ed foundation, or some such. i’ll even forgive you for keeping 10mm for yourself. otherwise, cry me a river.
[+] [-] Illniyar|7 years ago|reply
To portray it otherwise is just a spin.
At least he admits to “At the end of the day, I sold my company. I am a sellout. I acknowledge that,”. I'm sure it's much easy to be remorseful with a few billion dollars in the bank.
[+] [-] josefresco|7 years ago|reply
Would have loved to be a fly on the wall in that room!
[+] [-] everdev|7 years ago|reply
[+] [-] Mahn|7 years ago|reply
[+] [-] Jyaif|7 years ago|reply
I'm in awe at that guy, but I can't help but think that with $850M he could have funded so many interesting projects/research.
[+] [-] blihp|7 years ago|reply
[+] [-] cryptozeus|7 years ago|reply
[+] [-] jiveturkey|7 years ago|reply
[+] [-] ohazi|7 years ago|reply
I realize this was probably said in fruatration, but I think it paints a pretty clear picture of Zuckerberg's arrogance and entitlement.
[+] [-] chubot|7 years ago|reply
The article says they wanted a clause that granted them approval over monetization strategies. So Zuckerberg gave them some version that he knew had no teeth in order to close the acquisition. But he got exactly what he wanted in the end, without any real compromise.
This falling out with Acton and Joum seem like just another case in the long line of bad relationships: Saverin, and perhaps the Winklessvoss twins, although that "business" relationship was for the sole purpose of ripping them off.
[+] [-] akudha|7 years ago|reply
Hell, I am a lowly engineer in a tiny company who got screwed by a single line in a contract. I saw first hand what lawyers can do.
[+] [-] stock_toaster|7 years ago|reply
[+] [-] MarkMc|7 years ago|reply
It reminds me of the scene in The Big Short where at one point the investors a clamoring to withdraw their money from Michael Burry's fund. They hate him and call him names, but he refuses to let them withdraw. Later when he pays out a huge profit he emails them saying, "You're welcome".
[+] [-] buboard|7 years ago|reply
I think he's acknowledging that his company was un-monetizable and selling was obviously the best thing they could do. And 10 years later, it remains unmonetizable, that's sad.
[+] [-] ac4tw|7 years ago|reply
These quotes specifically:
The challenge was WhatsApp’s watertight end-to-end encryption, which stopped both WhatsApp and Facebook from reading messages. While Facebook didn’t plan to break the encryption, Acton says, its managers did question and “probe” ways to offer businesses analytical insights on WhatsApp users in an encrypted environment.
...
When Sandberg, Facebook’s COO, was asked by U.S. lawmakers in early September if WhatsApp still used end-to-end encryption, she avoided a straight yes or no, saying, “We are strong believers in encryption.” A WhatsApp spokesperson confirmed that WhatsApp would begin placing ads in its Status feature next year, but added that even as more businesses start chatting to people on the platform, “messages will remain end-to-end encrypted. There are no plan