34 | FORBES ASIA OCTOBER 2018
Facebook sought “broader rights” to
WhatsApp user data, Acton says, but
WhatsApp’s founders pushed back,
reaching a compromise with Facebook
management. A clause about no ads
would remain, but Facebook would still
link the accounts to present friend sug-
gestions on Facebook and ofer its ad-
vertising partners better targets for ads
on Facebook. Whats App would be the
input, and Facebook the output.
Acton and Koum spent hours helping
to rewrite the terms of service and were
stymied by a section on messaging from
businesses. “We obsessed over these two
paragraphs,” Acton remembers. It was
here that they lost a battle against the ad
model, when a lawyer strongly advised
them to include an allowance for “prod-
uct marketing,” so that if a business did
use WhatsApp for a marketing purpose,
Whats App wouldn’t be held liable.
WhatsApp’s founders then did what
they could to postpone Facebook’s mon-
etization plans. During much of 2016,
Zuckerberg was obsessed with the com-
petitive threat of Snapchat. his made
it easier for WhatsApp to put money-
making on the back burner and report
on new product features that aped Snap-
chat’s: a new camera that let you add
emojis to photos in October 2016, and
Status in February 2017, which was
widely seen as a clone of Snapchat
Stories.
By then, three years since the deal,
Zuckerberg was growing impatient,
Acton says, and he expressed his frustra-
tions at an all-hands meeting for What-
sApp stafers. “he CFO projections,
the ten-year outlook—they wanted and
needed the WhatsApp revenues to con-
tinue to show the growth to Wall Street,”
Acton recalls. Internally, Facebook had
targeted a $10 billion revenue run rate
within ive years of monetization, but
such numbers sounded too high to
Acton—and reliant on advertising.
Acton had an alternative that he tried
pushing back with: Invite businesses to
send “informational, useful content” to
WhatsApp users, like the SMS from his
Honda dealer, but don’t allow them to
advertise or track data beyond a phone
number. He also pushed the metered-
user model. Both to no avail.
Acton had let a management posi-
tion on Yahoo’s ad division over a de-
cade earlier with frustrations at the Web
portal’s so-called “Nascar approach” of
putting ad banners all over a Web page.
he drive for revenue at the expense of a
good product experience “gave me a bad
taste in my mouth,” Acton remembers.He was now seeing history repeat. “his
is what I hated about Facebook and what
I also hated about Yahoo,” Acton says. “If
it made us a buck, we’d do it.” In other
words, it was time to go.
Meanwhile, Koum stayed. He would
accrue time toward his inal stock grants,
even if he rarely went to the oice (“rest
and vest,” in Silicon Valley parlance).
Koum was “able to get through it,” inal-
ly leaving this April, the month ater Ac-
ton’s #deletefacebook tweet, announcing
via a Facebook post that he would focus
on collecting air-cooled Porsches. In Au-
gust 2018, when Forbes sat down with
Acton, another source said Koum was
sailing on a yacht in the Mediterranean,
far away from everything. He could not
be reached for comment.IF WALKING AWAY FROM $ 850 MILLION
feels like penance, Acton has gone fur-
ther. He has supercharged a small mes-
saging app, Signal, run by a security re-
searcher named Moxie Marlinspike with
a mission to put users before proit,
giving it $50 million and turning it into
a foundation. Now he’s working with thesame people who built the open-source
encryption protocol that is part of Sig-
nal and protects WhatsApp’s 1.5 bil-
lion users and that also sits as an option
on Facebook Messenger, Micro sot’s
Skype and Google’s Allo messenger.
Essentially, he’s re-creating WhatsApp
in the pure, idealized form it started:
free messages and calls, with end-to-
end encryption and no obligations to ad
platforms.
Acton says that Signal now has un-
speciied “millions” of users, with a goal
to make “private communication acces-
sible and ubiquitous.” While Acton’s $50
million should take it a long way—Sig-
nal could aford only two full-time en-
gineers until he came along—the foun-
dation wants to igure out a perpetual
business model, whether that means tak-
ing corporate donations like Wikipedia
or partnering with a larger company, as
Firefox has done with Google.
Others have come into the space as
well. AnchorFree, a sotware company in
Redwood City, California, makes a vir-
tual private network that hides your on-
line activity and has been download-
ed 650 million times. he company has
raised $358 million and is reported-
ly proitable. he private search engine
DuckDuckGo is grossing $25 million
a year, showing ads but without using
your search history to build a secret pro-
ile like Google does. Regulators in many
countries are similarly pushing back
on ad tracking. Saul Klein, one of Lon-
don’s leading venture capitalists, predicts
that Facebook will eventually be forced
to ofer an ad-free subscription option.
Acton’s metered model, in other words,
might get the last laugh.
Acton, for his part, is trying to look
forward. Besides Signal, he’s put $1 bil-
lion of the Facebook proceeds into his
philanthropic arms, to support healthcare
in impoverished areas of the U.S. as well
as early childhood development. He also
says he’s determined to raise his kids nor-
mally, from public schools to that Honda
minivan to a (relatively) modest house.
Acton notes, however, that it’s just one
mile away from Zuckerberg’s compound.
Extreme wealth, it seems, is “not as liber-
ating as you would hope.”FORBES ASIA
FACTON WAS NOW SEEING
HISTORY REPEAT. “IF IT MADE
US A BUCK, WE’D DO IT.”