The industry has tried and failed for years to make a better bottle.
Existing recycling technology needs clean, clear plastic to make new water bottles, and bottled-water companies say low recycling rates and a lack of infrastructure have stymied supply. Danone, for its part, is betting the reputation of its flagship water brand on a new technology that claims to turn old plastic from things like dirty carpets and sticky ketchup bottles into plastic suitable for new water bottles.
.. Plastic drink bottles are the third most common type of item found washed up on shorelines—behind cigarette butts and food wrappers
.. PepsiCo Inc. in August agreed to buy SodaStream—a maker of countertop machines that carbonate tap water—saying the $3.2 billion deal would help it go “beyond the bottle.”
.. Pepsi also now sells reusable water bottles that come with capsules to add flavors, and is testing stations in the U.S. that dispense Aquafina-branded water in different flavors... Poland Spring-owner Nestlé is rolling out glass and aluminum packaging for some brands and researching ways to make all its packaging recyclable or reusable by 2025.“The importance of this now has sunk in,” said Beverage Marketing Corp.’s Chairman Michael Bellas, who has followed the drinks industry for the past 46 years. “It’s the total broadened awareness of the environment, especially with millennials.”
.. Still, executives aren’t looking to get rid of plastic, which is cheap, robust and lightweight. A former Nestlé executive said the company’s internal research showed consumers were unlikely to take to boxed water. Glass bottles, meanwhile, break easily and are expensive to transport because they are heavy.A Montreal-based startup, Loop Industries Inc., had developed a process to break plastic into its base ingredients. The process didn’t use heat or pressure, so contaminants didn’t melt into the plastic and could be filtered out. Daniel Solomita, Loop’s CEO, likened it to disassembling a chocolate cake into its ingredients—sugar, flour, chocolate, eggs and butter—to make a brand new cake.
.. Mr. Dever and Danone executives had the process tested at Loop’s pilot plant—bringing their own waste plastic secretly tagged with a tracer to make sure that the returned samples were of the same material... Loop has yet to scale up its technology, and the company said its production plant won’t be ready until 2020. Loop shares, listed on Nasdaq, are down about 50% this year. Danone said it has confidence in Loop’s technology. Loop has also signed supply deals with Pepsi and Coca-Cola’s European bottler... Less than a third of PET bottles sold in the U.S. are collected for recycling, with less than 1% processed into food-grade plastic, according to Pepsi, one of the biggest buyers. The bottled-water industry says using more recycled plastic in bottles will incentivize collection of old bottles by giving them value... Danone, like much of the industry, has made promises about using recycled material before only to break them. A decade ago it pledged to use 50% recycled plastic in its water bottles by 2009. The very next year it slashed that target to between 20%-30% by 2011. Today, just 14% of the plastic in the bottles across its brands is recycled material... Nestlé’s plastic water bottles use just 5% recycled material in Europe and 7% in the U.S., while Coca-Cola’s use 10%. Pepsi says it uses 9% in bottles in the U.S. and 16% in Europe... In 2009, Nestlé launched a bottle made of 25% recycled plastic at Whole Foods but later scrapped it. Danone yanked a Volvic bottle made partly from biobased plastic after consumers paid little attention... Danone sought to be more ambitious with Evian. “Once we put ourselves in consumers’ shoes we realized 25% or 50% doesn’t make a lot of sense,” said Mr. Chauvelot. “What makes sense to the consumer is 100%.”.. Evian rolled out in the U.S. in the late 1970s, wooing health-conscious Americans with splashy ads playing up the benefits of hydration. By 1999, helped by clever product placement among models and athletes, Evian was the world’s No. 1 bottled-water brand and the U.S. market leader by sales, according to company filings... Then a flood of competitors, including mass-market offerings such as Coca-Cola’s Dasani and upscale brands such as Fiji, grabbed share. Evian’s U.S. volumes plunged to 29 million gallons last year from 69 million in 2000,.. Danone said marketing about the recycling plan helped Evian sales climb 6% in the first nine months of the year... The fastest of 10 lines can produce 72,000 bottles an hour. The plant has the capacity to make two billion bottles a year... To hit its recycling goal, Evian hopes to take deliveries of Loop-branded plastics at the factory by 2020. It is also talking to other potential suppliers. “We have a backup plan for sure,”
Now he’s talking publicly for the first time. Under pressure from Mark Zuckerberg and Sheryl Sandberg to monetize WhatsApp, he pushed back as Facebook questioned the encryption he’d helped build and laid the groundwork to show targeted ads and facilitate commercial messaging.
Acton also walked away from Facebook a year before his final tranche of stock grants vested. “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.” It was perhaps the most expensive moral stand in history. Acton took a screenshot of the stock price on his way out the door—the decision cost him $850 million.
.. “As part of a proposed settlement at the end, [Facebook management] tried to put a nondisclosure agreement in place,” Acton says. “That was part of the reason that I got sort of cold feet in terms of trying to settle with these guys.”
.. That kind of answer masks the kind of issues that just prompted Instagram’s founders to abruptly quit. Kevin Systrom and Mike Krieger reportedly chafed at Facebook and Zuckerberg’s heavy hand. Acton’s account of what happened at WhatsApp—and Facebook’s plans for it—provides a rare founder’s-level window into a company that’s at once the global arbiter of privacy standards and the gatekeeper of facts, while also increasingly straying from its entrepreneurial roots.
.. Despite a transfer of several billion dollars, Acton says he never developed a rapport with Zuckerberg. “I couldn’t tell you much about the guy,” he says. In one of their dozen or so meetings, Zuck told Acton unromantically that WhatsApp, which had a stipulated degree of autonomy within the Facebook universe and continued to operate for a while out of its original offices, was “a product group to him, like Instagram.”
.. So Acton didn’t know what to expect when Zuck beckoned him to his office last September, around the time Acton told Facebook brass that he planned to leave. Acton and Koum had a clause in their contract that allowed them to get all their stock, which was being doled out over four years, if Facebook began “implementing monetization initiatives” without their consent.
.. The Facebook-WhatsApp pairing had been a head-scratcher from the start. Facebook has one of the world’s biggest advertising networks; Koum and Acton hated ads. Facebook’s added value for advertisers is how much it knows about its users; WhatsApp’s founders were pro-privacy zealots who felt their vaunted encryption had been integral to their nearly unprecedented global growth.
.. This dissonance frustrated Zuckerberg. Facebook, Acton says, had decided to pursue two ways of making money from WhatsApp. First, by showing targeted ads in WhatsApp’s new Status feature, which Acton felt broke a social compact with its users. “Targeted advertising is what makes me unhappy,” he says. His motto at WhatsApp had been “No ads, no games, no gimmicks”—a direct contrast with a parent company that derived 98% of its revenue from advertising. Another motto had been “Take the time to get it right,” a stark contrast to “Move fast and break things.”
.. Facebook also wanted to sell businesses tools to chat with WhatsApp users. Once businesses were on board, Facebook hoped to sell them analytics tools, too. The challenge was WhatsApp’s watertight end-to-end encryption, which stopped both WhatsApp and Facebook from reading messages.
.. For his part, Acton had proposed monetizing WhatsApp through a metered-user model, charging, say, a tenth of a penny after a certain large number of free messages were used up. “You build it once, it runs everywhere in every country,” Acton says. “You don’t need a sophisticated sales force. It’s a very simple business.”
.. Acton’s plan was shot down by Sandberg. “Her words were ‘It won’t scale.’ ”
.. “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.”
.. When Acton reached Zuckerberg’s office, a Facebook lawyer was present. Acton made clear that the disagreement—Facebook wanted to make money through ads, and he wanted to make it from high-volume users—meant he could get his full allocation of stock. Facebook’s legal team disagreed, saying that WhatsApp had only been exploring monetization initiatives, not “implementing” them.
.. Zuckerberg, for his part, had a simple message: “He was like, This is probably the last time you’ll ever talk to me.”
.. Acton graduated from Stanford with a bachelor’s in computer science and eventually became one of the first employees at Yahoo in 1996, making millions in the process. His biggest asset from that time at Yahoo: befriending Koum, a Ukrainian immigrant he clicked with over their similar no-nonsense style.
.. WhatsApp, persuading a handful of former Yahoo colleagues to fund a seed round while he took on cofounder status and wound up with a roughly 20% stake.
.. two things sparked Zuckerberg’s mega-offer in early 2014. One was hearing that WhatsApp’s founders had been invited to Google’s Mountain View headquarters for talks, and he did not want to lose them to a competitor.
.. He recalls Zuckerberg being “supportive” of WhatsApp’s plans to roll out end-to-end encryption, even though it would block attempts to harvest user data. If anything, he was “quick to respond” during the discussions. Zuckerberg “was not immediately evaluating ramifications in the long term.”
.. told them that they would have “zero pressure” on monetization for the next five years.
.. Facebook prepared Acton to meet with around a dozen representatives of the European Competition Commission in a teleconference. “I was coached to explain that it would be really difficult to merge or blend data between the two systems,”
.. Later he learned that elsewhere in Facebook, there were “plans and technologies to blend data.” Specifically, Facebook could use the 128-bit string of numbers assigned to each phone as a kind of bridge between accounts. The other method was phone-number matching, or pinpointing Facebook accounts with phone numbers and matching them to WhatsApp accounts with the same phone number.
.. Within 18 months, a new WhatsApp terms of service linked the accounts and made Acton look like a liar. “I think everyone was gambling because they thought that the EU might have forgotten because enough time had passed.” No such luck: Facebook wound up paying a $122 million fine for giving “incorrect or misleading information” to the EU—a cost of doing business
.. Linking these overlapping accounts was a crucial first step toward monetizing WhatsApp. The terms-of-service update would lay the groundwork for how WhatsApp could make money. During the discussions over these changes, 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 suggestions on Facebook and offer its advertising partners better targets for ads on Facebook.
.. By then, three years since the deal, Zuckerberg was growing impatient, Acton says, and he expressed his frustrations at an all-hands meeting for WhatsApp staffers. “The CFO projections, the ten-year outlook—they wanted and needed the WhatsApp revenues to continue to show the growth to Wall Street,”
.. Internally, Facebook had targeted a $10 billion revenue run rate within five years of monetization, but such numbers sounded too high to Acton—and reliant on advertising.
.. Acton had left a management position on Yahoo’s ad division over a decade earlier with frustrations at the Web portal’s so-called “Nascar approach” of putting ad banners all over a Web page. The 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.
.. He has supercharged a small messaging app, Signal, run by a security researcher named Moxie Marlinspike with a mission to put users before profit, giving it $50 million and turning it into a foundation. Now he’s working with the same people who built the opensource encryption protocol that is part of Signal and protects WhatsApp’s 1.5 billion users and that also sits as an option on Facebook Messenger, Microsoft’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.