After a long dispute over how to produce more revenue with ads and data, the messaging app’s creators are walking away leaving about $1.3 billion on the table
How ugly was the breakup between Facebook Inc. FB -0.18% and the two founders of WhatsApp, its biggest acquisition? The creators of the popular messaging service are walking away leaving about $1.3 billion on the table.
The expensive exit caps a long-simmering dispute about how to wring more revenue out of WhatsApp, according to people familiar with the matter. Facebook has remained committed to its ad-based business model amid criticism, even as Facebook Chief Executive Mark Zuckerberg has had to defend the company before American and European lawmakers.
The WhatsApp duo of Jan Koum and Brian Acton had persistent disagreements in recent years with Mr. Zuckerberg and Chief Operating Officer Sheryl Sandberg, who grew impatient for a greater return on the company’s 2014 blockbuster $22 billion purchase of the messaging app, according to the people.
.. Many of the disputes with Facebook involved how to manage data privacy while also making money from WhatsApp’s large user base, including through the targeted ads that WhatsApp’s founders had long opposed.
.. Messrs. Acton and Koum are true believers on privacy issues and have shown disdain for the potential commercial applications of the service.
.. Mr. Zuckerberg and Ms. Sandberg have touted how an advertising-supported product makes it free for consumers and helps bridge the digital divide.
.. When Facebook bought WhatsApp, it never publicly addressed how the divergent philosophies would coexist. But Mr. Zuckerberg told stock analysts that he and Mr. Koum agreed that advertising wasn’t the right way to make money from messaging apps. Mr. Zuckerberg also said he promised the co-founders the autonomy to build their own products. The sale to Facebook made the app founders both multibillionaires.
.. Small cultural disagreements between the two staffs also popped up, involving issues such as noise around the office and the size of WhatsApp’s desks and bathrooms, that took on greater significance as the split between the parent company and its acquisition persisted.
.. During the height of the Cambridge Analytica controversy, in which the research firm was accused of misusing Facebook user data to aid the Trump campaign, Mr. Acton posted that he planned to delete his Facebook account.
.. David Marcus, an executive who ran Facebook’s other chat app, Messenger, confronted his former colleague. “That was low class,” Mr. Marcus said
.. When Mr. Acton departed Facebook, he forfeited about $900 million in potential stock awards
.. Mr. Koum is expected to officially depart in mid-August, in which case he would leave behind more than two million unvested shares worth about $400 million at Facebook’s current stock price. Both men would have received all their remaining shares had they stayed until this November, when their contracts end.
.. It is also the antithesis of what WhatsApp professed to stand for. Mr. Koum, a San Jose State University dropout, grew up in Soviet-era Ukraine, where the government could track communication, and talked frequently about his commitment to privacy.
.. Mr. Koum, 42, and Mr. Acton, 46, became friends while working as engineers at Yahoo Inc
.. WhatsApp, which launched in 2009, was designed to be simple and secure. Messages were immediately deleted from its servers once sent. It charged some users 99 cents annually after one free year and carried no ads.
.. Mr. Zuckerberg assured Messrs. Koum and Acton at the time that he wouldn’t place advertising in the messaging service, according to a person familiar with the matter. Messrs. Koum and Acton also negotiated an unusual clause in their contracts that said if Facebook insisted on making any “additional monetization initiatives” such as advertising in the app, it could give the executives “good reason” to leave and cause an acceleration of stock awards that hadn’t vested
.. Mr. Acton initiated the clause in his contract allowing for early vesting of his shares. But Facebook’s legal team threatened a fight, so Mr. Acton, already worth more than $3 billion, left it alone
.. said the WhatsApp founders are “pretty naive” for believing that Facebook wouldn’t ultimately find some way to make money from the deal, such as with advertising. “Facebook is a business, not a charity,”
.. At the time of the sale, WhatsApp was profitable with fee revenue, although it is unclear by how much.
.. Facebook told investors it would stop increasing the number of ads in Facebook’s news feed, resulting in slower advertising-revenue growth. This put pressure on Facebook’s other properties—including WhatsApp—to make money.
.. That August, WhatsApp announced it would start sharing phone numbers and other user data with Facebook, straying from its earlier promise to be built “around the goal of knowing as little about you as possible.”
.. Some of the employees were turned off by Facebook’s campus, a bustling collection of restaurants, ice cream shops and services built to mirror Disneyland.
.. After WhatsApp employees hung up posters over the walls instructing hallway passersby to “please keep noise to a minimum,” some Facebook employees mocked them with chants of “Welcome to WhatsApp—Shut up!”
.. “These little ticky-tacky things add up in a company that prides itself on egalitarianism,” said one Facebook employee.
.. Messrs. Koum and Acton proposed several ideas to bring in more revenue. One, known as “re-engagement messaging,” would let advertisers contact only users who had already been their customers.
.. None of the proposals were as lucrative as Facebook’s ad-based model. “Well, that doesn’t scale,” Ms. Sandberg told the WhatsApp executives of their proposals
.. Ms. Sandberg wanted the WhatsApp leadership to pursue advertising alongside other revenue models, another person familiar with her thinking said.
.. Ms. Sandberg, 48, and Mr. Zuckerberg, 34, frequently brought up their purchase of the photo-streaming app Instagram as a way to persuade Messrs. Koum and Acton to allow advertising into WhatsApp.
.. “It worked for Instagram,” Ms. Sandberg told the WhatsApp executives on at least one occasion
.. Mr. Zuckerberg wanted WhatsApp executives to add more “special features” to the app, whereas Messrs. Koum and Acton liked its original simplicity.
.. Mr. Zuckerberg and Ms. Sandberg also wanted Messrs. Koum and Acton to loosen their stance on encryption to allow more “business flexibility,”
.. Mr. Acton—described by one former WhatsApp employee as the “moral compass” of the team—decided to leave as the discussions to place ads in Status picked up.
Failing All Tests of the Presidency
Donald Trump is many things — most of them despicable — but the leader of a nation he is not. He is not a great man. Hell, he isn’t even a good man.
Donald Trump is a man of flawed character and a moral cavity. He cannot offer moral guidance because he has no moral compass. He is too small to see over his inflated ego.
.. Trump has personalized the presidency in unprecedented ways — making every battle and every war about his personal feelings. Did the person across the street or around the world say good or bad things about him? Does the media treat him fairly? Is someone in his coterie of corruption outshining him or casting negative light on him?
His interests center on the self; country be damned.
.. By claiming that there were some “very fine people” among the extremists marching in Charlottesville, the president made a profound declaration: The accommodation of racists is his creed.
.. According to The Chicago Tribune, one of Fields’s high school teachers said he once “wrote a three-page homework paper that extolled Nazi ideology and the prowess of the Führer’s armed forces,” and that even before then, the teacher said, “he had been well aware of Fields’s racist and anti-Semitic beliefs from private discussions he had with Fields during his junior year.”
.. “At least four times when the boy was in the eighth and ninth grades, Florence police were summoned to his home, mostly by his frantic mother, Samantha Bloom, an I.T. specialist. It was just the two of them living together, and young James, among other incidents, was reported to have spat in her face, smacked her head with a phone and frightened her with a foot-long knife, according to records of the 911 calls. Neighbors, in interviews, similarly described a troubled youth who treated his mother cruelly.”
.. He apparently felt that the media had unfairly condemned him for his original remarks and he was going to be the counterpuncher and strike back at the media. Again, it was all about him, not us.
.. He was not there to heal the nation or to uplift it. He was there for personal exoneration and redemption. He wasn’t there to plead the case that America could rise on the wings of its better angels. He was there to defend the demons.
.. Trump said that he had not initially condemned both sides because he wanted to wait to get all the facts, because that’s what he likes to do.
Lies.
On Saturday, when tens of thousands of protesters turned out to counter a small group of radical racists, Trump’s first response was to tweet: “Looks like many anti-police agitators in Boston. Police are looking tough and smart! Thank you.”
This man doesn’t wait for facts. This man doesn’t care about facts, or much else for that matter. He only cares about himself, his image and his positioning.
Comments:
.. I am among the 67% of Republicans who approve of Trump’s response to the mayhem in Charlottesville.
If, unlike Charles Blow, you watched the entire press conference, you would approve too. Trump said unreservedly that racists, white nationalists, Nazis, whatever you want to call these freaks should be condemned.
Taken out of context by this columnist and most of the news media is that President Trump said that there are good people who believe that these statutes should not be taken down. This is not a controversial statement. You may disagree with this view, but surely good people could take this view.
In the present Trump Derangement Syndrome suffered by this columnist and the major news media, any semblance of nuance, or even fully listening to the president’s words, is lost.
.. Saggio: Mr. Blow lets lay aside the emotion and look at the facts. GDP is up after years of nothingness under President Obama. Unemployment is down. Wages are up. For the first time a President of the United States has faced down North Korea and there is a slim hope for progress. We are beginning a realistic trade policy with China. And many foreign corporations are building new plants in America. Does any of this count with you?
.. Jack Sonville .. As a Jew, to me the most sickening characters in this plot line are the Jews in his cabinet–people like Cohn and Mnuchin. It is not enough to say, well, I know Donald Trump and he is personally not anti-Semetic. They are enablers and excuse-makers. They like being in power so much that they will broach any indignity and throw their heritage and people under the bus.
My question to them: After your time with Trump is done, where will you go to get back your dignity and self-respect?
.. zoe .. I watched the entire press conference. How many times did he say “fake news”? Are there people in this country that believe these statues should remain? Of course. Do you really think that they were marching with torches and armed with riot gear simply to protest the removal of a statue? What is more symbolic that marching with torches? It was very easy for the donald to state what some CEOs have since stated, what Arnold Schwarzenegger stated, what just about anyone on the street could have stated, at the beginning, as soon as we heard what had happened. He was waiting for the facts? Seriously? The donald never waits for facts. Whether you support him or not you know this is true. I watched the entire presser and someone with presidential temperament would have handled it differently. Nuance? He’s afraid of alienating his base. Do you believe him when during the campaign he said he knew nothing of the KKK or David Duke? There were no “fine people” marching alongside people caring Nazi flags and KKK ornamentation with guns at their side.
.. Bob israel .. I am sure that Charles Blow is not naive. When he excoriates President Trump for essentially telling the truth about the Charlottesville riots , that there were people with legitimate motives and also people with violent intent on both sides, which is now becoming clear, he is being disingenuous, at the very least.