1 00:00:04,400 --> 00:00:07,760 Speaker 1: Welcome to tex Stuff, a production from I Heart Radio. 2 00:00:12,360 --> 00:00:15,520 Speaker 1: Hey there, and welcome to tech Stuff. I'm your host, 3 00:00:15,680 --> 00:00:19,120 Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio 4 00:00:19,200 --> 00:00:22,799 Speaker 1: and I love all things tech. And you know, back 5 00:00:22,840 --> 00:00:28,639 Speaker 1: in little company called Facebook maybe you heard of him, 6 00:00:28,800 --> 00:00:31,760 Speaker 1: would hand over the equivalent of more than twenty one 7 00:00:32,440 --> 00:00:38,200 Speaker 1: billion with a B dollars to purchase another tech company. 8 00:00:38,680 --> 00:00:43,040 Speaker 1: Not only is that a princely sum, but it's actually 9 00:00:43,080 --> 00:00:45,919 Speaker 1: more than what the other company had originally asked for. 10 00:00:46,000 --> 00:00:49,880 Speaker 1: The original asking bryce from that company that got acquired 11 00:00:50,280 --> 00:00:55,280 Speaker 1: was sixteen billion. That company was WhatsApp, and for old 12 00:00:55,280 --> 00:00:59,080 Speaker 1: fogies like me, this announcement came as a total shock. 13 00:00:59,400 --> 00:01:03,400 Speaker 1: I had even heard of WhatsApp at that time. How 14 00:01:03,440 --> 00:01:08,080 Speaker 1: could this company be worth such a staggeringly huge amount 15 00:01:08,080 --> 00:01:11,399 Speaker 1: of money and why would Facebook pay more than what 16 00:01:11,520 --> 00:01:16,400 Speaker 1: they were asking for. That's not how negotiation typically goes, 17 00:01:17,040 --> 00:01:19,040 Speaker 1: at least as far as I understand it. I am 18 00:01:19,400 --> 00:01:23,200 Speaker 1: admittedly not a business type person. Well, in this episode, 19 00:01:23,280 --> 00:01:26,559 Speaker 1: we're going to talk about the history of WhatsApp and 20 00:01:26,600 --> 00:01:29,080 Speaker 1: what the app does for the two or three of 21 00:01:29,120 --> 00:01:32,000 Speaker 1: you who don't know, and how things have changed in 22 00:01:32,040 --> 00:01:37,400 Speaker 1: the years since Facebook acquired it, because things changed a lot, 23 00:01:38,040 --> 00:01:41,880 Speaker 1: and it's a fascinating story. WhatsApp didn't start out as 24 00:01:41,920 --> 00:01:44,920 Speaker 1: an end to end communication tool build upon a premise 25 00:01:45,000 --> 00:01:47,880 Speaker 1: that the users could send private messages that were secure 26 00:01:47,960 --> 00:01:51,840 Speaker 1: from prying eyes. It started as a much more modest 27 00:01:51,920 --> 00:01:54,840 Speaker 1: tool that would let a user set a status so 28 00:01:54,920 --> 00:01:58,040 Speaker 1: that other users would know if that first person was 29 00:01:58,160 --> 00:02:01,600 Speaker 1: free to chat or whatever. That was the original WhatsApp. 30 00:02:01,640 --> 00:02:04,000 Speaker 1: It was just to say, hey, is it okay if 31 00:02:04,000 --> 00:02:06,680 Speaker 1: I call you right now? Essentially, And I guess that 32 00:02:07,280 --> 00:02:10,480 Speaker 1: takes a bit off the edge over making a phone 33 00:02:10,480 --> 00:02:13,799 Speaker 1: call For the folks who hate doing it. I'm pretty 34 00:02:13,840 --> 00:02:17,280 Speaker 1: much in that boat. And while the story of WhatsApp 35 00:02:17,400 --> 00:02:21,679 Speaker 1: is not over, there's been major drama over the last 36 00:02:21,720 --> 00:02:24,680 Speaker 1: couple of years, and we will cover that along the way. Anyway, 37 00:02:24,720 --> 00:02:27,960 Speaker 1: I'm getting ahead of myself. The story of WhatsApp should 38 00:02:28,000 --> 00:02:31,680 Speaker 1: start with the story of its founders, Yon Coomb and 39 00:02:31,760 --> 00:02:34,600 Speaker 1: Brian Acton, and I'll start off with comb first, as 40 00:02:34,680 --> 00:02:37,320 Speaker 1: his story really tells us all we need to know 41 00:02:37,400 --> 00:02:41,320 Speaker 1: about his motivations, both for developing WhatsApp the way he did, 42 00:02:41,760 --> 00:02:45,320 Speaker 1: as well as why he would ultimately leave Facebook in 43 00:02:45,360 --> 00:02:48,239 Speaker 1: two thousand and eighteen, and uh, I guess spoiler alert. 44 00:02:48,680 --> 00:02:52,919 Speaker 1: So Comb was born in the Ukraine in nineteen seventy six. 45 00:02:53,400 --> 00:02:57,160 Speaker 1: Back then, the Ukraine was part of the Soviet Union. 46 00:02:57,480 --> 00:02:59,880 Speaker 1: And you may, oh, my drew gees have forgotten what 47 00:03:00,040 --> 00:03:02,519 Speaker 1: the U S. SR was like. Back in those days. 48 00:03:03,200 --> 00:03:07,840 Speaker 1: The authoritarian government was infamous for spying on its own citizens, 49 00:03:08,080 --> 00:03:12,240 Speaker 1: eager to assess out any possible resistance to total government control. 50 00:03:12,800 --> 00:03:15,800 Speaker 1: The KGB, which was the U. S s RS State 51 00:03:15,960 --> 00:03:22,519 Speaker 1: Security Force, was justifiably feared throughout the country. Soviet citizens 52 00:03:22,520 --> 00:03:25,960 Speaker 1: were cowed into obedience, and speaking ill of the government, 53 00:03:26,080 --> 00:03:30,720 Speaker 1: even in private, was a potentially dangerous activity. The government 54 00:03:30,760 --> 00:03:34,400 Speaker 1: was known to tap phones and to intercept messages, and 55 00:03:34,440 --> 00:03:36,840 Speaker 1: the story of how people lived under that kind of 56 00:03:37,000 --> 00:03:40,280 Speaker 1: umbrella is part of the reason why folks like me 57 00:03:40,520 --> 00:03:43,880 Speaker 1: get a bit upset when we find out organizations like 58 00:03:44,040 --> 00:03:46,680 Speaker 1: the n s A here in the United States were 59 00:03:46,720 --> 00:03:50,200 Speaker 1: combing through phone records with no real checks or balances. 60 00:03:50,640 --> 00:03:54,320 Speaker 1: But let's get back to Comb. Jancomb came from a 61 00:03:54,440 --> 00:03:58,440 Speaker 1: humble home. His father worked in construction management, his mother 62 00:03:58,560 --> 00:04:01,440 Speaker 1: took care of the home. Growing up, he lived in 63 00:04:01,440 --> 00:04:04,240 Speaker 1: a house with no hot water By the time Comb 64 00:04:04,360 --> 00:04:07,960 Speaker 1: was in his teens, things were getting really rough over 65 00:04:08,000 --> 00:04:11,200 Speaker 1: in the Ukraine. There was a growing anti Semitic movement, 66 00:04:11,320 --> 00:04:14,760 Speaker 1: and John's family was Jewish. So Jan and his mother 67 00:04:15,120 --> 00:04:18,960 Speaker 1: immigrated to the United States, moving to Mountain View, California. 68 00:04:19,279 --> 00:04:23,680 Speaker 1: His father remained behind, unable to follow his family in 69 00:04:23,720 --> 00:04:27,920 Speaker 1: the United States. Komb's mother earned enough money through babysitting 70 00:04:28,000 --> 00:04:32,120 Speaker 1: to make ends meet a little bit in Jan himself 71 00:04:32,160 --> 00:04:34,719 Speaker 1: took a part time job at a grocery store, sweeping 72 00:04:34,800 --> 00:04:38,240 Speaker 1: up the aisles. His mother grew ill and so the 73 00:04:38,279 --> 00:04:41,520 Speaker 1: two ended up having to depend upon a disability allowance 74 00:04:41,560 --> 00:04:44,440 Speaker 1: from the government. They relied on food stamps to help 75 00:04:44,440 --> 00:04:49,240 Speaker 1: with their grocery purchases. Times were really hard. Comb became 76 00:04:49,279 --> 00:04:53,360 Speaker 1: interested in computer programming and computer networks. He would read 77 00:04:53,440 --> 00:04:56,160 Speaker 1: books and teach himself how to hack and code. He 78 00:04:56,240 --> 00:05:00,960 Speaker 1: joined hacker communities and he enrolled in San Jose University 79 00:05:01,000 --> 00:05:03,720 Speaker 1: and he got a job with a professional services firm 80 00:05:03,800 --> 00:05:07,320 Speaker 1: called Ernston Young part time gig as a security tester. 81 00:05:07,920 --> 00:05:11,080 Speaker 1: In that role, he would visit various companies to test 82 00:05:11,160 --> 00:05:14,800 Speaker 1: their networks, probing for vulnerabilities in an effort to shore 83 00:05:14,880 --> 00:05:18,320 Speaker 1: up defenses against the real bad guys out there. One 84 00:05:18,480 --> 00:05:21,480 Speaker 1: of his jobs brought him to the offices of Yahoo, 85 00:05:21,600 --> 00:05:25,280 Speaker 1: and there he met Yahoo employee number forty four, a 86 00:05:25,440 --> 00:05:29,360 Speaker 1: k a. Brian Acton. So let's switch over to him 87 00:05:29,400 --> 00:05:31,880 Speaker 1: for a moment, because he would become the other co 88 00:05:32,040 --> 00:05:36,680 Speaker 1: founder of WhatsApp. So Brian Acton had a very different 89 00:05:36,720 --> 00:05:40,160 Speaker 1: background than yon Comb. Acton was born in Michigan in 90 00:05:40,240 --> 00:05:43,440 Speaker 1: nineteen seventy two. That makes him about four years older 91 00:05:43,480 --> 00:05:46,800 Speaker 1: than John Is. But he grew up in Florida. And 92 00:05:46,920 --> 00:05:49,000 Speaker 1: for those folks not in the United States who aren't 93 00:05:49,000 --> 00:05:53,440 Speaker 1: familiar with our geography, Michigan and Florida are pretty darn 94 00:05:53,560 --> 00:05:56,160 Speaker 1: far apart from each other, ones on the north end 95 00:05:56,200 --> 00:05:58,279 Speaker 1: of the country, the others on the south end of 96 00:05:58,320 --> 00:06:01,640 Speaker 1: the country. His mother was a businesswoman. She founded her 97 00:06:01,680 --> 00:06:05,560 Speaker 1: own freight forwarding business. Acting credits much of his work 98 00:06:05,600 --> 00:06:09,040 Speaker 1: ethic to his mother, whom he said would work tirelessly 99 00:06:09,160 --> 00:06:11,479 Speaker 1: in an effort to make sure she could make payroll 100 00:06:11,560 --> 00:06:15,400 Speaker 1: for her employees during tough times. Acting attended the University 101 00:06:15,400 --> 00:06:18,919 Speaker 1: of Pennsylvania to study engineering, and after a year of 102 00:06:18,920 --> 00:06:22,479 Speaker 1: studying there, he transferred over to Stanford and focused on 103 00:06:22,560 --> 00:06:26,800 Speaker 1: computer science instead. He graduated in nineteen nine and he 104 00:06:26,839 --> 00:06:29,760 Speaker 1: worked for a few big companies like Adobe and Apple 105 00:06:29,880 --> 00:06:33,480 Speaker 1: in various roles, but then ended up working at Yahoo 106 00:06:33,600 --> 00:06:36,880 Speaker 1: in nineteen nine six. That's when he became employee number 107 00:06:36,960 --> 00:06:41,039 Speaker 1: forty four and he worked in the infrastructure team. Yahoo, 108 00:06:41,200 --> 00:06:43,080 Speaker 1: just so you know, had started up as a two 109 00:06:43,080 --> 00:06:46,320 Speaker 1: person project back in ninete, so it's still a very 110 00:06:46,360 --> 00:06:49,240 Speaker 1: young company when act and joined, and it was on 111 00:06:49,279 --> 00:06:52,080 Speaker 1: the rise, just as people began to suspect that there 112 00:06:52,120 --> 00:06:55,080 Speaker 1: might be gold in them the our webs. No one 113 00:06:55,160 --> 00:06:58,360 Speaker 1: was totally sure how the Internet was going to generate cash, 114 00:06:58,520 --> 00:07:01,320 Speaker 1: like an out of control bit oin minor, but the 115 00:07:01,360 --> 00:07:06,120 Speaker 1: general consensus was that the Internet was pretty much going 116 00:07:06,160 --> 00:07:08,200 Speaker 1: to be the future of business, and the web in 117 00:07:08,240 --> 00:07:10,720 Speaker 1: particular was going to take front and center stage in 118 00:07:10,760 --> 00:07:15,120 Speaker 1: that regard. Acting and Comb clicked early on. Comb was 119 00:07:15,160 --> 00:07:19,320 Speaker 1: working there as a security contractor, and of course Acting 120 00:07:19,400 --> 00:07:22,080 Speaker 1: was employee number forty four. Both of them had a 121 00:07:22,120 --> 00:07:25,880 Speaker 1: no nonsense approach to communication and feedback. Both of them 122 00:07:25,920 --> 00:07:29,720 Speaker 1: would just cut to the chase, not necessarily to be rude, 123 00:07:29,920 --> 00:07:32,920 Speaker 1: but to be efficient. Comb would end up getting a 124 00:07:33,000 --> 00:07:36,640 Speaker 1: job offer from Yahoo in early nine seven, and he 125 00:07:36,680 --> 00:07:39,360 Speaker 1: took the job offer he joined the company not long 126 00:07:39,400 --> 00:07:42,520 Speaker 1: after his initial visit. He was still attending San Jose 127 00:07:42,720 --> 00:07:45,760 Speaker 1: University at the time when he took the job at Yahoo, 128 00:07:45,960 --> 00:07:48,920 Speaker 1: but after a server emergency at Yahoo pulled him out 129 00:07:48,920 --> 00:07:51,880 Speaker 1: of class, he ultimately decided he was actually learning more 130 00:07:51,920 --> 00:07:54,640 Speaker 1: on the job and being more useful at Yahoo, and 131 00:07:54,680 --> 00:07:56,600 Speaker 1: so he dropped out of school and he worked for 132 00:07:56,680 --> 00:07:59,720 Speaker 1: Yahoo full time. And now we can kind of fast 133 00:07:59,760 --> 00:08:02,000 Speaker 1: for word a bit. Because the two men stayed at 134 00:08:02,080 --> 00:08:05,880 Speaker 1: Yahoo for several years as early employees, they benefited from 135 00:08:05,880 --> 00:08:09,440 Speaker 1: earning shares of Yahoo. The company had held its initial 136 00:08:09,480 --> 00:08:13,280 Speaker 1: public offering in nineteen and those shares were growing in 137 00:08:13,400 --> 00:08:16,640 Speaker 1: value year over year. The dot com crash of two 138 00:08:16,640 --> 00:08:19,840 Speaker 1: thousand and two thousand one was a really rough time. 139 00:08:20,280 --> 00:08:24,120 Speaker 1: Those those stock prices took a beating. Yahoo weathered the 140 00:08:24,160 --> 00:08:26,920 Speaker 1: storm and came out the other side, but it was brutal. 141 00:08:27,520 --> 00:08:30,520 Speaker 1: Before the bubble burst, Yahoo stock was up to more 142 00:08:30,560 --> 00:08:34,680 Speaker 1: than four hundred seventy dollars per share before a stock split. 143 00:08:35,000 --> 00:08:37,559 Speaker 1: And a quick side note on what stock splits are. 144 00:08:38,040 --> 00:08:40,720 Speaker 1: You can think of a company's value as being the 145 00:08:40,840 --> 00:08:44,760 Speaker 1: number of shares of that company multiplied by the market 146 00:08:44,800 --> 00:08:48,199 Speaker 1: price for those shares. So if I've got a company 147 00:08:48,240 --> 00:08:52,120 Speaker 1: that has one thousand shares held by shareholders, or they're 148 00:08:52,160 --> 00:08:54,600 Speaker 1: on the market or whatever, and the market currently values 149 00:08:54,640 --> 00:08:57,800 Speaker 1: those shares at ten dollars each, then the overall value 150 00:08:57,800 --> 00:09:01,040 Speaker 1: of my company is ten thousand dollars ten dollars per share. 151 00:09:01,200 --> 00:09:04,439 Speaker 1: One thousand shares, my company is valued at ten thousand dollars. 152 00:09:04,880 --> 00:09:08,080 Speaker 1: That's a very high level way to describe this, but 153 00:09:08,160 --> 00:09:12,240 Speaker 1: it's generally how it works. So in a stock split, 154 00:09:12,920 --> 00:09:17,559 Speaker 1: companies will issue more shares of stock, giving each shareholder 155 00:09:18,280 --> 00:09:22,160 Speaker 1: additional shares. So in a two for one stock split, 156 00:09:22,559 --> 00:09:26,200 Speaker 1: each shareholder would have the number of shares doubled. However, 157 00:09:26,600 --> 00:09:30,080 Speaker 1: the price per share would go down to half. So 158 00:09:30,120 --> 00:09:32,240 Speaker 1: in my example where I said I have a thousand 159 00:09:32,320 --> 00:09:35,360 Speaker 1: shares at ten dollars of share, now would be two 160 00:09:35,440 --> 00:09:39,440 Speaker 1: thousand shares, but at five dollars per share. So why 161 00:09:39,440 --> 00:09:42,080 Speaker 1: does the price come down on it's because you can't 162 00:09:42,120 --> 00:09:45,920 Speaker 1: magically make the company be worth more. Remember, the company's 163 00:09:46,040 --> 00:09:48,840 Speaker 1: value is based on the number of shares times the 164 00:09:48,960 --> 00:09:53,199 Speaker 1: market price for those shares, So you can't just drive 165 00:09:53,320 --> 00:09:56,520 Speaker 1: up your company's value by adding more shares at the 166 00:09:56,559 --> 00:09:59,520 Speaker 1: same price as what is currently on the market that 167 00:09:59,559 --> 00:10:04,520 Speaker 1: would be insanity. However, all that being said, after the 168 00:10:04,679 --> 00:10:09,280 Speaker 1: stock splits, the Yahoo stock was worth about eighteen dollars 169 00:10:09,280 --> 00:10:13,240 Speaker 1: per share at its peak, which is still incredible. However, 170 00:10:13,679 --> 00:10:17,120 Speaker 1: on the low side, a couple of weeks after September eleven, 171 00:10:17,280 --> 00:10:23,200 Speaker 1: two thousand one, which exacerbated the already uh struggling dot 172 00:10:23,240 --> 00:10:26,280 Speaker 1: com market, the stock price for a yah who share 173 00:10:26,360 --> 00:10:30,320 Speaker 1: was down to below ten dollars a share, So that's 174 00:10:30,360 --> 00:10:32,520 Speaker 1: like finding your dollar bill is suddenly only worth a 175 00:10:32,600 --> 00:10:37,200 Speaker 1: dime or ten cents. Still, Yahoo rebounded, and both Acting 176 00:10:37,280 --> 00:10:40,680 Speaker 1: and Comb were still employees there during this time, so 177 00:10:41,000 --> 00:10:44,920 Speaker 1: while they saw their fortunes totally crumble, they also saw 178 00:10:44,960 --> 00:10:47,880 Speaker 1: them slowly build back up again. Now, by this stage, 179 00:10:48,120 --> 00:10:51,120 Speaker 1: Comb had tragically lost both his parents. His father had 180 00:10:51,160 --> 00:10:54,880 Speaker 1: passed away in nine having never moved to the United States. 181 00:10:55,280 --> 00:10:58,640 Speaker 1: His mother passed away in two thousand. He and Brian 182 00:10:58,720 --> 00:11:01,520 Speaker 1: Acton were friends as all his colleagues. They would hang out, 183 00:11:01,600 --> 00:11:05,080 Speaker 1: they would play frisbee together, and they chatted a lot. 184 00:11:05,440 --> 00:11:08,960 Speaker 1: So Acton's own resolve was being tested while he was 185 00:11:09,000 --> 00:11:11,640 Speaker 1: working at Yahoo. He was put on a project in 186 00:11:11,679 --> 00:11:15,400 Speaker 1: which he was helping build out an advertising strategy, and 187 00:11:15,880 --> 00:11:21,000 Speaker 1: Brian Acton does not like advertising. He finds it distasteful, 188 00:11:21,360 --> 00:11:24,679 Speaker 1: and he was discouraged that the only real goal of 189 00:11:25,000 --> 00:11:27,360 Speaker 1: this particular job that he was doing was to convince 190 00:11:27,360 --> 00:11:30,959 Speaker 1: people to buy stuff. By two thousand seven, both Comb 191 00:11:31,000 --> 00:11:33,360 Speaker 1: and Acton felt they had done everything they wanted to 192 00:11:33,400 --> 00:11:35,600 Speaker 1: do at Yahoo and now they were just doing stuff 193 00:11:35,640 --> 00:11:38,080 Speaker 1: in order to have a job. So they decided it 194 00:11:38,120 --> 00:11:40,280 Speaker 1: was time to go, and in the fall of two 195 00:11:40,320 --> 00:11:44,160 Speaker 1: thousand seven both of them resigned from Yahoo, and they 196 00:11:44,160 --> 00:11:46,600 Speaker 1: each took time to consider what they should do next. 197 00:11:47,160 --> 00:11:50,280 Speaker 1: After about a year, both men had applied to and 198 00:11:50,360 --> 00:11:55,640 Speaker 1: been rejected by Facebook. Now, if Facebook had hired one 199 00:11:55,840 --> 00:11:59,280 Speaker 1: or both of them, this story might not have happened 200 00:11:59,280 --> 00:12:01,920 Speaker 1: at all. What app may have never been a thing. 201 00:12:02,120 --> 00:12:05,360 Speaker 1: But because neither were hired, it's set the stage for 202 00:12:05,480 --> 00:12:09,880 Speaker 1: what would come next. Comb had purchased an iPhone in 203 00:12:09,960 --> 00:12:12,600 Speaker 1: early two thousand nine, and he could see something that 204 00:12:12,640 --> 00:12:15,839 Speaker 1: took other folks a lot longer to notice. The web 205 00:12:15,880 --> 00:12:20,120 Speaker 1: experience was inevitably going to move to a mobile platform. 206 00:12:20,280 --> 00:12:23,440 Speaker 1: Comb anticipated that people would be relying on devices like 207 00:12:23,480 --> 00:12:26,760 Speaker 1: smartphones a lot more in the future, shifting the focus 208 00:12:26,840 --> 00:12:30,440 Speaker 1: of the web experience from desktops and laptops to mobile 209 00:12:30,480 --> 00:12:33,960 Speaker 1: phones and other mobile devices. And he had an idea 210 00:12:34,080 --> 00:12:36,800 Speaker 1: for an app that he wanted to create, and I 211 00:12:36,840 --> 00:12:38,920 Speaker 1: just want to say, like this whole move to the 212 00:12:38,960 --> 00:12:43,880 Speaker 1: mobile experience. I remember us looking at that move as 213 00:12:43,880 --> 00:12:47,160 Speaker 1: well when we were with how stuff works the website, 214 00:12:47,280 --> 00:12:51,520 Speaker 1: because the experience of accessing website on a phone is 215 00:12:51,720 --> 00:12:53,880 Speaker 1: different from the way you would access it on a 216 00:12:53,920 --> 00:12:57,320 Speaker 1: desktop or on a laptop, and it meant that we 217 00:12:57,360 --> 00:13:00,280 Speaker 1: had to really focus on how to optimize is that 218 00:13:00,360 --> 00:13:03,240 Speaker 1: experience so people would still want to come and visit 219 00:13:03,240 --> 00:13:07,480 Speaker 1: the website. It's a real challenge. And Come was already 220 00:13:07,520 --> 00:13:09,199 Speaker 1: ahead of the game. He was seeing that this is 221 00:13:09,240 --> 00:13:12,120 Speaker 1: where things were headed. So his idea was pretty simple. 222 00:13:12,800 --> 00:13:16,040 Speaker 1: He thought it would be useful if the address book 223 00:13:16,400 --> 00:13:20,280 Speaker 1: on his smartphone allowed the people on his address book 224 00:13:20,320 --> 00:13:23,000 Speaker 1: to set a status. So that way, if he's thinking 225 00:13:23,000 --> 00:13:25,120 Speaker 1: about calling someone, he pulls up the address book, he 226 00:13:25,120 --> 00:13:26,840 Speaker 1: looks at their name and he sees the status and 227 00:13:26,840 --> 00:13:29,480 Speaker 1: he sees, oh, that person is busy. You know they're 228 00:13:29,520 --> 00:13:32,320 Speaker 1: on a conference call or something. I know not to 229 00:13:32,400 --> 00:13:35,240 Speaker 1: call that person. So the status could let other users 230 00:13:35,240 --> 00:13:37,800 Speaker 1: know if the person is available to text or chat, 231 00:13:38,040 --> 00:13:39,800 Speaker 1: or if they're in a meeting or going to a 232 00:13:39,800 --> 00:13:43,400 Speaker 1: movie or are otherwise occupied. It could give an alert 233 00:13:43,480 --> 00:13:46,920 Speaker 1: if someone's phone battery had was low. So let's say 234 00:13:46,920 --> 00:13:49,600 Speaker 1: you're looking at your your phone book and you say, oh, 235 00:13:49,679 --> 00:13:51,920 Speaker 1: I want to call my dad, but my dad's phone 236 00:13:51,920 --> 00:13:55,120 Speaker 1: batteries about to die, so I should probably hold off 237 00:13:55,160 --> 00:13:57,760 Speaker 1: so that he can conserve that battery life in case 238 00:13:57,760 --> 00:13:59,559 Speaker 1: he needs it for something important, and I'll just call 239 00:13:59,640 --> 00:14:03,160 Speaker 1: him later. Or it might even be used to let 240 00:14:03,200 --> 00:14:06,480 Speaker 1: people know if someone's interested in hanging out or grabbing 241 00:14:06,520 --> 00:14:09,240 Speaker 1: dinner or something. You just set a status saying you 242 00:14:09,320 --> 00:14:12,400 Speaker 1: know that you're looking to see if anyone else wants 243 00:14:12,400 --> 00:14:14,439 Speaker 1: to grab a bite to eat. You could do that 244 00:14:14,559 --> 00:14:17,800 Speaker 1: as well. Comb already had a name in mind for this, 245 00:14:17,920 --> 00:14:20,800 Speaker 1: and it was WhatsApp, which itself was a play on 246 00:14:20,840 --> 00:14:24,120 Speaker 1: the phrase what's up. The status would tell users at 247 00:14:24,160 --> 00:14:28,360 Speaker 1: a glance what was up with their various contacts, saving 248 00:14:28,400 --> 00:14:31,000 Speaker 1: them time if they see that someone's unavailable to chat 249 00:14:31,120 --> 00:14:34,440 Speaker 1: or whatever. There was reportedly one other name in contention, 250 00:14:34,640 --> 00:14:38,800 Speaker 1: which was zapp, but we got WhatsApp on his birthday 251 00:14:38,920 --> 00:14:44,920 Speaker 1: February twenty, two thousand nine, Comb Incorporated WhatsApp Incorporated in California. 252 00:14:45,080 --> 00:14:47,840 Speaker 1: He still had some cash from his Yahoo days when 253 00:14:47,840 --> 00:14:49,960 Speaker 1: he left the company. He left just shy of half 254 00:14:50,000 --> 00:14:52,760 Speaker 1: a million dollars. He was working on the back end 255 00:14:52,840 --> 00:14:56,240 Speaker 1: side of WhatsApp. He was researching regional phone codes and 256 00:14:56,280 --> 00:14:58,280 Speaker 1: stuff like that in an effort to build out the 257 00:14:58,320 --> 00:15:01,240 Speaker 1: systems that would actually in able his idea to work. 258 00:15:01,640 --> 00:15:03,920 Speaker 1: And he got in touch with an iPhone app developer 259 00:15:04,080 --> 00:15:08,320 Speaker 1: named Igor Slomnikov and they got to work. They spent 260 00:15:08,400 --> 00:15:11,360 Speaker 1: a month trying to get things working properly, and it 261 00:15:11,440 --> 00:15:14,040 Speaker 1: was slow going. For one thing, Comb needed people to 262 00:15:14,160 --> 00:15:17,000 Speaker 1: download and install the app, just to test it out 263 00:15:17,200 --> 00:15:19,400 Speaker 1: and to be able to work on these features, and 264 00:15:19,440 --> 00:15:21,400 Speaker 1: there weren't a whole lot of folks available to do 265 00:15:21,440 --> 00:15:24,480 Speaker 1: it within his circle. He got discouraged, and he talked 266 00:15:24,520 --> 00:15:27,080 Speaker 1: with Brian Acton. He said, maybe I should just give 267 00:15:27,160 --> 00:15:30,480 Speaker 1: up on this thing and just walk away. But Acton said, no, no, no, 268 00:15:30,520 --> 00:15:33,800 Speaker 1: you should stick with it, stay with us a bit longer. 269 00:15:33,840 --> 00:15:36,200 Speaker 1: I think you're onto something. In the summer of two 270 00:15:36,200 --> 00:15:40,960 Speaker 1: thousand nine, Apple change things and it made push notifications 271 00:15:41,000 --> 00:15:44,640 Speaker 1: available to app developers, and a push notification in case 272 00:15:44,680 --> 00:15:47,680 Speaker 1: you don't know gives an app the ability to send 273 00:15:47,720 --> 00:15:50,880 Speaker 1: an alert to an end user, even if that user 274 00:15:51,000 --> 00:15:55,640 Speaker 1: is not actively engaged in that app. Jan included push 275 00:15:55,720 --> 00:16:00,840 Speaker 1: notifications in his version of WhatsApp. Now, if user change 276 00:16:00,920 --> 00:16:03,800 Speaker 1: their status, it could send out a notification to everyone 277 00:16:03,880 --> 00:16:07,760 Speaker 1: else in that user's address book who also had downloaded 278 00:16:07,840 --> 00:16:11,080 Speaker 1: and installed WhatsApp. So you need both of those things right. 279 00:16:11,120 --> 00:16:13,840 Speaker 1: You have to be within the address book of the person, 280 00:16:14,240 --> 00:16:16,920 Speaker 1: and you also had to have WhatsApp installed on your phone. 281 00:16:17,080 --> 00:16:20,040 Speaker 1: But if you did, then someone could change their status 282 00:16:20,080 --> 00:16:22,720 Speaker 1: to something like I'm washing my hair and it would 283 00:16:22,760 --> 00:16:25,280 Speaker 1: go out to all their WhatsApp friends. So it was 284 00:16:25,320 --> 00:16:29,280 Speaker 1: a way of not just notifying people, but communicating with 285 00:16:29,440 --> 00:16:33,320 Speaker 1: them in a new and interesting way. And then something 286 00:16:33,480 --> 00:16:36,000 Speaker 1: kind of strange happened, and actually I would argue, it's 287 00:16:36,000 --> 00:16:40,120 Speaker 1: not that strange, but comb didn't anticipate it. WhatsApp users 288 00:16:40,160 --> 00:16:43,480 Speaker 1: began to leverage the app as a sort of messaging service. 289 00:16:43,600 --> 00:16:48,360 Speaker 1: They were communicating through these status updates, which in a 290 00:16:48,400 --> 00:16:51,800 Speaker 1: way is a lot like how Twitter evolved over time. 291 00:16:51,960 --> 00:16:54,080 Speaker 1: And so it's not unusual for people to come up 292 00:16:54,080 --> 00:16:56,640 Speaker 1: with alternative ways to use a tool once they get 293 00:16:56,680 --> 00:16:59,640 Speaker 1: their hands on the tool. You know, the person developing 294 00:16:59,640 --> 00:17:01,760 Speaker 1: it had an idea of how it's going to be used, 295 00:17:01,800 --> 00:17:05,920 Speaker 1: but that doesn't necessarily follow through once people get access 296 00:17:05,920 --> 00:17:08,560 Speaker 1: to it. But a good developer will take note of 297 00:17:08,600 --> 00:17:12,640 Speaker 1: those behaviors and cater to them. A great developer will 298 00:17:12,800 --> 00:17:16,000 Speaker 1: enhance those abilities even further. And Joan was about to 299 00:17:16,040 --> 00:17:19,760 Speaker 1: turn into a great developer. I'll explain more in just 300 00:17:19,800 --> 00:17:29,560 Speaker 1: a moment, but first let's take a quick break. What 301 00:17:29,720 --> 00:17:33,960 Speaker 1: Jan had inadvertently done is create a free messaging service. 302 00:17:34,200 --> 00:17:36,840 Speaker 1: And this requires us to think back a little bit. 303 00:17:37,600 --> 00:17:41,120 Speaker 1: It's not necessarily as common now, but a decade ago, 304 00:17:41,680 --> 00:17:44,960 Speaker 1: it was not unusual for phone companies to charge customers 305 00:17:45,000 --> 00:17:49,440 Speaker 1: for text messaging. Some still do. Phone plans varied, however, 306 00:17:49,520 --> 00:17:52,440 Speaker 1: Some allowed for a certain number of text messages per month, 307 00:17:52,760 --> 00:17:54,840 Speaker 1: and if you went over that then you would have 308 00:17:54,880 --> 00:17:58,159 Speaker 1: to pay a fee, possibly a small fee per additional 309 00:17:58,240 --> 00:18:01,639 Speaker 1: text message. Others were pay as you go, and a 310 00:18:01,680 --> 00:18:04,000 Speaker 1: fee here in the United States could range between ten 311 00:18:04,080 --> 00:18:08,160 Speaker 1: to thirty cents per text message. A few plans allowed 312 00:18:08,200 --> 00:18:11,160 Speaker 1: for unlimited texts, but you were probably paying a lot 313 00:18:11,200 --> 00:18:14,080 Speaker 1: more for that plan. And then there was the policy 314 00:18:14,160 --> 00:18:17,800 Speaker 1: that to this day I think is a total scam, 315 00:18:17,880 --> 00:18:20,720 Speaker 1: which is that you would get charged for sending out 316 00:18:20,840 --> 00:18:24,160 Speaker 1: too many texts. I kind of understand that. I mean, 317 00:18:24,800 --> 00:18:27,679 Speaker 1: in a way, I think it's kind of you know, 318 00:18:28,160 --> 00:18:32,439 Speaker 1: stone age policy, but I understand it from a certain perspective. However, 319 00:18:32,440 --> 00:18:36,680 Speaker 1: you would also get fees for receiving texts, not reading them, 320 00:18:36,720 --> 00:18:41,119 Speaker 1: just receiving them. So how is that fair? How is 321 00:18:41,160 --> 00:18:43,439 Speaker 1: it fair for a carrier to charge you both for 322 00:18:43,560 --> 00:18:47,480 Speaker 1: sending and receiving a text. In fact, if both people 323 00:18:47,720 --> 00:18:51,200 Speaker 1: on a text message conversation, we're using the same phone carrier, 324 00:18:51,680 --> 00:18:54,160 Speaker 1: it was possible for that carrier to collect on both 325 00:18:54,200 --> 00:18:58,240 Speaker 1: the sending and the receiving side of a text message. 326 00:18:58,280 --> 00:19:01,080 Speaker 1: This would be like if you were receiving a letter 327 00:19:01,119 --> 00:19:03,480 Speaker 1: in the mail you had to pay for the stamp. 328 00:19:04,000 --> 00:19:07,560 Speaker 1: They were double dipping for the same communication, charging both parties, 329 00:19:07,600 --> 00:19:10,200 Speaker 1: and that's rotten if you ask me. But it gets 330 00:19:10,240 --> 00:19:12,960 Speaker 1: even more expensive if you're trying to communicate with someone 331 00:19:13,040 --> 00:19:16,240 Speaker 1: who happens to be in another country, not here in 332 00:19:16,280 --> 00:19:19,480 Speaker 1: the United States. The average person might not do that 333 00:19:19,640 --> 00:19:22,400 Speaker 1: too frequently. You know a lot of people do, but 334 00:19:22,560 --> 00:19:25,520 Speaker 1: I'd say the vast average of the United States citizens 335 00:19:25,520 --> 00:19:29,639 Speaker 1: were communicating within the US. However, in places like the 336 00:19:29,680 --> 00:19:33,320 Speaker 1: European Union, where citizens in an EU country can travel 337 00:19:33,520 --> 00:19:37,119 Speaker 1: freely to other EU countries to work or to study, 338 00:19:37,680 --> 00:19:40,000 Speaker 1: it's not unusual at all to have to communicate with 339 00:19:40,040 --> 00:19:44,240 Speaker 1: someone who's in another country. SMS messages, that is, text 340 00:19:44,320 --> 00:19:48,080 Speaker 1: messages are an effective way to communicate succinctly, but those 341 00:19:48,119 --> 00:19:51,080 Speaker 1: text fees could get pretty hefty, or at least they were, 342 00:19:51,119 --> 00:19:55,440 Speaker 1: at the very bottom line, a nuisance, and WhatsApp got 343 00:19:55,440 --> 00:19:58,920 Speaker 1: around that messages were sent through the app, not as 344 00:19:59,119 --> 00:20:03,480 Speaker 1: SMS messages, So if you connected to WiFi with your smartphone, 345 00:20:03,600 --> 00:20:05,720 Speaker 1: you weren't even using out the data on your cell 346 00:20:05,760 --> 00:20:09,480 Speaker 1: phone plan. So you can now send messages for free 347 00:20:09,640 --> 00:20:12,240 Speaker 1: through the status updates. You didn't have to worry about 348 00:20:12,280 --> 00:20:15,439 Speaker 1: those text fees, and the log in for WhatsApp was 349 00:20:15,520 --> 00:20:18,000 Speaker 1: just your phone number, you didn't need a user name. 350 00:20:18,280 --> 00:20:20,359 Speaker 1: It was a great work around all on its own. 351 00:20:20,400 --> 00:20:23,080 Speaker 1: People loved it. Like you knew the phone numbers you 352 00:20:23,080 --> 00:20:26,199 Speaker 1: wanted to text, you just did it through WhatsApp and 353 00:20:26,240 --> 00:20:29,000 Speaker 1: you avoided having to do all that nonsense with the 354 00:20:29,119 --> 00:20:33,040 Speaker 1: SMS fees. Acting and COMB began to work on fleshing 355 00:20:33,040 --> 00:20:36,679 Speaker 1: out WhatsApps so that it wasn't an ad hoc messaging system, 356 00:20:36,720 --> 00:20:40,879 Speaker 1: but rather a purpose built messaging system. Acting also reached 357 00:20:40,880 --> 00:20:43,800 Speaker 1: out to several of his former Yahoo colleagues and he 358 00:20:43,880 --> 00:20:46,359 Speaker 1: raised some investment money to the tune of a quarter 359 00:20:46,480 --> 00:20:50,600 Speaker 1: of a million dollars two hundred fifty thousand dollars. He 360 00:20:50,680 --> 00:20:55,400 Speaker 1: officially joined WhatsApp in November two thousand nine. Now WhatsApp 361 00:20:55,440 --> 00:20:59,320 Speaker 1: shifted toward being a messaging service. Users could reach out 362 00:20:59,320 --> 00:21:01,480 Speaker 1: to people in their address list who also had the 363 00:21:01,480 --> 00:21:04,879 Speaker 1: app and send text messages over WiFi for free. They 364 00:21:04,880 --> 00:21:07,840 Speaker 1: could send out group messages to contacting a bunch of 365 00:21:07,840 --> 00:21:10,600 Speaker 1: people at once instead of one at a time, And 366 00:21:10,600 --> 00:21:14,000 Speaker 1: there was this great double check feature. You would get 367 00:21:14,119 --> 00:21:17,080 Speaker 1: one check when WhatsApp detected that your message had been 368 00:21:17,119 --> 00:21:19,840 Speaker 1: received by the other party. You would get another one 369 00:21:20,080 --> 00:21:22,640 Speaker 1: when that message was read. You didn't have to worry 370 00:21:22,680 --> 00:21:24,760 Speaker 1: about a message getting lost in the ether. You know, 371 00:21:24,800 --> 00:21:26,879 Speaker 1: if you send a text message, the only way you 372 00:21:26,920 --> 00:21:29,600 Speaker 1: know the person actually got it is if they responded. 373 00:21:30,080 --> 00:21:32,000 Speaker 1: This way you could actually see if they got it. 374 00:21:32,080 --> 00:21:34,399 Speaker 1: You could see if they responded, or see if they 375 00:21:34,440 --> 00:21:37,359 Speaker 1: read it, and if they hadn't read it, you would 376 00:21:37,520 --> 00:21:39,879 Speaker 1: be like, hey, what is going on here? You know 377 00:21:39,920 --> 00:21:42,439 Speaker 1: whether or not it made it to the correct destination 378 00:21:42,800 --> 00:21:46,119 Speaker 1: to expand beyond the iOS crowd. The co founders reached 379 00:21:46,160 --> 00:21:49,720 Speaker 1: out to a developer named Chris Piper. He was getting 380 00:21:49,720 --> 00:21:52,680 Speaker 1: to work on another version of the app, but it 381 00:21:52,720 --> 00:21:56,360 Speaker 1: wasn't for Android because Android hadn't really gained a lot 382 00:21:56,359 --> 00:21:59,199 Speaker 1: of traction yet. It would become an enormous part of 383 00:21:59,240 --> 00:22:02,439 Speaker 1: WhatsApp straight g further down the line, but at this time, 384 00:22:03,000 --> 00:22:05,679 Speaker 1: hardly anyone was running around with an Android phone. I 385 00:22:05,720 --> 00:22:09,080 Speaker 1: mean I was, but I'm a dork. Not many other 386 00:22:09,080 --> 00:22:12,479 Speaker 1: people were doing it. Pipher was able to create a 387 00:22:12,560 --> 00:22:16,679 Speaker 1: BlackBerry version of WhatsApp because yeah, back then, BlackBerry was 388 00:22:16,720 --> 00:22:20,080 Speaker 1: still a powerhouse in smartphones. You have to remember that 389 00:22:20,200 --> 00:22:23,640 Speaker 1: before the iPhone came along in two thousand seven, BlackBerry 390 00:22:23,720 --> 00:22:27,840 Speaker 1: was practically the only smartphone game in town. That's an exaggeration, 391 00:22:27,880 --> 00:22:30,400 Speaker 1: but it's not much of one. BlackBerry was pretty much 392 00:22:30,480 --> 00:22:34,320 Speaker 1: it when it came to smartphones pre iPhone. They set 393 00:22:34,400 --> 00:22:37,240 Speaker 1: up a temporary office space and they continued to work 394 00:22:37,320 --> 00:22:41,920 Speaker 1: on the app. Meanwhile, more people were beginning to discover WhatsApp, 395 00:22:42,160 --> 00:22:44,320 Speaker 1: and at first it wasn't a money maker at all. 396 00:22:44,480 --> 00:22:47,840 Speaker 1: In fact, it was mostly a drain on Comb's personal resources. 397 00:22:48,359 --> 00:22:52,160 Speaker 1: As part of the verification process when signing up new users, 398 00:22:52,560 --> 00:22:56,439 Speaker 1: WhatsApp would send an old school SMS text message to 399 00:22:56,600 --> 00:23:00,080 Speaker 1: that user's phone with the verification, but the come and 400 00:23:00,160 --> 00:23:03,720 Speaker 1: he had to pay for this service, And depending upon 401 00:23:03,920 --> 00:23:07,000 Speaker 1: where that end user was, it could get expensive, because 402 00:23:07,000 --> 00:23:09,480 Speaker 1: a message to a place like the Middle East might 403 00:23:09,560 --> 00:23:13,639 Speaker 1: cost sixty five cents per message. And yeah, a little 404 00:23:13,680 --> 00:23:16,520 Speaker 1: more than half a dollar isn't much all on its own, 405 00:23:16,560 --> 00:23:19,800 Speaker 1: but when you consider that thousands and later millions and 406 00:23:19,840 --> 00:23:22,879 Speaker 1: then tens of millions, and then hundreds of millions of 407 00:23:22,920 --> 00:23:26,600 Speaker 1: people were signing up, those costs begin to add up. 408 00:23:27,359 --> 00:23:31,280 Speaker 1: Sometimes the app would be available for free. Sometimes it 409 00:23:31,400 --> 00:23:33,920 Speaker 1: was a paid app. So what was going on? Why 410 00:23:33,920 --> 00:23:36,439 Speaker 1: did people have to pay for it sometimes? And sometimes 411 00:23:36,480 --> 00:23:40,280 Speaker 1: it was just available for free. This wasn't necessarily a 412 00:23:40,320 --> 00:23:43,040 Speaker 1: revenue strategy. It kind of was, but it was also 413 00:23:43,080 --> 00:23:46,960 Speaker 1: a way of metering adoption. And what I mean by 414 00:23:46,960 --> 00:23:49,719 Speaker 1: that is that the founders were using the paid option 415 00:23:49,800 --> 00:23:52,400 Speaker 1: to help slow down growth. When things were getting out 416 00:23:52,400 --> 00:23:56,000 Speaker 1: of hand. They would see a ton of people adopting WhatsApp, 417 00:23:56,160 --> 00:23:58,800 Speaker 1: and in order to slow things DOWND. They'd say, all right, 418 00:23:58,880 --> 00:24:01,439 Speaker 1: let's switch it to a paid app. And it was 419 00:24:01,560 --> 00:24:05,280 Speaker 1: not necessarily to make money, although that was definitely welcome, 420 00:24:05,800 --> 00:24:08,120 Speaker 1: but it was more to say, let's slow things down 421 00:24:08,160 --> 00:24:10,480 Speaker 1: because fewer people are going to download it if we 422 00:24:10,560 --> 00:24:13,760 Speaker 1: charge for it. So they charged like a dollar for 423 00:24:13,880 --> 00:24:17,399 Speaker 1: the app, and if the adoption began to a spike, 424 00:24:17,440 --> 00:24:19,400 Speaker 1: they would flip that switch. They'd make it a paid app, 425 00:24:19,440 --> 00:24:21,080 Speaker 1: and when things would calm down, they would switch it 426 00:24:21,119 --> 00:24:23,800 Speaker 1: back down to free. By the end of two thousand nine, 427 00:24:24,200 --> 00:24:27,520 Speaker 1: they included the ability for iPhone users to send photos 428 00:24:27,600 --> 00:24:30,639 Speaker 1: over WhatsApp. And they also saw that when they were 429 00:24:30,720 --> 00:24:34,440 Speaker 1: charging that dollar for the app, people were still downloading 430 00:24:34,480 --> 00:24:37,400 Speaker 1: the app. They were still paying that dollar, and they 431 00:24:37,440 --> 00:24:40,520 Speaker 1: realized that maybe they could make this continue as a 432 00:24:40,520 --> 00:24:44,560 Speaker 1: paid app. The general strategy was that WhatsApp would be 433 00:24:44,640 --> 00:24:47,760 Speaker 1: free to users for the first year, but after that year, 434 00:24:48,119 --> 00:24:52,040 Speaker 1: users would be required to pay a one dollar subscription 435 00:24:52,119 --> 00:24:54,760 Speaker 1: fee for the next year, and every year after that 436 00:24:54,880 --> 00:24:58,520 Speaker 1: they would renew with another one dollar. Now, when you 437 00:24:58,560 --> 00:25:00,840 Speaker 1: compare that to the amount of money they might be 438 00:25:00,880 --> 00:25:05,159 Speaker 1: spending on text messaging fees, that was nothing. So the 439 00:25:05,280 --> 00:25:09,280 Speaker 1: money was coming in one other really big decision that 440 00:25:09,359 --> 00:25:12,000 Speaker 1: Acting and Coma agreed upon is that the app would 441 00:25:12,040 --> 00:25:16,320 Speaker 1: never ever include advertising. They both felt that ads were 442 00:25:16,320 --> 00:25:18,919 Speaker 1: a bad idea, that it would ruin the experience and 443 00:25:18,920 --> 00:25:22,399 Speaker 1: that just felt wrong. Brian even left a note for 444 00:25:22,480 --> 00:25:26,640 Speaker 1: Jon with the phrase no ads, no games, no gimmicks, 445 00:25:26,760 --> 00:25:31,080 Speaker 1: and Jan would thumbtack that to his desk. Acting felt 446 00:25:31,119 --> 00:25:34,439 Speaker 1: passionately that the experience shouldn't be diluted by these things 447 00:25:34,760 --> 00:25:38,919 Speaker 1: or monetized in those ways, and Jan agreed. The downside 448 00:25:38,920 --> 00:25:41,679 Speaker 1: of that approach is that it was harder to make money. 449 00:25:42,000 --> 00:25:45,399 Speaker 1: Comen Acting weren't really about to make the rounds with 450 00:25:45,440 --> 00:25:47,600 Speaker 1: the press. They didn't want to do that either. They 451 00:25:47,600 --> 00:25:50,280 Speaker 1: didn't try to do PR blasts or anything like that. 452 00:25:50,880 --> 00:25:53,960 Speaker 1: The service was picking up steam from users all by itself. 453 00:25:54,760 --> 00:25:59,119 Speaker 1: Venture capitalists actually sought out the co founders, and the 454 00:25:59,160 --> 00:26:02,159 Speaker 1: two of them resist did the overtures of these investors 455 00:26:02,160 --> 00:26:04,520 Speaker 1: for a while. They were worried that people coming in 456 00:26:04,560 --> 00:26:08,199 Speaker 1: with investment money would make demands that they compromise on 457 00:26:08,240 --> 00:26:11,760 Speaker 1: their service. They were also worried that investors would make 458 00:26:11,800 --> 00:26:15,000 Speaker 1: them have to incorporate ads or somehow change things beyond 459 00:26:15,400 --> 00:26:20,000 Speaker 1: what their vision was for WhatsApp. They did eventually make 460 00:26:20,080 --> 00:26:23,080 Speaker 1: an agreement with the investment firm Sequoia for around a 461 00:26:23,160 --> 00:26:26,480 Speaker 1: funding that amounted to eight million dollars after they were 462 00:26:26,520 --> 00:26:30,720 Speaker 1: assured that the firm would only act in a strategic 463 00:26:30,800 --> 00:26:35,840 Speaker 1: advisor capacity. Internally, the company continued to grow slowly over 464 00:26:35,880 --> 00:26:38,400 Speaker 1: the first couple of years. By two thousand and fourteen, 465 00:26:38,640 --> 00:26:43,360 Speaker 1: when Facebook would swoop in, the company boasted fifty five employees. 466 00:26:43,400 --> 00:26:47,320 Speaker 1: About half of them were engineers working on WhatsApp services, 467 00:26:47,359 --> 00:26:50,680 Speaker 1: and the rest were essentially customer service representatives who are 468 00:26:50,680 --> 00:26:54,720 Speaker 1: providing support in dozens of languages. The user numbers were 469 00:26:54,720 --> 00:26:58,560 Speaker 1: growing really fast, but the company itself was still very small. 470 00:26:59,240 --> 00:27:02,720 Speaker 1: They would have been actually moved to a nondescript office building. 471 00:27:02,840 --> 00:27:05,720 Speaker 1: There was no sign indicating the company was even there, 472 00:27:06,160 --> 00:27:07,560 Speaker 1: and it was the sort of place you had to 473 00:27:07,600 --> 00:27:09,639 Speaker 1: know about before you visited, or else you might just 474 00:27:09,640 --> 00:27:12,439 Speaker 1: spend all day just looking for it. The whole endeavor 475 00:27:12,600 --> 00:27:16,280 Speaker 1: was keeping a fairly low profile. In two thousand thirteen, 476 00:27:16,520 --> 00:27:20,359 Speaker 1: one year before Facebook's acquisition, Acting and Coomb decided to 477 00:27:20,359 --> 00:27:23,800 Speaker 1: hold another round of funding. By that time, the service 478 00:27:23,960 --> 00:27:27,640 Speaker 1: was really going strong from a user standpoint. They boasted 479 00:27:27,880 --> 00:27:32,600 Speaker 1: two hundred million active users by the beginning of and 480 00:27:32,640 --> 00:27:35,400 Speaker 1: an active user is someone who uses a service at 481 00:27:35,480 --> 00:27:39,320 Speaker 1: least once a month. As Joan would say, active users 482 00:27:39,359 --> 00:27:43,600 Speaker 1: are what's important, not registered users, because anyone can register 483 00:27:43,800 --> 00:27:46,320 Speaker 1: to a service and become a user, but then never 484 00:27:46,440 --> 00:27:50,800 Speaker 1: touch the app or service again, so a registered account 485 00:27:50,880 --> 00:27:54,879 Speaker 1: doesn't really mean much. Active users are how you should 486 00:27:54,880 --> 00:27:58,840 Speaker 1: measure success because it shows that those people depend upon 487 00:27:59,040 --> 00:28:02,840 Speaker 1: and hopefully whatever it is you are offering. The co 488 00:28:03,000 --> 00:28:06,880 Speaker 1: founders had decided on this secret round of funding because 489 00:28:06,920 --> 00:28:08,919 Speaker 1: they wanted to make certain there was money in the 490 00:28:08,920 --> 00:28:12,280 Speaker 1: company in order to make payroll. Acting was remembering the 491 00:28:12,320 --> 00:28:15,760 Speaker 1: lessons he picked up from his mother's freight forwarding business. 492 00:28:15,800 --> 00:28:19,960 Speaker 1: So with this round they raised another fifty million dollars. 493 00:28:20,720 --> 00:28:24,119 Speaker 1: At the time, the company had eight point to five 494 00:28:24,400 --> 00:28:27,600 Speaker 1: seven million dollars in its accounts, which means that they 495 00:28:27,680 --> 00:28:31,000 Speaker 1: actually still had more money than the original eight point 496 00:28:31,040 --> 00:28:33,760 Speaker 1: to five million dollars that had been invested in it. 497 00:28:34,800 --> 00:28:37,840 Speaker 1: But it wasn't like WhatsApp was raking an enormous revenue. 498 00:28:38,200 --> 00:28:41,840 Speaker 1: It was stable, you know, it was generating income and 499 00:28:41,960 --> 00:28:45,640 Speaker 1: profit at least some quarters. It was profitable, but it 500 00:28:45,680 --> 00:28:49,000 Speaker 1: wasn't what you'd call a runaway success from a profit perspective, 501 00:28:49,560 --> 00:28:51,760 Speaker 1: the company had made some other decisions. On top of 502 00:28:51,800 --> 00:28:55,360 Speaker 1: turning down ad deals and keeping games and gimmicks off 503 00:28:55,360 --> 00:28:58,480 Speaker 1: the app, they also decided that these servers running the 504 00:28:58,520 --> 00:29:02,400 Speaker 1: service would not hold onto user messages, so when people 505 00:29:02,440 --> 00:29:06,920 Speaker 1: communicated over WhatsApp all data, the message data would be 506 00:29:06,920 --> 00:29:10,280 Speaker 1: stored locally to the users phones, but not on the 507 00:29:10,360 --> 00:29:14,000 Speaker 1: WhatsApp servers. John and Brian both felt strongly about this 508 00:29:14,400 --> 00:29:18,640 Speaker 1: that the users deserved privacy and they should be you know, 509 00:29:18,880 --> 00:29:22,840 Speaker 1: confident that no one's eavesdropping or snooping along WhatsApp servers 510 00:29:22,880 --> 00:29:26,320 Speaker 1: to learn about their private data. And they didn't want 511 00:29:26,360 --> 00:29:29,480 Speaker 1: any of that to reflect poorly on their service, So 512 00:29:30,120 --> 00:29:33,320 Speaker 1: as just a matter of policy, they didn't hold onto messages. 513 00:29:33,880 --> 00:29:36,640 Speaker 1: All of this leads up to the Facebook acquisition in 514 00:29:36,680 --> 00:29:40,400 Speaker 1: two thousand fourteen. So why would Facebook, a company that 515 00:29:40,480 --> 00:29:44,720 Speaker 1: inteen was closing in on a billion daily active users. 516 00:29:45,240 --> 00:29:48,560 Speaker 1: These days it's like two point four five billion monthly 517 00:29:48,680 --> 00:29:51,920 Speaker 1: active users. Why would this company go after a messaging 518 00:29:51,960 --> 00:29:55,800 Speaker 1: service that was not an enormous revenue generator. It was 519 00:29:55,840 --> 00:29:59,120 Speaker 1: a service that wasn't keeping tabs on users at least 520 00:29:59,120 --> 00:30:01,680 Speaker 1: not to the extent that Facebook does with its users. 521 00:30:02,080 --> 00:30:04,560 Speaker 1: What was the motivation behind this deal and why did 522 00:30:04,560 --> 00:30:08,800 Speaker 1: Facebook agree to hand over even more money than the 523 00:30:08,920 --> 00:30:12,240 Speaker 1: asking price of sixteen billion dollars for a company that 524 00:30:12,280 --> 00:30:16,080 Speaker 1: had recently had a valuation of one point five billion 525 00:30:16,080 --> 00:30:19,120 Speaker 1: dollars that was a fraction of the asking price. Well, 526 00:30:19,120 --> 00:30:23,160 Speaker 1: there's actually several answers to that question. First, Facebook has 527 00:30:23,200 --> 00:30:26,360 Speaker 1: its own messaging app or layer known as Facebook Messenger, 528 00:30:26,840 --> 00:30:30,800 Speaker 1: and that tool is incredibly valuable for Facebook. Keep in mind, 529 00:30:31,240 --> 00:30:35,160 Speaker 1: Facebook makes its money primarily through advertising, the very thing 530 00:30:35,200 --> 00:30:38,960 Speaker 1: that acted in comb are staunchly trying to avoid at 531 00:30:38,960 --> 00:30:43,360 Speaker 1: this time, and Facebook can offer advertisers are really enticing deal, 532 00:30:43,840 --> 00:30:47,560 Speaker 1: and that deal would be you, or rather the data 533 00:30:47,600 --> 00:30:50,640 Speaker 1: that indicates who you are and what you like. By 534 00:30:50,680 --> 00:30:53,960 Speaker 1: analyzing the stuff you post the status is, you interact 535 00:30:54,000 --> 00:30:57,440 Speaker 1: with the groups, you join, the messages you engage with, 536 00:30:57,840 --> 00:31:01,680 Speaker 1: Facebook and advertisers can earn an awful lot about you 537 00:31:01,760 --> 00:31:05,160 Speaker 1: and your preferences, which means Facebook can target you with 538 00:31:05,240 --> 00:31:07,920 Speaker 1: the ads that are most likely to appeal to you. 539 00:31:08,360 --> 00:31:11,360 Speaker 1: That in turn means you're more likely to act on 540 00:31:11,400 --> 00:31:16,080 Speaker 1: those ads. We have to remember that with platforms like Facebook, 541 00:31:16,360 --> 00:31:20,160 Speaker 1: we users are the product. We're what is being bought 542 00:31:20,200 --> 00:31:23,680 Speaker 1: and sold. The website is just the method for keeping 543 00:31:23,800 --> 00:31:27,400 Speaker 1: us there and convincing us to share more information about ourselves. 544 00:31:27,960 --> 00:31:30,600 Speaker 1: It has to be a compelling experience so that we 545 00:31:30,640 --> 00:31:33,840 Speaker 1: give up our time and thus our data, and in 546 00:31:33,960 --> 00:31:39,000 Speaker 1: turn that data can be sold effectively. But What's App 547 00:31:39,160 --> 00:31:43,840 Speaker 1: represented a distraction from Facebook's Messenger. It was a problem. 548 00:31:44,160 --> 00:31:47,480 Speaker 1: If people were using WhatsApp rather than a Facebook property, 549 00:31:47,760 --> 00:31:50,680 Speaker 1: then all that sweet data just goes to waste. Worse, 550 00:31:51,080 --> 00:31:53,800 Speaker 1: What's that wasn't even keeping that data, They were just 551 00:31:53,920 --> 00:31:58,360 Speaker 1: discarding all that valuable information the very nerve. Now being 552 00:31:58,400 --> 00:32:02,040 Speaker 1: facetious here, but that was one reason Facebook was interested. 553 00:32:02,480 --> 00:32:05,040 Speaker 1: When we come back, I'll mention a couple of others. 554 00:32:05,040 --> 00:32:16,760 Speaker 1: But first let's take another quick break. Okay, So one 555 00:32:16,880 --> 00:32:21,600 Speaker 1: reason Facebook went after WhatsApp was that WhatsApp represented competition 556 00:32:21,840 --> 00:32:26,560 Speaker 1: with Facebook's own Messenger app. Another is that Mark Zuckerberg 557 00:32:26,640 --> 00:32:31,000 Speaker 1: heard that some other companies like Google had expressed interest 558 00:32:31,080 --> 00:32:34,600 Speaker 1: in WhatsApp. Now, John and Brian weren't really looking for 559 00:32:34,640 --> 00:32:37,720 Speaker 1: a deal at this time, but Zuckerberg didn't know that, 560 00:32:37,880 --> 00:32:40,360 Speaker 1: and the thought of a competitor potentially grabbing up what 561 00:32:40,520 --> 00:32:44,320 Speaker 1: was rapidly becoming a behemoth messaging app, though again not 562 00:32:44,600 --> 00:32:49,440 Speaker 1: necessarily a profitable one, didn't set well with the markster. See. 563 00:32:49,480 --> 00:32:52,600 Speaker 1: At this point, WhatsApp had more than four hundred million 564 00:32:52,720 --> 00:32:56,480 Speaker 1: active users on a typical day, and on that typical day, 565 00:32:56,840 --> 00:33:02,360 Speaker 1: nearly twenty billion messages would go across its servers, So 566 00:33:02,480 --> 00:33:05,360 Speaker 1: it was clear that the service had value, even if 567 00:33:05,360 --> 00:33:08,400 Speaker 1: it wasn't really capitalizing on that value the way a 568 00:33:08,480 --> 00:33:12,320 Speaker 1: traditional service company would. And again, the time people spent 569 00:33:12,440 --> 00:33:16,280 Speaker 1: on WhatsApp meant they weren't spending time on Facebook. But 570 00:33:16,320 --> 00:33:21,160 Speaker 1: if Facebook bought WhatsApp, well, now those users are spending 571 00:33:21,200 --> 00:33:24,640 Speaker 1: even more time on Facebook owned products and services, even 572 00:33:24,680 --> 00:33:27,560 Speaker 1: if they're not fully monetized. And then there was the 573 00:33:27,600 --> 00:33:31,120 Speaker 1: fear that Facebook would take what was intended to be 574 00:33:31,240 --> 00:33:35,240 Speaker 1: a simple service, free of advertising and one that wouldn't 575 00:33:35,240 --> 00:33:39,080 Speaker 1: hold onto user data like messages, and then turn it 576 00:33:39,080 --> 00:33:42,560 Speaker 1: into a money generating ad platform. This is part of 577 00:33:42,560 --> 00:33:46,240 Speaker 1: why Facebook tacked on that additional three billion dollars to 578 00:33:46,320 --> 00:33:49,440 Speaker 1: the sixteen billion dollar asking price that John and Brian 579 00:33:49,480 --> 00:33:53,000 Speaker 1: had demanded. This was all in an effort to convince 580 00:33:53,120 --> 00:33:56,720 Speaker 1: the staff of WhatsApp to stay on to come over 581 00:33:56,760 --> 00:33:59,920 Speaker 1: to Facebook and continue to work on the WhatsApp service, 582 00:34:00,280 --> 00:34:04,120 Speaker 1: So it pushed up the price up to nineteen billion dollars. 583 00:34:04,160 --> 00:34:08,600 Speaker 1: And this deal was based largely on Facebook stock shares, 584 00:34:08,800 --> 00:34:11,399 Speaker 1: and those stocks actually increased in value before the deal 585 00:34:11,480 --> 00:34:13,960 Speaker 1: was finally closed, so really, when you look at it 586 00:34:14,160 --> 00:34:17,000 Speaker 1: was closer to twenty two billion dollars when it was 587 00:34:17,080 --> 00:34:21,319 Speaker 1: all said and done. In an amazing symbolic move, the 588 00:34:21,400 --> 00:34:25,719 Speaker 1: co founders would sign the agreement for this acquisition outside 589 00:34:25,719 --> 00:34:28,719 Speaker 1: the building where Comb's mother would stand in line to 590 00:34:28,760 --> 00:34:32,720 Speaker 1: get her allotment of food stamps, which is a heck 591 00:34:32,880 --> 00:34:36,879 Speaker 1: of a rags to rich's journey food stamps to billionaire. 592 00:34:37,440 --> 00:34:41,640 Speaker 1: In addition, Zuckerberg promised Yawn and Brian that Facebook wouldn't 593 00:34:41,680 --> 00:34:45,560 Speaker 1: make any move to incorporate advertising in WhatsApp for like 594 00:34:45,719 --> 00:34:48,480 Speaker 1: five years, and that they would run everything by the 595 00:34:48,520 --> 00:34:51,840 Speaker 1: founders first, and that the company would be able to 596 00:34:51,880 --> 00:34:55,120 Speaker 1: operate pretty independently from the rest of Facebook. WhatsApp should 597 00:34:55,120 --> 00:34:57,359 Speaker 1: be able to do its own thing. Now, if this 598 00:34:57,600 --> 00:35:00,759 Speaker 1: sounds familiar to you, it might be because as they 599 00:35:00,840 --> 00:35:04,440 Speaker 1: said the same thing to Instagram when Facebook acquired Instagram. 600 00:35:04,600 --> 00:35:08,520 Speaker 1: That was the same messaging and like Instagram, the founders 601 00:35:08,560 --> 00:35:13,320 Speaker 1: of WhatsApp would become increasingly disenchanted with Facebook's moves over time. 602 00:35:14,160 --> 00:35:17,640 Speaker 1: Around the same time that they were getting acquired, the 603 00:35:17,680 --> 00:35:21,040 Speaker 1: WhatsApp founders were also looking to incorporate end to end 604 00:35:21,239 --> 00:35:25,200 Speaker 1: encryption in WhatsApp messaging. This provides a level of security 605 00:35:25,239 --> 00:35:28,200 Speaker 1: in communications, though it's by no means perfect. So let 606 00:35:28,239 --> 00:35:31,440 Speaker 1: me explain what I mean by that. So, with end 607 00:35:31,440 --> 00:35:34,440 Speaker 1: to end encryption, you have someone typing in a message 608 00:35:34,480 --> 00:35:38,400 Speaker 1: into WhatsApp, and that message gets scrambled or encrypted in 609 00:35:38,440 --> 00:35:42,640 Speaker 1: a predetermined way. It's encoded. The person on the other 610 00:35:42,719 --> 00:35:45,840 Speaker 1: end can only descramble that message if they hold the 611 00:35:45,880 --> 00:35:50,000 Speaker 1: appropriate key the decoder, and in this case only the 612 00:35:50,080 --> 00:35:55,960 Speaker 1: recipient would possess that particular decoder. The process itself establishes 613 00:35:56,360 --> 00:35:59,080 Speaker 1: the keys, and it's a bit complicated, but you should 614 00:35:59,080 --> 00:36:02,960 Speaker 1: just know that the process allows both the parties to 615 00:36:03,040 --> 00:36:06,279 Speaker 1: hold an encoder and decoder that's unique to their communication. 616 00:36:06,400 --> 00:36:10,799 Speaker 1: No one else has that that decoder, So it means 617 00:36:10,840 --> 00:36:14,400 Speaker 1: that if anyone were to intercept a message in transit, 618 00:36:14,920 --> 00:36:17,320 Speaker 1: that person would only be able to see the encrypted 619 00:36:17,520 --> 00:36:21,360 Speaker 1: scrambled version. It would be meaningless. They might know the 620 00:36:21,440 --> 00:36:24,839 Speaker 1: origin of the message, and they might know the destination 621 00:36:25,000 --> 00:36:27,120 Speaker 1: for that message, but they wouldn't know what was actually 622 00:36:27,160 --> 00:36:30,040 Speaker 1: in the message itself, which is good. This is an 623 00:36:30,080 --> 00:36:35,560 Speaker 1: important component in secure communications. However, it is not a 624 00:36:35,600 --> 00:36:40,400 Speaker 1: bulletproof vest against eavesdroppers and spies and hackers. That's because 625 00:36:40,760 --> 00:36:44,920 Speaker 1: someone could target the end devices in other words, the 626 00:36:45,000 --> 00:36:47,600 Speaker 1: phones or you know, the phone of the person making 627 00:36:47,600 --> 00:36:49,880 Speaker 1: the message or the phone of the person receiving the message. 628 00:36:50,800 --> 00:36:53,040 Speaker 1: If the hacker does that, if they can exploit a 629 00:36:53,120 --> 00:36:57,880 Speaker 1: vulnerability in that device, then they can potentially read messages 630 00:36:58,040 --> 00:37:01,080 Speaker 1: once they get unencrypted. On the other side, so the 631 00:37:01,120 --> 00:37:04,120 Speaker 1: message in transit would be difficult to suss out, but 632 00:37:04,200 --> 00:37:06,799 Speaker 1: the hackers have bypassed that. They're going straight to an 633 00:37:06,920 --> 00:37:10,279 Speaker 1: end point. They're getting the information through the phone, not 634 00:37:10,560 --> 00:37:14,759 Speaker 1: pulling the communication out of the air. Here's what makes 635 00:37:14,800 --> 00:37:18,080 Speaker 1: matters worse. In the old days, you could follow good 636 00:37:18,080 --> 00:37:21,640 Speaker 1: browsing protocol and avoid most of these traps. You know, 637 00:37:22,000 --> 00:37:25,360 Speaker 1: things like don't go to websites you don't know, don't 638 00:37:25,360 --> 00:37:29,160 Speaker 1: open links from strange sources, that kind of thing. But 639 00:37:29,360 --> 00:37:33,320 Speaker 1: in the world of apps with push notifications, it's possible 640 00:37:33,360 --> 00:37:36,200 Speaker 1: to either sneak an app into an app store that 641 00:37:36,239 --> 00:37:40,880 Speaker 1: pushes out malware automatically. If you've enabled push notifications for 642 00:37:40,880 --> 00:37:43,040 Speaker 1: that app, then your phone would just take care of 643 00:37:43,040 --> 00:37:45,839 Speaker 1: all that on its own. Or maybe you can even 644 00:37:45,840 --> 00:37:49,120 Speaker 1: find a vulnerability in an existing app and hide some 645 00:37:49,200 --> 00:37:52,600 Speaker 1: malware that way, and then you have a big install 646 00:37:52,680 --> 00:37:55,719 Speaker 1: base that could receive a push notification that could potentially 647 00:37:56,120 --> 00:37:59,680 Speaker 1: make their phones more vulnerable. This isn't great. Now. My 648 00:38:00,000 --> 00:38:03,040 Speaker 1: thing is that end to end encryption is not the 649 00:38:03,120 --> 00:38:07,920 Speaker 1: ultimate insecurity, but it frequently gets presented that way. So 650 00:38:08,000 --> 00:38:11,520 Speaker 1: if the messages, hey, we can't read your messages because 651 00:38:11,560 --> 00:38:16,160 Speaker 1: they're encrypted, that's not necessarily true. On top of that, 652 00:38:16,600 --> 00:38:20,160 Speaker 1: you have governments around the world, including the United States, 653 00:38:20,640 --> 00:38:25,080 Speaker 1: pushing companies that run encryption communication services to include a 654 00:38:25,120 --> 00:38:30,280 Speaker 1: backdoor method of access for official government agents and investigators. 655 00:38:30,640 --> 00:38:34,279 Speaker 1: Government agencies argue that this is necessary so that intelligence 656 00:38:34,320 --> 00:38:38,600 Speaker 1: officers can detect potential threats. But there's a general rule 657 00:38:38,680 --> 00:38:40,759 Speaker 1: of thumb that we should all keep in mind, and 658 00:38:40,800 --> 00:38:46,600 Speaker 1: that is security vulnerabilities are a bad thing, intentional or otherwise, 659 00:38:46,640 --> 00:38:50,440 Speaker 1: because a backdoor is a security vulnerability just by its 660 00:38:50,520 --> 00:38:54,480 Speaker 1: very nature. It allows someone to bypass the security measures 661 00:38:54,520 --> 00:38:57,680 Speaker 1: that are in place to protect users. That's the same 662 00:38:57,719 --> 00:39:01,480 Speaker 1: thing that hackers look for when they're probing systems for vulnerabilities, 663 00:39:01,520 --> 00:39:05,279 Speaker 1: except in this case the vulnerability is purposefully created and 664 00:39:05,440 --> 00:39:09,759 Speaker 1: implemented by the service provider, And you can bet that 665 00:39:09,800 --> 00:39:13,799 Speaker 1: if such back doors are created, armies of hackers will 666 00:39:13,800 --> 00:39:17,200 Speaker 1: be seeking out ways to exploit those back doors. So 667 00:39:17,280 --> 00:39:20,839 Speaker 1: even if you have a deep trust of intelligence agencies 668 00:39:21,120 --> 00:39:23,680 Speaker 1: doing the right thing, and if you do have a 669 00:39:23,719 --> 00:39:26,279 Speaker 1: trust and intelligence agencies doing the right thing, you might 670 00:39:26,320 --> 00:39:29,640 Speaker 1: want to rethink that you should keep in mind it's 671 00:39:29,640 --> 00:39:32,439 Speaker 1: not just the quote unquote good guys who will want 672 00:39:32,480 --> 00:39:36,480 Speaker 1: to use these back doors. So anyway, I'll get off 673 00:39:36,480 --> 00:39:40,320 Speaker 1: the high horse. Moreover, around the same time that WhatsApp 674 00:39:40,440 --> 00:39:44,600 Speaker 1: was incorporating into end encryption as be around two thousand sixteen, 675 00:39:45,000 --> 00:39:49,000 Speaker 1: Facebook was making another big change. WhatsApp would be sharing 676 00:39:49,200 --> 00:39:52,960 Speaker 1: some user data with Facebook, which in turn would be 677 00:39:53,040 --> 00:39:56,080 Speaker 1: using that data in an effort to serve up targeted 678 00:39:56,160 --> 00:40:00,200 Speaker 1: ads to Facebook users. This was a big shift, one 679 00:40:00,239 --> 00:40:04,080 Speaker 1: that was controversial among WhatsApp users and the tech world 680 00:40:04,080 --> 00:40:08,160 Speaker 1: in general really as well as within WhatsApp. That being said, 681 00:40:08,200 --> 00:40:11,360 Speaker 1: according to the press release, the data being shared would 682 00:40:11,360 --> 00:40:14,680 Speaker 1: be limited. It would include the phone number, which for 683 00:40:14,760 --> 00:40:18,080 Speaker 1: WhatsApp is equivalent to a user name, and the last 684 00:40:18,120 --> 00:40:22,080 Speaker 1: time the app had been used. The information was spelled 685 00:40:22,080 --> 00:40:25,640 Speaker 1: out in the updated terms and conditions for WhatsApp. But 686 00:40:25,719 --> 00:40:28,360 Speaker 1: then the average person and I include myself in this, 687 00:40:29,239 --> 00:40:32,120 Speaker 1: rarely gives the old T and C anything more than 688 00:40:32,160 --> 00:40:36,160 Speaker 1: a cursory glance. And I'm sure that is even being generous. 689 00:40:36,200 --> 00:40:38,920 Speaker 1: I suspect many of you, and again I am not 690 00:40:39,080 --> 00:40:42,600 Speaker 1: leaving myself out here. Skip right on down to that 691 00:40:42,680 --> 00:40:45,760 Speaker 1: little check box that turns us all into big old liars. 692 00:40:46,120 --> 00:40:47,560 Speaker 1: You know the check box. I mean, it's the one 693 00:40:47,600 --> 00:40:51,000 Speaker 1: that says, yeah, sure, I read all that stuff. Well. 694 00:40:51,080 --> 00:40:54,440 Speaker 1: In the mass of text in these terms and services, 695 00:40:55,120 --> 00:40:59,680 Speaker 1: there was a message about how to opt out of 696 00:40:59,719 --> 00:41:04,560 Speaker 1: this data sharing feature, this idea of sharing your information 697 00:41:04,560 --> 00:41:08,359 Speaker 1: for the purposes of ads, But again it was kind 698 00:41:08,360 --> 00:41:11,239 Speaker 1: of buried in the bottom of that terms and conditions. 699 00:41:11,760 --> 00:41:14,440 Speaker 1: It really sounded like Mark Zuckerberg was pulling out the 700 00:41:14,480 --> 00:41:18,120 Speaker 1: old Darth Vader routine. You know, the I have altered 701 00:41:18,160 --> 00:41:21,640 Speaker 1: the deal, pray I do not alter it further. And 702 00:41:21,800 --> 00:41:24,919 Speaker 1: just like Lando, John and Brian were probably feeling that 703 00:41:25,080 --> 00:41:27,799 Speaker 1: this deal is getting worse all the time, and they 704 00:41:27,840 --> 00:41:30,799 Speaker 1: weren't the only ones. The European Union would end up 705 00:41:30,840 --> 00:41:34,160 Speaker 1: finding Facebook more than a hundred million dollars for collecting 706 00:41:34,160 --> 00:41:37,040 Speaker 1: that information. They ordered the company to knock it off 707 00:41:37,040 --> 00:41:40,480 Speaker 1: in the EU. The EU is generally far more protective 708 00:41:40,520 --> 00:41:44,360 Speaker 1: of personal information than places like the United States. But 709 00:41:44,719 --> 00:41:47,600 Speaker 1: this really shouldn't come as a surprise to anyone. Facebook 710 00:41:47,680 --> 00:41:51,200 Speaker 1: has long pursued a goal of aligning its various properties 711 00:41:51,239 --> 00:41:55,600 Speaker 1: to maximize the payoff. It's also what drove the creators 712 00:41:55,600 --> 00:41:59,040 Speaker 1: of Instagram away. They would leave Facebook largely because they 713 00:41:59,080 --> 00:42:02,040 Speaker 1: had been told that Instagram would remain its own thing 714 00:42:02,200 --> 00:42:04,840 Speaker 1: and that they wouldn't be asked to either incorporate Facebook 715 00:42:04,840 --> 00:42:08,400 Speaker 1: features into Instagram, nor would Facebook a tip to integrate 716 00:42:08,480 --> 00:42:12,560 Speaker 1: Instagram features in Facebook only. That's pretty much what Facebook 717 00:42:12,719 --> 00:42:17,320 Speaker 1: did do well. The watsapp creators were facing a similar situation. 718 00:42:18,000 --> 00:42:21,680 Speaker 1: In September two thousand seventeen, Brian Acton had had enough. 719 00:42:22,000 --> 00:42:26,280 Speaker 1: He chose to leave Facebook, and this was an expensive decision. 720 00:42:26,760 --> 00:42:30,280 Speaker 1: He was six months away from having his shares vest 721 00:42:30,400 --> 00:42:34,200 Speaker 1: with the company. Those shares were worth around eight hundred 722 00:42:34,320 --> 00:42:39,320 Speaker 1: fifty million dollars. But the agreement also hinged upon Facebook 723 00:42:39,320 --> 00:42:41,920 Speaker 1: holding up their end of the deal, which included an 724 00:42:41,920 --> 00:42:47,200 Speaker 1: agreement not to implement quote monetization initiatives end quote without 725 00:42:47,239 --> 00:42:51,360 Speaker 1: the founders agreement. But then a lawyer for Facebook argued 726 00:42:51,400 --> 00:42:54,880 Speaker 1: that the company was just, you know, exploring the possibility 727 00:42:54,960 --> 00:42:59,240 Speaker 1: of monetization. They weren't actually implementing anything yet, so acting 728 00:42:59,320 --> 00:43:04,680 Speaker 1: couldn't just grab his shares because they hadn't done anything. 729 00:43:04,760 --> 00:43:07,920 Speaker 1: They were just talking about it. It's just talk, and 730 00:43:08,040 --> 00:43:11,080 Speaker 1: rather than fight, Acton walked away. He left behind almost 731 00:43:11,080 --> 00:43:15,479 Speaker 1: a billion dollars. Jean Koum stuck with Facebook for six 732 00:43:15,520 --> 00:43:19,759 Speaker 1: more months, and he left after his shares vested, but 733 00:43:19,880 --> 00:43:22,200 Speaker 1: he did leave in two thousand and eighteen. He also 734 00:43:22,239 --> 00:43:25,160 Speaker 1: resigned his seat from the board of directors for Facebook, 735 00:43:25,440 --> 00:43:29,720 Speaker 1: and between Acton's departure and Combs, the Cambridge Analytica scandal 736 00:43:29,920 --> 00:43:33,480 Speaker 1: also had become world news. Act and gained even more 737 00:43:33,520 --> 00:43:36,440 Speaker 1: attention because he called for people to delete their Facebook 738 00:43:36,440 --> 00:43:41,439 Speaker 1: accounts hashtag delete Facebook. Comb kept quiet, and when he left, 739 00:43:41,480 --> 00:43:44,200 Speaker 1: he said he would be pursuing his other interests, which 740 00:43:44,440 --> 00:43:49,600 Speaker 1: include collecting very expensive, very fast cars. Since then, other 741 00:43:49,640 --> 00:43:53,120 Speaker 1: WhatsApp executives who were either with the company pre Facebook 742 00:43:53,120 --> 00:43:57,960 Speaker 1: acquisition or post have left, and Comb's replacement, a man 743 00:43:58,080 --> 00:44:01,840 Speaker 1: named Chris Daniels, would leave even two thousand nineteen, along 744 00:44:01,880 --> 00:44:05,200 Speaker 1: with his boss, a Facebook executive named Chris Cox, who 745 00:44:05,280 --> 00:44:08,560 Speaker 1: at one time was thought of as a possible replacement 746 00:44:08,680 --> 00:44:12,200 Speaker 1: CEO if Zuckerberg were to ever step down. This was 747 00:44:12,239 --> 00:44:15,759 Speaker 1: after Zuckerberg had announced plans to realign Facebook toward a 748 00:44:15,800 --> 00:44:19,120 Speaker 1: focus on private messaging, and it did little to make 749 00:44:19,120 --> 00:44:21,640 Speaker 1: people feel better about what was going on over there. 750 00:44:22,080 --> 00:44:25,680 Speaker 1: Will Cathcart would take over as the head of WhatsApp, 751 00:44:25,719 --> 00:44:29,239 Speaker 1: and he remains that to this day. More than a 752 00:44:29,320 --> 00:44:34,160 Speaker 1: billion people use WhatsApp today as a messenger service. Facebook's 753 00:44:34,160 --> 00:44:37,640 Speaker 1: intent to monetize the service hasn't led to a massive 754 00:44:37,719 --> 00:44:40,440 Speaker 1: drop in users, but for many people it was a 755 00:44:40,480 --> 00:44:43,000 Speaker 1: bridge too far. It certainly was a bridge too far 756 00:44:43,080 --> 00:44:46,000 Speaker 1: for co founder Brian Acton, who has since invested in 757 00:44:46,120 --> 00:44:49,879 Speaker 1: an encrypted messaging service called Signal that uses the same 758 00:44:49,960 --> 00:44:53,719 Speaker 1: encryption technology that WhatsApp uses. So you could argue he's 759 00:44:53,760 --> 00:44:57,040 Speaker 1: effectively backing a semi competitor to the company he co 760 00:44:57,200 --> 00:45:00,440 Speaker 1: founded back in two thousand nine, and that the story 761 00:45:00,440 --> 00:45:04,080 Speaker 1: of WhatsApp so far from what I've read, Acting has 762 00:45:04,120 --> 00:45:07,960 Speaker 1: held himself accountable for his decisions, perhaps to the point 763 00:45:08,040 --> 00:45:12,600 Speaker 1: of self flagellation, saying I sold out. I'm sure Yawn 764 00:45:12,719 --> 00:45:15,040 Speaker 1: is also frustrated with how things turned out, though I 765 00:45:15,080 --> 00:45:18,640 Speaker 1: guess you can feel somewhat comforted if you happen to 766 00:45:18,680 --> 00:45:21,759 Speaker 1: be sailing around the world on a yacht. Still, I 767 00:45:21,800 --> 00:45:24,400 Speaker 1: can't say that I would have made a different decision 768 00:45:24,760 --> 00:45:28,280 Speaker 1: had I been in their shoes. No one's ever offered 769 00:45:28,280 --> 00:45:31,120 Speaker 1: me billions of dollars, But hey, if you want to 770 00:45:31,160 --> 00:45:33,920 Speaker 1: see how I would handle that situation, I'm totally game. 771 00:45:34,080 --> 00:45:36,400 Speaker 1: I'm welcome for you to give it a try. Go ahead, 772 00:45:36,600 --> 00:45:38,719 Speaker 1: throw a couple of billion dollars at me. See if 773 00:45:38,719 --> 00:45:41,760 Speaker 1: you can get me to compromise in my values. Please. 774 00:45:42,400 --> 00:45:45,160 Speaker 1: And that wraps up this episode of tech stuff. I 775 00:45:45,160 --> 00:45:48,200 Speaker 1: hope you guys enjoyed this story of WhatsApp and where 776 00:45:48,239 --> 00:45:51,400 Speaker 1: it came from and why Facebook paid so much money 777 00:45:51,440 --> 00:45:54,720 Speaker 1: for it. It's something that people are still wondering if 778 00:45:55,280 --> 00:45:58,399 Speaker 1: it will pay off in the long run. I would 779 00:45:58,440 --> 00:46:01,920 Speaker 1: argue it has simply because any distraction from Facebook is 780 00:46:02,000 --> 00:46:05,879 Speaker 1: a detriment to Facebook. So as the company eliminates those distractions, 781 00:46:06,239 --> 00:46:09,759 Speaker 1: it makes itself stronger. If you guys have suggestions for 782 00:46:09,840 --> 00:46:12,279 Speaker 1: future episodes of tech Stuff, send me a message. You 783 00:46:12,280 --> 00:46:16,480 Speaker 1: can do so on Twitter or Facebook. The handle for 784 00:46:16,560 --> 00:46:19,600 Speaker 1: both of those is text stuff H s W and 785 00:46:19,640 --> 00:46:27,840 Speaker 1: I'll talk to you again really soon. Text Stuff is 786 00:46:27,840 --> 00:46:31,040 Speaker 1: an I Heart Radio production. For more podcasts from I 787 00:46:31,120 --> 00:46:34,719 Speaker 1: Heart Radio, visit the i Heart Radio app, Apple Podcasts, 788 00:46:34,840 --> 00:46:36,840 Speaker 1: or wherever you listen to your favorite shows.