5 months ago
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Proton, the Swiss company behind a suite of privacy-focused apps such as ProtonMail, is following in the footsteps of Signal and Mozilla by transitioning to a new non-profit foundation model.
The newly setup Proton Foundation will serve as the main shareholder in the existing corporate entity that is Proton AG, which will continue to operate as a for-profit company under the auspices of the Foundation. This, according to CEO Andy Yen, is designed to make the organization self-sustainable, without having to rely on donations, grants, or commercial tie-ups with corporations.
Indeed, while the likes of Signal has relied on the backing of billionaires such as WhatsApp co-founder Brian Acton, and Mozilla leans heavily on search revenue from Google, Yen says that the Proton Foundation wants to set itself apart by retaining a “profitable and healthy business” at its core. So basically, it wants to operate as though it is a bonafide profit-making business, without having to convince the world that its “privacy” promise plays second fiddle to investors’ demands.
“This change in governance does not signal a shift in how our core businesses are run,” Yen wrote in a blog post announcing the change today. “Proton is not profit-driven, but we still must retain profitability as a core objective because a cornerstone of safeguarding Proton’s mission is independence through self-sustainability.”
The story so far
Founded out of Geneva, Switzerland, in 2014, Proton is best known for its encrypted email service ProtonMail, but the company has expanded into all manner of privacy-focused products including a VPN, password manager, calendar and a cloud storage service.
ProtonMail logo seen displayed on a mobile phone screen with its website interface in the background. Image Credits: Idrees Abbas/SOPA Images/LightRocket / Getty Images
Shortly after launch in 2014, the company set up a crowdfunding campaign which went on to raise around $500,000, before going on to raise an additional $2 million from Silicon Valley VC firm Charles River Ventures (CRV) and the Swiss not-for-profit body Fondation Genevoise pour l’Innovation Technologique (FONGIT). Today, Proton says it no longer has any venture capital investors as shareholders, withCRV selling its stake to FONGIT in 2021.
Now, Yen; fellow co-founder Jason Stockman; and the company’s director of engineering (and first employee) Dingchao Lu have donated some shares to the foundation thus making it the “primary” shareholder. However, it’s not clear how much of a stake it owns, and who else retains a shareholding in the company — TechCrunch has reached out to Proton for clarification here.
Both Yen and Lu will serve on the Foundation’s board of trustees, alongside the inventor of the web, Sir Tim Berners-Lee; Prof. Carissa Veliz, professor of ethics at the Institute for Ethics in AI at the University of Oxford; and Antonio Gambardella, director at Fongit.
Proton’s move signals the inherent challenges of building a business around privacy, particularly where external funding has been raised and investors seek a return. Proton, for its part, has always positioned itself as “independent” — both from a stakeholder perspective with no VC investors, and from a technological perspective as it sidesteps the usual public cloud providers to operate its own servers and network equipment.
By shifting to a model where it still operates as a for-profit under a not-for-profit foundation, the company is trying to forge a path that keeps privacy as a central tenet retaining some of the advantages that private companies can offer — this includes being able to offer stock options to “attract and incentivize the best talent in tech,” according to Yen, who added that the setup also would not prevent the company from going public.
“As with much of what we do, this approach is unique, but we believe this hybrid model offers the best of both worlds,” Yen said. “However, the foundation’s control would always require the company to act in a way that does not jeopardize Proton’s original mission, and Proton’s financial success is directly committed to the public good. In this way, we seek to preserve not only Proton’s values, but also our culture of innovation, entrepreneurship, and ambition, and our relentless competitive spirit.”
