Protonthe Swiss company behind a suite of privacy-focused apps like ProtonMail is following in the footsteps of Signal and Mozilla in moving to a recent nonprofit foundation model.
Newly configured Proton Foundation will probably be the foremost shareholder of the existing company, Proton AG, which can proceed to operate as a for-profit company under the auspices of the Foundation. This is according to the CEO Andy Yengoals to be sure that the organization is self-sufficient without having to rely on donations, grants or industrial connections with corporations.
Indeed, while firms like Signal have relied on the support of billionaires like WhatsApp co-founder Brian Acton, and Mozilla relies heavily on Google search revenue, Yen says the Proton Foundation wants to differentiate itself by maintaining a “profitable and healthy business” at basics. So it mainly wants to operate as if it were a real for-profit business, without having to persuade the world that its promise of “privacy” plays a secondary role to third parties.
“This change in management does not represent a change in the way we conduct our core business,” Yen wrote in: blog post announcing the change today. “Proton is not for profit, but we must continue to maintain profitability as our primary goal because the cornerstone of securing Proton’s mission is independence through self-sufficiency.”
History so far
Founded in Geneva, Switzerland in 2014, Proton is best known for its ProtonMail encrypted email service, but the company has expanded into all types of privacy-focused products, including VPNpassword manager, calendar and cloud storage service.
Shortly after the company was launched in 2014 organize something AND crowdfunding campaign who then raised about $500,000 before he began collecting an additional $2 million from Silicon Valley VC firm Charles River Ventures (CRV) and a Swiss nonprofit (FONGIT). Currently, Proton says it now not has any enterprise capitalists as shareholders, along with CRV sold his share to FONGIT in 2021
Now, Yen; co-founder Jason Stockman; and the company’s technical director (and first worker) Dingchao Lu donated shares to the foundation, thus making it the “main” shareholder. However, it is not clear how much of the shares it owns and who else will retain shares in the company – TechCrunch asked Proton for clarification.
Both Yen and Lu will serve on the Foundation’s board of directors alongside the network’s creator, Sir Tim Berners-Lee; prof. Carissa Veliz, Professor of Ethics at the Institute for Ethics in AI at the University of Oxford; AND Antonio Gambardellidirector at Fongit.
Proton’s move signals the inherent challenges of building a business around privacy, particularly where external financing has been raised and investors are looking for a return. For its part, Proton has all the time positioned itself as “independent” – each from the perspective of non-VC stakeholders and from a technology perspective, because it bypasses the usual public cloud providers in operating its own servers and networking equipment.
By moving to a model in which it continues to operate as a for-profit organization inside a not-for-profit foundation, the company is attempting to forge a path that maintains privacy as a central principle while retaining some of the advantages that non-public firms can offer – this includes the ability to offer options for shares to “attract and incentivize top technology talent,” according to Yen, who added that this setup would also not prevent the company from going public.
“As with most of what we do, this approach is unique, but we believe this hybrid model offers the best of both worlds,” Yen said. “However, foundation control would always require the company to operate 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 strive to preserve not only Proton’s values, but also our culture of innovation, entrepreneurship and ambition, as well as our constant competitive spirit.”