Proton, the Swiss company behind ProtonMail and other privacy-focused apps, is following in the footsteps of Signal and Mozilla in moving to a new non-profit foundation model.
The newly established Proton Foundation will serve as the majority shareholder in the existing legal entity, Proton AG, which will continue to operate as a for-profit company with the support of the foundation. This is intended to make the organization self-sustaining, without relying on donations, grants or commercial partnerships with companies, according to CEO Andy Yen.
Indeed, while companies like Signal rely on the backing of billionaires like WhatsApp co-founder Brian Acton, and Mozilla relies heavily on search revenue from Google, the Proton Foundation wants to differentiate itself by having a “sound, profitable business” at its core, Yen said. Essentially, the foundation wants to operate as if it were a bona fide commercial enterprise, without having to convince the world that its “privacy” promises have taken a back seat to investor demands.
“This governance change does not mean any change to the way we operate our core business,” Yen said in a blog post announcing the changes today. “Although Proton is not a profit-seeking company, we must still maintain profitability as a core objective, as independence through self-reliance is the cornerstone of upholding Proton's mission.”
The story so far
Founded in Geneva, Switzerland in 2014, Proton is best known for its encrypted email service, ProtonMail, but has expanded into a full range of privacy-focused products, including VPNs, password managers, calendars, and cloud storage services.
The ProtonMail logo appears on a phone screen with the website interface in the background. Image credit: Idrees Abbas/SOPA Images/LightRocket / Getty Images
The company launched a crowdfunding campaign shortly after its founding in 2014, raising about $500,000, and then another $2 million from Silicon Valley venture capital firm Charles River Ventures (CRV) and Swiss nonprofit Fondation Genève Technology (FONGIT). Proton currently has no venture capital investors as shareholders, and CRV said it will sell its stake to Fondasi in 2021.
Currently, Yen, co-founder Jason Stockman, and the company's director of engineering (and first employee) Dingchao Lu have donated some of their shares to the foundation, making it the “major” shareholder. But it's unclear how much stock the foundation owns or who else holds shares in the company. TechCrunch has reached out to Proton here for more details.
Yen and Lu serve as trustees of the foundation, alongside Sir Tim Berners-Lee, inventor of the web, Professor Carissa Vellis, Professor of Ethics at the Oxford University Institute for AI Ethics, and Fongit director Antonio Gambardella.
Proton's move illustrates the inherent difficulties of building a business around privacy, especially when you're raising outside funding and investors are looking for a return. Proton has always positioned itself as “independent” both from a stakeholder perspective — it doesn't have venture-capital investors — and from a technology perspective, as it eschews the usual public cloud providers and runs its own servers and network equipment.
By transitioning to a model where it operates as a for-profit company under a nonprofit foundation, the company is clearing the way to keep some of the benefits a private company can offer while keeping privacy as a core tenet. That includes offering stock options to “attract and incentivize the best talent in the tech industry,” Yen said, adding that the structure wouldn't prevent the company from going public.
“Like much of what we do, the approach is unique, but we believe this hybrid model offers the best of both worlds,” Yen said. “But the foundation's stewardship ensures that the company always acts in a way that does not jeopardize Proton's original mission, and that Proton's economic success contributes directly to the public interest. In this way, we seek to uphold not only Proton's values, but also its culture of innovation, entrepreneurial spirit, ambition and relentless competitiveness.”