Chang: Thank you for having us. So David, great to speak with you. This is your first public appearance since making that move that shocked us all, going from PayPal to Facebook. A little bit has happened since then, which we’ll get to. But first, I want to know, why? Why did you leave? How much of your salmon did you eat before Mark Zuckerberg made the hard sell?

Marcus: Now, I know this is going to outlive me, it’s crazy. Well I think, first of all, you know, running a very large public company—in the case of PayPal, it wasn’t public by itself, but we had a lot of the aspects of being a public company that we had to live with—is actually way overrated. And I think that a lot of public company CEOs out there are fairly unhappy and they just don’t speak about it. But I think, you know, the social pressure and all that when you’ve dedicated your life to reaching that point is such that you stay on and then you’re addicted to the power and the corporate jets and what have you and then you stay there being unhappy. But—

Chang: So not even a little part of you wishes that you were still there so you could be CEO now that they’re spinning it off as a public company?

Marcus: No. No, not at all. Really, not at all. And, you know, I had three phenomenal years at PayPal and I don’t regret it just one bit. I learned a ton, met unbelievable people, but it was time for me to go back to building things rather than fixing things and spending a lot of time not actually getting my hands dirty. And I think that for me, being an entrepreneur and having built companies all my life, it was time. And Mark basically just got me at the right time when I had—you know, my mind was starting to think about new things and he just caught me at the right time.

Chang: And this was over dinner. I mean what was his sell? How did he pitch this to you?

Marcus: Well, it was pretty straightforward, actually, you know, that messaging is going to become more and more important and that it’s going to be very big if we succeed, and that he thought that I would be an okay choice to actually go and run this. So when he fully shared his vision with me it was pretty obvious that this was the right thing for me at the right time.

Chang: You went from managing 15,000 people at PayPal to a 100 at Messenger.

Marcus: That’s awesome.

Chang: What’s that like?

Marcus: It’s awesome. It’s awesome. And plus, it’s a phenomenal team that I’m working with right now. They’re very young, which is awesome because they don’t know what’s impossible yet, and I think that’s such a blessing. And they’ve done unbelievable things, because when you think about like taking Messenger from being just a feature inside of Facebook—and originally, if you remember well, it was kind of almost an email system where you could have your email, like—all the way to taking it to a full-fledged messaging product and reaching half a billion monthly active users, which we just announced.

Chang: Five hundred million monthly active users now on Facebook Messenger?

Marcus: On Messenger, on mobile, yes. And so it’s—I mean they did unbelievable things. And so it’s a phenomenal team, and when you have half a billion people using your product every month, and multiple hundreds of millions every day, the opportunity that you’ve got to think through the next features, the next capabilities with your team on a Monday and then a couple of weeks later you push a new version and within a couple of hours it reaches a hundred million people, there’s nothing quite like it. And we push a new version of Messenger for both iOS and Android about every two weeks. So the pace of innovation and iteration is very, very fast.

Chang: And you got there just after Facebook decided to shut down Messenger within the Facebook app completely, right? Not a popular decision.

Marcus: No.

Chang: So how do you feel about that growth?

Marcus: Well I think that—

Chang: Given that users didn’t have a choice.

Marcus: Yeah, I think a couple of things. First of all, it already had north of 200 million monthly actives before that point. And I think the—when you think about Facebook, and that’s one of the things I admire in Mark and in Facebook is the capacity to make hard choices that over time pay off. And when you think about newsfeed, it used to be a chronological feed and then the team decided that, no, it couldn’t survive over time and it was like you almost had riots on the streets and people were extremely unhappy. But I don’t think that Facebook would have actually been that successful if it had continued with the chronological feed. You know, there’s just no way you that you can get to enough stories in your day. The quality of the stories that you would see as more friends and more content reached Facebook, it would have been impossible for you to actually have a quality experience. And so that was a hard decision and I think it’s a similar one here, where we think of messaging as a core product and not as a feature of Facebook. And if you want a messaging experience that’s best in class, best in the world, it needs to be fast, it needs to be responsive, all of your correspondence needs to have push notification enabled, and the only way you can achieve that is if everyone is on the same platform and it is a dedicated app that’s built solely for purposes of messaging. And so I think it was the right decision and—you know, I think we can always communicate better and learn from experiences, but I think that all in all it was the right decision and that over time it will prove to be the right decision. And it shows because people love the app, they use it, and half a billion people use it every month. And so it’s not like they downloaded the app and they don’t use it. It’s really that we did a pretty good job at creating an experience that people like and come back to.

Chang: So more than half a billion people still haven’t moved over. How do you get them?

Marcus: Well, so I think it’s not that clear, right? Because when you think about it, Facebook is about 1.3 billion monthly actives, but that’s across Web and mobile. So if you look at mobile only, it’s less than that. And then on mobile right now, Messenger is only available on iOS, Android and Windows phone. And so for instance, we know that we have lots of Facebook users still using Facebook on Symbian S40 phones, like the old Nokia phones and feature phones where Messenger is not necessarily available. So it doesn’t address the full 1.3 billion monthly actives, but we certainly have the ambition to take the app to north of a billion monthly active users and I think we’ll get there.

Chang: So Facebook also along the way bought WhatsApp, and two completely separate parts of the business today. Why do we need both? Why do we need WhatsApp and Messenger?

Marcus: Well I think, first of all, they complete two different things and they will evolve differently over the years to come. WhatsApp wants to be very utilitarian, replace SMS and potentially more things, but it’s very communication-simple driven whereas Messenger is more media rich. And it will continue to be more rich in terms of ways to express yourself and capabilities in the years to come. And so I think that you see WhatsApp succeeding massively in countries where it has taken over—if you look at Spain, for instance, everybody’s on WhatsApp. And so there are other markets where neither Messenger nor WhatsApp has actually won decisively. So I think we have a lot of room to grow on both ends. I love both experiences for different reasons. I chat with some people on WhatsApp and a lot of people on Messenger. And so I think they both have room to exist and we’ll figure things out in the years to come.

Chang: So how closely do you work with Jan Koum? Do you talk to him at all?

Marcus: So yes, we talk, but Jan is in his office in Mountain View, not on campus. And that’s the way the deal was set up. And that’s the way it should be because the goal of WhatsApp is now to reach over a billion monthly actives as well and I think that anything we would do to distract them on that road to a billion would be detrimental.

Chang: So when you talk, what do you talk about?

Marcus: Like best practices, what they’ve learned, because obviously they’ve been doing that with a lot of success and they started like way sooner with like a team, a very small team at first that was very focused on making that messaging experience best in class. And they’ve had formidable success, so I think we have a lot to learn from them. And if there are things where we can help in terms of features they’re building in the future or things like that, we’re here to help as well.

Chang: In terms of strategy, I mean are you consciously talking about taking different roads, “We’re going to go after a richer experience, we’re going to go after a different kind—a more necessary experience”?

Marcus: Yes, Jan is anyway very passionate about like keeping it like very pure and simple. And so that’s self-evident in any conversation, and I think that what we’re going to try to do is try to—if you think about Messenger today, so you can send selfies, stickers, voice clips. You can make high-definition free calls that are growing like crazy right now, and you can do many more things, you can share your location, etcetera. And we’ll add more and more capabilities around the theme of enabling you to express yourself better with the people you care the most about in your life. And that’s the way we will differentiate over time.

Chang: So how do you continue to grow Messenger without cannibalizing WhatsApp, or even Facebook? I mean even Mark Zuckerberg has said messaging is more important than social networking.

Marcus: I don’t think that’s a problem actually, because those are two very different use cases. When you use Facebook traditionally, it’s to share broadly or consume stories. You have like five minutes and you’re waiting in line and you want to see what’s happening in your world, the stories you care the most about, you go to the main app. You want to communicate, you go to Messenger or WhatsApp. So I don’t think we worry much about cannibalization of time spent on mobile between those apps. I think between WhatsApp and Messenger there’s still so much market share out there, there’s still so many other solutions and the market is still so fragmented that we don’t really worry about that right now.

Chang: Let’s talk about that market because I’m curious to know how you think messaging plays out. You know, why am I going to need WhatsApp and Facebook Messenger and Twitter, email and text, Snapchat, and something else? What happens to all of these? There has to be consolidation at some point.

Marcus: Maybe. Maybe not. I think that it appeals to different demographics, and we in Silicon Valley might not be the model because we try and use everything. But the vast majority of people have generally a primary—they have the people they care the most about that are on one messaging platform and they generally tend to communicate with them on that platform. Then they have like the wide berth of people they’re talking with and this is SMS and what have you. And then, you know, in the teenage world you have other apps that teenagers use more. And so it’s really a fragmented market, but at the end of the day what matters, to us at least, on the Messenger side of things is that you use Messenger as your default messaging product to communicate with the people you care the most about in your life.

Chang: What do you think about Snapchat?

Marcus: I think they’ve done a pretty good job at building an experience. They’re going to start monetizing and we’ll see what happens.

Chang: How much of a threat are they to what you’re trying to do? Because they’re also trying to make the experience richer.

Marcus: Yeah, I think we don’t worry too much about what others are doing. What we’re trying to do once—it’s like the luxury of once you have users that already like your product at a clip of half a billion people a month, you have a chance to actually make it really awesome for them. And that’s what gets me out of bed in the morning. And I think that we have an opportunity in years to come to build really the most amazing messaging experience in the world. And I think if we do that we wouldn’t have to worry about—like we won’t have to worry about anyone else.

Chang: How closely are you following the Asian messaging space, like WeChat, Line, Kakao? Have you been to Asia? Where are you seeing inspiration and where are you seeing things you don’t want to do?

Marcus: So, yes. I think it’s a fascinating market and you have like generally—

Chang: You’ve been there, you’ve tried it out?

Marcus: Yes.

Chang: Okay.

Marcus: And you have like different categories, and I think one that has worked really, really well in Asia is everything that has to do with stickers and expression. So a couple of brands are doing extremely well with that, a couple of messaging apps. And then you’ve got like the WeChat model, where it’s like everybody in China has it. And no one exchanges business cards anymore; people basically exchange WeChat handles or a QR code that you can scan on a phone to exchange contact information and people communicate on that, people buy things, there’s a whole ecosystem of commerce. So it’s really fascinating. But at the same time, it’s an experience that works there because the state of the market is not where we are here. So credit card penetration is low, so for instance, paying taxis was only cash before that happened, etcetera. So we’re trying to figure out what there is to learn about those different experiences and build like a very unique experience over time inside of Messenger that actually matches the market needs of the market we serve the most, which is North America, Western Europe.

Chang: So what about monetization? How will you make money on Messenger? I know you’ve experimented with some things. Will we for example be able to talk to brands directly? Will brands be able to talk directly to us?

Marcus: So we haven’t experimented anything yet, at least externally. We’re always playing with a ton of things inside, but like we haven’t experimented anything externally yet. And I think there are a number of ways we can do that. One is content, and a lot of the Asian chat platforms and messaging platforms are monetizing by selling stickers and content. That might be one way. And then an intriguing piece is always, you know, how can you actually make communications between businesses and people really amazing, delightful—which it isn’t right now, because when you traditionally want to call a large company for anything it’s kind of a—it ranks probably close to a visit to the dentist in terms of you wanting to do that. And so can we actually solve that experience, make it delightful is kind of an intriguing thing. But there are numbers of ways that we can monetize and we’ll experiment in the next couple of years and I’m sure we’ll find something.

Chang: And what about payments at Facebook? You’re the payments guy, you’re the expert.

Marcus: I don’t know. This is going to outlive me. I’ve done other things than payments in my life. I think—

Chang: But there have been hints about the ability to maybe send money to someone on Messenger.

Marcus: Yes, I think we’ll see what happens there. I think the point I want to make is I don’t think it makes sense for Facebook to enter the payments business. So there are payments experiences on Facebook right now. The payments team is experimenting with Buy on Facebook, which enables you to buy a product directly from the newsfeed without actually navigating off the website or the mobile app, which I think is really interesting. So we’re going to continue investing in building the best possible buying experiences on Facebook across platforms. And I think we need to do that, but we’re an advertising-based business so I don’t think it makes sense to actually build a payments business. But it does make sense to reduce friction from seeing the product you might want and getting it.

Chang: Working with Mark Zuckerberg, what’s that like? How closely do you work with him and how is it similar or different to what you expected?

Marcus: It’s awesome actually. Mark is truly a remarkable leader. And he’s—

Chang: How involved is he in what you’re doing?

Marcus: Oh, he’s involved. He’s involved. We spend a lot of time together, and he’s really impressive. He’s a very impressive—like it’s pretty rare when you have leaders that can combine both vision over the very long run, you know, visionaries, and at the same time who can execute really well in a short to medium term. Generally, you’re one or the other, and he’s both. And that’s truly, truly amazing to watch.

Chang: So where is Messenger going to be in one year and five years?

Marcus: Well five years, hopefully we’ll be in the billions. That’s the goal. And I think that if we’re successful, we’ll build a really amazing platform and build an ecosystem around it that will make it extremely compelling for every constituent of that ecosystem around it. I think one year from now, we’ll have more capabilities and we’ll have more ways for you to express yourself better and hopefully we can reinvent the category rather than catch up on different fronts. But I think the more—to build anything really great takes time and so I think the five-year horizon is actually more interesting to me than the one-year horizon. And I think it’s going to be interesting.

Chang: All right. Does anybody have any questions? Anyone? Because I’ve got more. Okay.

Van Grove: Hi. Jennifer Van Grove with The Street. I was curious if you could talk about the demographic makeup of Messenger and whether or not Facebook has looked at Kik, which tends to skew very young?

Marcus: So the demographic is actually very similar to the Facebook demographic. It’s unsurprisingly the same people who use Facebook a lot who use Messenger as well. And, yes, there are a ton messaging apps out there that cater to different demographics and each of them have a different functionality. Kik is definitely one of them. We’re looking to—the one guiding principle that I have for Messenger is that I really want to keep the experience super high quality. Because if this is your go-to messaging app, it needs to be fast, it needs to be reliable, it needs to be dependable, and if you add on top of that the best tools for you to express yourself then we think we can win. But I really don’t want to make the experience too invasive or cumbersome and I think that’s a guiding principle for us.

Yao: Carl Yao, CSoft International. We provide language translation communication. We’ve also develop our own social network to some extent. I’m just wondering, your chat program sounds great, do you license that to other developers or is it something that you keep to your own?

Marcus: You mean the messaging experience? Like—

Yao: No, the APIs or other—

Marcus: So we have like a bunch of things that you can currently do. Like for instance, you can use a share extension and share content or an article, a video or something from other third party sites through Messenger. You can do that today, but for now that’s basically the extent of it. But over time we’ll probably look at opening the platform more and more and letting more third parties develop capabilities for Messenger. But that’s not in the immediate front.

Chang: David?

Kirkpatrick: Yeah, David. I don’t know which mic is supposed to work here, but—you mentioned the free calls that are flowing over Messenger. I mean that’s a very interesting thing that I’m curious how high a priority you put on and how many free calls are flowing over it now, if you could say, and what do you think that grows into over time? I mean do you think this could be become essential facility for people for their voice communication?

Marcus: Well, voice is growing really, really fast and it’s actually—it was surprising to me that it’s growing that fast given how buried it is in app right now. Because the only way that you can initiate a call from Messenger is actually start a thread with someone and then in the upper right corner you have the call button. But it’s growing, and the numbers, while I can’t share specifically, they’re big numbers every day and growing really fast. And we’re going to make the feature more prominent in the app so it’s going to be easier to discover how to call people. And those are very high quality calls and the team has worked really, really hard in making the feature really awesome. So we have Voice Clips and we have Voice Calls and those two things are used for different things, but I think that over time we’ll develop more capabilities around these two things. And, yes, so I think it can be a prominent communication channel for voice communication over time, yes.

Chang: All right. David Marcus, everybody.

Marcus: Thank you.

Chang: Head of Facebook Messenger. Thank you so much.