CDR: Zero Knowledge, after poor software sales, tries new gambit
http://www.wired.com/news/business/0,1367,39895,00.html Privacy Firm Tries New Gambit by Declan McCullagh (declan@wired.com) 2:00 a.m. Nov. 1, 2000 PST WASHINGTON -- Zero Knowledge Systems seems to have finally realized a harsh truth: Internet users don't like to pay extra to protect their privacy. The Montreal-based firm won acclaim for its sophisticated identity-cloaking techniques, but very few people appear to have paid the $49.95 a year to shield their online activities from prying eyes. That's not exactly a heartening prospect for a company with 250 employees to pay and $37 million in venture capital funds to justify -- especially when already high-strung investors have become nervous about Internet companies that have never made a profit. Zero Knowledge's solution: A kind of privacy consulting service it announced on Tuesday. Through it, the company hopes to capitalize on the growing privacy concerns of both consumers and businesses -- and, most importantly, finally enjoy some revenues. "This is a new focus for Zero Knowledge: helping businesses build in privacy technologies in how they deal with customer data flow," Austin Hill, co-founder and chief executive, said in a telephone interview. "As customer expectations have increased with privacy, and how governments have started to regulate some privacy standards ... all of a sudden, companies are having to think, 'Hold on, how do I build in privacy?'" Hill said. Hill and his staff of technologists -- including veterans like cryptologists Stefan Brands and Ian Goldberg -- aren't alone in eyeing the privacy-consulting business as a lucrative one. Many of the established consulting businesses such as PricewaterhouseCoopers and Ernst and Young offer privacy services. IBM launched such a business in 1998, and an Andersen Consulting representative says that privacy awareness is "a component of almost anything we do." [...]
At 11:41 AM -0500 11/1/00, Declan McCullagh wrote:
http://www.wired.com/news/business/0,1367,39895,00.html
Privacy Firm Tries New Gambit by Declan McCullagh (declan@wired.com) 2:00 a.m. Nov. 1, 2000 PST
WASHINGTON -- Zero Knowledge Systems seems to have finally realized a harsh truth: Internet users don't like to pay extra to protect their privacy.
This is a recurring theme, and one we've talked about many times. Fact is, most people don't think they need security. Most people don't even think they need backups. Until their hard disk crashes. And so on. It's a tough sell in either case. This is why the market for crypto and security and anonymity has tended to be at the "margins" of society: porn, warez, freedom fighting, etc. Such has it always been, such shall it always be. Targetting the mainstream is a tough sell. (The most widely-deployed bits of crypto are in places where huge deals were cut with browser makers, e.g., SSL, Verisign, etc. The customer is only vaguely aware that such things are happening. No sale to Joe Average is needed. Probably this is the way Web proxies will ultimately be sold.) ZKS was just one of many companies attempting to sell privacy tools to "Joe Average," and his little daughter Suzy Average (pictured in ZKS Freedom ads...). Well, Joe doesn't do much with his home computer except check some sites and maybe download a few porn images from Danni's Hotbox when Suzy has gone to bed and the wife is passed out on the sofa. _Could_ ZKS Freedom help Joe a little? Maybe, but it's not something even on his radar screen to worry about. His bigger concern is having Suzy or the wifey find the paltry pieces of porn he purloined. Or he's at work and his boss has just announced that several employees have been fired for using the company's networks for checking sports scores, downloading porn, usng Napster, etc. These are Joe Average's _real_ concerns about privacy. Cute ads about little girls needing their privacy probably won't sell ZKS Freedom to Joe Average. ZKS may do better by bundling Freedom with Danni's Hard Drive accounts! "Your porn is downloaded to you in "Plain Brown Wrapper" format, disguised to look like a marketing report containing the key words you specify. Your boss will think it's business, your wife will be bored." (No, I'm not suggesting this as any kind of real product. The market is just too small, and downloading porn or Napster songs at work is a lose for many good reasons. The proper solution is even more straightforward: only fools download porn at company sites, and they deserve to be fired. And if Joe Average doesn't have his own _personal_ computer at home, they're cheap enough. No reason Little Suzy should be doing her homework on the machine he has his porn on. And even if he does, encrypted partitions are trivial to set up. Plus, removable CD-RWs and Zips. "Zip--for when you don't want your porn discovered by your wife!") The second major use for privacy tools is preventing the "dossier society" effect, where one's words in alt.sex.gerbils are archived for all time and are seen by prospective employers, Senate confirmation panels, etc. This is a likely market for ZKS Freedom. Ah, except that utterly free and easy to use services like MyDeja and MyYahoo and suchlike are dominant in this application area ("space"). It is routine to see "aardvaark42@mydeja.com" posts in nearly all newsgroups. While these are not cryptographically robust, it's unlikely these will ever be linked to true names. Especially as they may be set up on the fly, through proxies, etc. Still, some fraction of people will pay for Freedom-type nyms. Probably not $50 a year, as that is a significant fraction of their entire ISP bill. But not a lot of people. And they won't pay much. The real market for robust security and privacy tools is, as always, elsewhere. The _interesting_ market has always been for those who are--demonstrably!--willing to pay big bucks to get on a plane to fly to the Cayman Islands or Luxembourg to open an offshore account. For those who are actively interested in untraceable VISA cards. For those selling arms. For those trafficking in illegal thoughts. In short, for crypto anarchy. Not for fluff. Will the new ZKS business model work? Maybe. But as Simson Garfinkel points out in the article Declan wrote, this may take years to develop. Until then, tough sledding. MojoNation seems to be a lower burn-rate run at the real low hanging fruit. --Tim May -- ---------:---------:---------:---------:---------:---------:---------:---- Timothy C. May | Crypto Anarchy: encryption, digital money, ComSec 3DES: 831-728-0152 | anonymous networks, digital pseudonyms, zero W.A.S.T.E.: Corralitos, CA | knowledge, reputations, information markets, "Cyphernomicon" | black markets, collapse of governments.
participants (2)
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Declan McCullagh -
Tim May