The German startups hoping to ease the privacy worries of the 'healthy paranoid'

The NSA revelations have spurred growth in turnkey solutions to privacy problems that appeal to country's security-minded citizens.
Written by Michael Filtz, Contributor

If you're looking for a VPN product, chances are you've heard of ZenMate, which provides VPN and web traffic encryption through easy-to-use browser plugins and mobile apps.

On a recent afternoon in ZenMate's Berlin offices, Simon Specka, one of the company's co-founders, explained what led ZenMate to create its privacy products. Even though various VPNs and encryption solutions have existed for some time, ZenMate's founders saw they weren't really being adopted by the mass market.

"We thought that one of the key reasons is that security or privacy tools are still too complicated," said Specka.

"So we thought that by making very complex technologies accessible and comfortable for users on the mass market, this is something we could do."

A healthy paranoia

ZenMate's Simon Specka. Image: ZenMate

"We're digital natives, and we've always been a little bit paranoid, not in a completely crazy way, but in healthy, paranoid way," Specka continued.

In many ways, this 'healthy paranoia' reflects the views of many Germans, especially in the post-Snowden era. A December 2013 study by Bitkom, a trade association for the ICT industry in Germany, found that around 80 percent of German internet users felt that their data was unsafe, a substantial increase from previous studies.

"The trust of many internet users in the security of their data was shaken by the NSA affair," said Bitkom president Dieter Kempf.

This emerging discontent, coupled with the fact Germany has some of Europe's strictest data protection laws - the country has a strong interpretation of the Safe Harbour laws, which govern the sharing of data between Europe and the United States - has created a healthy environment for German startups working in the security and privacy space.

Indeed a number of startups in the country are tapping into this sentiment with products catering to those who may not be tech experts but who demand privacy nonetheless.

There's Lübeck's Commocial, for instance, which promises to "protect your digital identity" with a mobile app that manages passwords as well as PINs and TAN codes.

There are also a number of German startups offering a range of secure but easy-to-use email solutions, including Lavaboom and Posteo. These providers, by operating in Germany, hope they can avoid the fate of Lavabit, a secure email provider that shut down rather than comply with an order that would have allowed the US government to access its data.

The orange box

Like ZenMate, Hamburg-based Protonet offers a turnkey solution to another of today's digital problems: securely storing and accessing private data. This startup offers a range of small, stylish orange boxes on which users can host their own files, with straightforward software that can run collaboration tools and other applications. The idea is that if users didn't have to rely on services in the cloud, they'd have more control and more security with this solution.

Protonet's all-in-one storage product. Image: Protonet

Protonet's first devices launched in July 2013, just weeks after the NSA leaks hit the news. Phillip Baumgaertel, who's in charge of the business development for Protonet, says that for many customers, although privacy isn't always the primary selling point, it is usually a priority.

"For a lot of people this has gotten really real, especially in Germany," said Baumgaertel. "And what we see is that people are not only considering price, they're also considering privacy."

Beyond Protonet's standard encryption, Baumgaertel said that a shift away from centralized cloud services adds more security, in and of itself.

"When people hacked iCloud, what was the incentive?" Baumgaertel said. "The incentive was stealing hundreds or thousands of pictures or passwords."

"This is because iCloud is a kind of honeypot, and if you can get to the honeypot, you get all the honey."

If your files and personal information are hosted on your own server, however, they're less attractive as a target for hackers.

More users, more money

Shortly after ZenMate launched in 2013 - it was part of the first batch of the Axel Springer Plug and Play Accelerator in Berlin - its services had some 100,000 users. But over the course of the past year and a half, this number has risen to over six million.

But perhaps more importantly, money is following. Last month, ZenMate closed its Series A funding round of $3.2m, led by Holtzbrinck Ventures, which has invested in German startups such as Zalando and Wooga.

Other ZenMate investors include T-Venture, Deutsche Telekom's venture arm, which has funded other security startups such as CipherCloud and Lookout.

Even end users, who may not have huge venture funds to throw around, are ponying up for easy-to-use security. Earlier this year, Protonet set a crowdfunding record when it raised over $4m on Seedmatch, a German crowdfunding platform.

"We didn't think that it would blow up that much," said Protonet's Baumgaertel. "Seriously."

ZenMate's Specka attributes the surge in ZenMate usage to the fact that internet users are becoming increasingly tuned in to ideas around privacy.

Specifically in terms of Germany, Specka, who grew up outside of Frankfurt, points to an increased sensitivity developed due to the country's history of government spying.

"Germans have learned from the past that a certain amount of privacy is a fundamental right," said Specka. "Having the Eastern German government spying on its people, it was devastating. And this is how Germans learned, in a way."

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