Why Hotspot Shield's co-founder puts privacy over profits

One tech chief said it's by design that only a fraction of his customers pay for his service.
Written by Zack Whittaker, Contributor
(Image: file photo via Wikimedia Commons)

NEW YORK -- Every time a site goes dark or a connection is lost amid protest, scandal, or revolution, David Gorodyansky usually finds out hours or even days before the media does.

In the wake of the Arab Spring in 2010, his company helped more than a million users in Egypt get access to social media again literally overnight. That same year, his company set up an email autoresponder with its privacy app attached for users in China after the government blocked the company's website. The number of users in China quadrupled in just a few days. And, last year when the Turkish government blocked access to Twitter, his company saw two million users in three days use his service to circumvent the blocks.

His company AnchorFree developed Hotspot Shield, a networking app, which allows users across the world to bypass state censorship and internet provider filters from their computers or phones. The app helps its users to bypass state censorship by encrypting and tunnelling a user's internet traffic through servers located outside of their country.

"We've been an enabler for getting to information pretty much every time an internet provider or governments has tried to block access to information," said Gorodyansky, as part of an hour-long interview in mid-December.

A Moscow native and now a US citizen, Gorodyansky, 33, co-founded AnchorFree a decade ago, putting him in the somewhat quieter ranks of chief executives who started major Silicon Valley tech companies in their early adult lives.

But where other companies -- Facebook, Twitter, Google, and Microsoft and Apple -- focused on drawing in as many users for the greatest annual profit, Gorodyansky said he is driven by an entirely different mission.

"We believe security and privacy are basic human rights for really every person on the planet," said Gorodyansky. He said that the 400 million people who use Hotspot Shield, which is growing by hundreds of thousands of installs each day, come from every country in the world. He argued that the next five years will have billions of people joining the internet, mostly from developing nations, where online privacy is a commodity.

Thanks to combined funding of $63 million, including $52 million from Goldman Sachs in 2012, AnchorFree has expanded rapidly in the past three years. The company's network spans a dozen countries, and has an internet capacity larger than eBay's.

Though the company is for-profit, Gorodynasky argued that where people can't pay for privacy, they shouldn't. The 3 percent of users who subscribe to its premium "elite" service, which removes ads and expands the service's virtual reach to a number of other countries, makes up the bulk of the company's revenue.

By offering his service for free to 97 percent of his customers, as he explained it, he aims to "open up the world's borders and allow information to flow freely."

Gorodynasky admits that while he wants his company to deliver privacy, security, and freedoms to the next five billion people, living in the present day is more like internet Whack-a-Mole by reacting to events as they unfold. For example, the company can tell that so-many-million people visited Facebook, or Twitter, or another site based on data collected on domains visited in aggregate. "That's all we know," said Gorodynasky. "We don't have names, or know data per user." The aggregate metric helps the company to ensure that access to a particular site in high demand is as good as it can be.

"We're very reactive," he said, as he reeled off examples of internet blockades in Turkey, as well as preemptive events, such as helping users watch events like the World Cup from countries where broadcast streams aren't available.

One example stood out among the rest. When hundreds of thousands took to the streets in Venezuela two years ago in protests over government policies and censorship, Gorodynasky made the call to give away its privacy software for free to his users in the country, likely to the short-term financial detriment to the company that could have easily capitalized on the situation.

Privacy is the "same" for everyone, he said, whether it's an on-the-ground activist fighting government oppression using his free service, or an airport-dwelling executive using the paid service.

"I might have 'nothing to hide'," he said, "but I've got a lot to protect."

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