True mobile privacy requires specialized hardware.
That’s what we heard from Silent Circle, which announced $30 million in new funding today. The privacy-focused startup will use the funds to bring its ultra-secure “Blackphone” — a $629 smartphone powered by a custom version of Android called PrivatOS — to market next month. The company also announced that it is relocating its global headquarters from the Caribbean island of Nevis to Switzerland.
To learn more about these developments, we caught up with Silent Circle CEO Mike Janke. Here’s a transcript of our conversation:
Eric Blattberg: Does true mobile privacy require specialized hardware? What’s the hardware / software balance there?
Mike Janke: Short answer: Yes, for true mobile privacy. True mobile privacy means it’s not just governments or hackers that you are preventing from accessing your phone but also the most gargantuan of threats — the big data companies. Think about the 18 pieces of malware that Samsung puts on your phone, or Verizon, or AT&T.
Real mobile security prevents the apps you download from sending your location, contact list, browsing history, and so on without your knowledge. All of those are real privacy threats. If you were to combine good “digital hygiene” along with good software to protect you, that would cover 99% of the threats but would not stop a zero-day attack, so hardware is part of the 100% solution.
Mike Janke: Well, first, FreedomPop simply buys cheap Samsung phones, puts a few apps on them, and then sells them. Has anyone checked the code or done a security review on FreedomPop’s “proprietary encryption”? No. Did they build their own device? Did they build their own OS from the ground up? Wi-Fi protection? Secure over-the-air updates? No, to all of that. So in reality, it’s an apples to jelly beans comparison. Their phone is a marketing gimmick, but we wish them well.
Eric Blattberg: What benefits does a Swiss headquarters offer?
Mike Janke: Neutrality, strong privacy laws, and an awesome business climate. We have data farms in Canada and Switzerland. Employees from 12 countries. 75% of our customer base is outside North America. All of these factors led us to choose Switzerland as the right place for our new headquarters.
Eric Blattberg: Why are venture capitalists loving privacy-centric companies right now?
Mike Janke: Because privacy has become a worldwide issue. People want it and are willing to pay for it. VCs follow profit, return-on-investment, and the next big wave. They are smart folks.
Eric Blattberg: Do you think their enthusiasm accurately reflects market demand? And what sort of market demand are you forecasting for the Blackphone?
Mike Janke: Absolutely. Venture capitalists don’t get enthusiastic unless the data and demographics are behind it. They are in the business of making money — so, privacy, the Internet of things, and the cloud are prime targets.
The market demand for Blackphone honestly took us by surprise. Everyone “hopes” their products will have great success, but we were not prepared for this level of demand. We are now. We expect to sell three million devices in 12 months, but almost 20 million in the next three years as we launch our family of devices.