October 8th, 2011

Is Privacy Dead?

A month ago, I was demoing the alpha version of a location based mobile application for the Entrepreneurship @ Cornell advisory council. I told the council that my vision was to “change social behavior” by influencing users to find people in close proximity who are a part of the same network (Cornell), people who have similar interests, and comparable career aspirations.  I spoke about aggregating and displaying personal information on mobile devices to help people feel comfortable when approaching a stranger.  I went on to talk about how it seems “creepy” and that people will be concerned about privacy, then Bill Trenchard (a serial entrepreneur and VC) immediately shouted “PRIVACY IS DEAD”!

When Bill shouted I instantly remembered when it was creepy to meet someone online.  Now finding a date or a wife on Match.com is not only acceptable but also a primary mechanism for meeting someone new.   I thought about how people never used their real names in chat rooms and or even as an email address.   I thought back even further when I would write the phone number of a cute girl on my hand and could only reach her when both of us were near landline telephones.  Those thoughts prompted me to write this blog and to get your feedback on how privacy is changing in society and to figure out what is creepy today but will not be so creepy in 5 or 10 years.  You, Generations X and Y, will make the decision about the future of privacy because you:

(1)    Have witnessed societal and technological inflection points

(2)    Have historical memory of the world prior to the emergence of free flowing information and instant access to people through the internet and mobile devices

(3)    Have more than 35 more years to be active citizens of the world. 

Technology has drastically changed social behavior; however, the key barrier to the next social paradigm shift and the disruption of more markets is the evolution of privacy.   Can privacy barriers actually be lowered further?  What generation X and Y deems as socially acceptable will allow social media, new business products, personal life, virtual goods, and education to converge more and will create market dislocation for entrepreneurs to introduce new products/services.   I believe the new markets will include:

  •  Mass commercialization and commoditization of peoples’ personal interests/tastes
  •  Micro targeting people using real-time location information in a way that people will welcome
  •  Brand awareness of products that target hyper personal and intimate needs. 

As an example of the latter market, Mary Jaensch, CEO of Zestra, mentioned to me that“Women are willing to give up a bit of privacy to get better solutions for previously thought-of intimate, deeply personal needs and interests – like increased sexual satisfaction.  They are discovering new solutions and options by talking to like-minded people in trusted forums and digital space.

Before you think about the future of privacy, consider how the mass adoption of certain technologies have already changed privacy over the last 20 years.  More specifically, how these technologies changed accessibility, connectedness, rate of communication, and communication capacity.

Email (early 90s)

Email created a new medium to communicate with a person in an instant, but not real-time manner.  By adopting email as a norm, society lowered a privacy barrier by allowing any person, business, or machine that gained access to a person’s email address to directly contact and communicate with that person.  Email also increased people’s capacity to communicate. 

Chat rooms (mid-90s and early ‘00s)

Like email, chat rooms created a new medium for communication, which furthered increased individuals ability to engage.  The major difference was real-time engagement, so the need for strict privacy barriers was higher.  Thus, the idea of a virtual friend/buddy was required before communication was allowed.  However, social behavior started to change at this point.  People were more willing to communicate with people they did not know and people slowly became more open to meeting new people from around the nation and world.  This change was partly due to the fact that technology increased people’s capacity to communicate.  Note online threats (i.e. cyber bullying, etc.) also emerged and are the basis of a new market opportunity: cyber protection, which will be more important if privacy barriers continue to fall!

Cellphones/text message/etc. (late 90s and early ‘00s)

Like landline phones, cellphones allowed for more personal engagement, created by simply hearing someone’s voice.  Unlike voicemail, landline, chartrooms, and emails, cellphones created the idea that a person is always accessible.  The cellphone is still carried with a person at all times and has become a necessary extension of one’s daily paraphernalia, which has led to the smartphone being a platform to personally engage consumers.  Like chartrooms, cellphone access was limited to personal connections and text messages, creating a privacy control on a person’s responsiveness.

Ecommerce and online transaction process (late 90s and early ‘00s)

Shopping online is an example of another privacy barrier that was lowered.  As the internet became more widely adopted in the late ‘90s, people were skeptical about giving away credit card information and personal information online.  The implementation of SSL certification and the emergence of safe online transaction services such as PayPal in the late 90s helped ease the concern of identity theft and fraud caused by online transactions.  Similar to the market to protect individuals from social threats, a market to protect online banking and fraud is emerging to mitigate the risk of the lowered privacy barrier for online transactions. One of my favorite technologies in the banking and fraud protection space is BillGuard.

Web Identity and Social media (early ’00 – ‘10)

Web 2.0 technologies including social media software and some location based technologies have allowed the internet to acquire personal identifies and data based products/services that are not dependent on the physical world.  For example, today personal property like photos, music, identity, opinions, history, real-time location, and thoughts are a part of the digital world and are becoming more and more freely accessible to anyone.  What is happening as the barrier to access private and personal information decrease?  Can we just eliminate privacy altogether?  Is there a market to protect people’s digital identity and assets?

What’s next?

The rapid growth of tablets, smart phones, location based technology, and the normalization of free flowing personal information is creating markets to engage people in real-time at their current location.  In the early 2000s there were talks about how RFIDs would create new markets by allowing retailers to know personal information about consumers and provide them with hyper specific services/goods in real-time.  However, privacy concerns about location and personal information were too great and a true market opportunity for RFID technology never emerged for personal commerce.  Is society ready to reveal real-time location and other personal information in return for more tailored services and products?  For instance, would you like your next UPS package to be delivered directly to you (where ever you are) instead of your home?

Additionally, more personal information is being acquired and aggregated online.  Niche communities are being created in the virtual space through blogs, web series on Blip.TV, groups in google+, and exclusive lists of people who have similar interests/tastes (collected by daily deal aggregators like Groupon and Yipit).  As a society, are we ready for private groups to be micro-targeted with hyper personal and sensitive products that address specific needs (i.e. Zestra)?

What are your thoughts? 

  1. aholidayvc posted this
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