Making Freedom Part of the Business Model: How a Young Trep Helped Fuel the Arab Spring
Entrepreneur's New Year’s Guide
After the events of the Arab Spring in recent years rocked the world, even the technologies we live and work with daily gained greater prominence.
Social media helped disparate groups stay connected. Streaming-video platforms helped disseminate and visually present what was happening in the thick of the chaos. And hot-spot shielding technology helped citizen journalists on the ground cover their tracks.
The maker of that specific piece of helpful technology is AnchorFree, the Silicon Valley startup that was founded in 2011 by David Gorodyansky and Eugene Malobrodsky.
Initially, the two young founders conceived the technology -- which acts as a virtual private network, or VPN -- with the intention of helping people securely surf the web, as if the internet were one big secure banking website. But after launching the company’s Hotspot Shield, or what’s known in the business as a web anonymizer, activists in Egypt, Tunisia and Libya quickly snapped up the technology -- using it to shield their locations online so they could safely organize protests and inform the world about events as they occurred.
Since then, Gorodyansky, now 30, says the technology has continued to evolve. AnchorFree’s business model now directly addresses the needs of these emerging markets to bypass internet censors. And, as originally intended, the technology offers greater privacy and security to web users in the first world too. Additionally, the Hotspot Shield is available as a free VPN option for iPhone and Android users, allowing them to shield their mobile-data usage through an encrypted connection.
In May, the 50-person operation raised $52 million from Goldman Sachs to go grow the company to even greater heights. YoungEntrepreneur.com sat down with AnchorFree’s CEO Gorodyansky to find out how the ride from entrepreneur to unwitting hero of online privacy has been:
Q: How did you come up with the idea for AnchorFree?
A: We realized that people’s identities were going to be digital, everything you do online was going to be digital. We also realized that you could probably learn more from a person by looking at their online activities than by walking into their house.
Q: AnchorFree is used in 190 countries. Are some of those governments challenging your technology?
A: It’s actually endorsed by governments in a lot of places. In Europe, for example, they’re very keen on privacy and enabling consumers’ choice around privacy. But yes, in some countries, China being one of them, the government does not like us because we’re enabling Google and Facebook, which aren’t unavailable there. They try to find ways to stop it, but we’re pretty good at making sure we’re not stopped.
Q: How did AnchorFree’s involvement with Arab Spring impact the company?
A: We didn’t know at the beginning that we were building a product that could be used in that way. But once we realized it and we saw huge numbers of users using the product for freedom, we said, ‘this is huge.’ And so we really doubled down on that and started to focus both on the Western world and on emerging markets -- both on security and privacy, but also on freedom. Essentially, we added freedom to the business model.
Q: What was most challenging about starting such a controversial business as a young person?
A: When we started AnchorFree, we were sure that we wanted to enable the world to be private and to generate revenue from enabling privacy. One of the challenges was, if you want to do something that really impacts the world, how do you do that and at the same time grow a profitable business?
The way I look at it is, if you’ve got a really big addressable market, and there are several billion people that really have a need, then you’ll find a business model around that over time.
Q: In three venture rounds of funding, AnchorFree raised $63 million. How did you raise so much money at such a young age?
A: At 23, I realized that I didn’t know everything, so I’d need to surround myself with really smart people. So, I put together a board and basically connected with a lot of really smart people. They invest in the company and attract other people to invest. Over the years, they’ve been extremely helpful at guiding the business, helping answer questions and making introductions.
Q: Besides surrounding yourself with smart people, any other advice for young entrepreneurs?
A: I would avoid the use of consultants that want to charge a lot of money for advice. I’ve never paid for advice. I enabled very smart people to be advisors, and in return allowed them to invest in the business. Anybody who wants to give you advice should be putting their money where their mouth is.
-This interview was edited for clarity and brevity.