This VC forecast scares the pants off of me

After the list of losers they pawned off in the lead-up to the Internet bust, I nearly always distrust the pronouncements of venture capitalists about the future. Of course, why hold a grudge? Isn't that the price you pay in a hit-and-miss business? For every few Webvans, there's always a Google to convince the world that these guys really know how to read the tea leaves better than most folks. I suppose so.

So it was that I was especially curious when the Churchill Club earlier this week invited some of the A-List venture capitalists in Silicon Valley for a panel discussion on the top ten tech trends. (Eric Savitz kept good notes in his recap of the evening.) Most of what got offered up was unexceptional, but one comment in particular from Josh Kopelman may turn out to be one of the most prescient forecasts of the year. I'm actually hoping he's wrong because Kopelman's prediction scares the pants off me.

Vinod Khosla: Privacy is a red herring

Kopelman presented a scenario for the rise of the "implicit" Internet. I'm simplifying, but he was referring to the vast web of personal data that until now has existed relatively undisturbed in different corners of the data world. For example, you may have made a reservation over the Internet one day, or bought a book from an online reseller on another. But that that data is going to get collected from heretofore separate "silos" as companies that figure out ways to break through the barriers and deliver information based on that implicit cyber data.

That shouldn't strike anybody as a pipe dream. It's already happening in small ways and it's an idea that VCs will be in a hurry to fund. Some, though perhaps not all. Roger McNamee, who also participated in the panel, pointed out the obvious elephant in the room. Not only might Facebook know what I'm doing, he said, "but the Chinese government also knows." True enough. And not just the Chinese. Any government.

Vinod Khosla, who also took part in the discussion, was less impressed by the obvious privacy objections. Sounding a lot like his former partner in arms at Sun Microsystems, Scott McNealy, he described this as a big opportunity, giving short shrift to nitpickers like me. "Privacy is a red herring," he said. "There are rules and laws and ways to address the privacy issue."

Maybe he'll be proved right, but that's still one helluva leap of faith. If the experience of the last several years teaches anything, it's that the best of intentions often get sacrificed to political expediency. I know what Khosla wants to sell, but isn't it better to take a hard second look at the price before committing? Of course, good luck trying to tell that to the herd once it picks up the scent.

[Worf101]

Nice to read something that makes sense for a change. You can't just assume, as many have, that laws written or weakend by contribution seeking self serving politicians will protect you from foreign or domestic buisnesses or their governmental counterparts. Soon they'll not only have your entire internet history but your genetic predispositions as well. You're absolutely right to be scared and so am I.

D. Macks

[Schratboy]

This is entirely doable and is probably already being done by the CIA and other quasi-governmental entities. We have developed a commercial software tool that is lightweight, and easily installed which does content analysis on email, http and files creating a vectorized profile of on-line communications. We can see who goes where and what they do. Who is the source and who was the destination--everything. So the idea that someone could drop in a small footprint applet or inconspicuous device somewhere with an AT&T POP....let's get real. The administration has already been accused of spying on the citizenry with the help of the TELCOs so why should any of this come as a surprise?

Big brother has been alive and well since J. Edgar Hoover tried on his first pair of women's stockings.

[protagonistic]

This is one of the reasons I do not do all my shopping over the internet. The easiest way to avoid a lot of data tracking is to use cash. Until they start using in store cameras to tie cash purchases to a face you will be reasonably safe. But it is probably just a matter of time intil they start doing that.

[ghostofitpast]

I found this so interesting that I reflected on it at length on my own blog at:

http://therehearsalstudio.blogspot.com/2008/05/privacy-is-red-herring.html

[private user 2]

Throw enough rocks your bound to hit something eventually. These "A List" VC's are just the ones that managed to hit something with one, it doesn't mean they are any smarter than the next guy.

You want to get a realistic idea of what the future may hold, talk to engineers that have been in the game 10 or more years.

What really scares me about this is the attitude of "there are laws to deal with privacy". Just because something is legal, that does NOT mean it is ethical or moral.

[Lerianis]

And just because something is illegal, does not mean that it is unethical or immoral: read: homosexuality, the outlawing of interracial marriages 40+ years ago.

[willdryden]

Laws do nothing without enforcement and the crooks know that inforcement is very difficult. That is why only a few of the people using stolen credit cards ever get caught.

[i_made_this]

Point well taken, Charlie. But I bear in mind that 9 out of 10 Internet VC's that fund these tons of useless little "Web 2.0" operations lose money on their investnments and it's no sweat for these VC's to use these faulures as write-off's against their one or two huge smash hit successes. Second, about the data non-privacy movement that caught fire post-9/11, I maybe a dreamer on this but sense that an upcoming Dem admin might nip that horrifying possibility in the bud.

[Lerianis]

I wouldn't be too sure about that. A lot of Democratic candidates who I have talked with by e-mail support the government doing some of the things that they are doing under Bush right now..... they just want it to be done OUT IN THE OPEN with proper oversight by the courts and Congress.

[petercranstone]

It's always interesting to ignore privacy until "yours" is compromised and then all of a sudden it becomes personal.

In meeting with mobile users we've learned three things. They want:
1. Convenience
2. Privacy
3. Control

In meeting Enterprise customers who deliver services to mobile customers they want:

1. To make money

What is required is a solution that aligns these objectives. It's not hard to do "IF" you design for it from the beginning - however layering in Privacy cannot be done like tinsel on a Christmas tree.

Peter
5o9 Inc.

[catbutt5]

"There are rules and laws and ways to address the privacy issue."
Unfortunately, the only ones constrained by such laws seem to be Government bodies.
But if you go to Joe Shmoe on the street or Joe VC for example, they'd sell you out for a pittance. Heck, they'd probably set your house on fire for the right price. Your privacy means absolutely nothing to them. Greed plain and simple.
And now Government bodies can get around those laws too because, since your private info is available to the public at large, or being sold by some service without your permission, they can use it too. Since the Gov. didn't amass the data themselves, they're not breaking the law now.

Ethics and morals? Sorry, not profitable.

[aintnorainbowdorothy]

The one thing I know, after 40 years using Computers and then in IT and Security Consulting, is that nothing is sacred; Those many years ago when I was in Intelligence Operatons in the military, we knew what the Russians and Chinese (then the enemies) were doing and also knew that they knew what we were doing. And that was in the days of still using punch cards and paper and magntic tape. One thing I know is certain. Information is not secret if put to paper, into the ether or somewhere else. If a person wants no one to know anything about her/him, then that person has to completly destroy his/her present identity and create a new one, keeping the old one a secret. And a secret by its' very nature is only a secret as long as only a single person knows it. Put it out there in the public, and I mean to a second person, perhaps a third, it's no longer secret. Use a computer and someone knows about you and your computer self. There is no guarantee of privacy. Never has been, never will be.

[Renegade Knight]

Behold Web 3.0
VPN's where Data will be your own and Silos will run dry.

[Fil0403]

I'd say it only really scares whoever has comething to hide (and, judging from the comments, it surprisingly seems to be a large number of people).

[Tony McCune]

After spending the past six months pitching to VC I've come to the conclusion that they often run in packs. If you don't start out in Silicon Valley or Waltham MA and aren't "connected" it's hard to get enough due-diligence done for the VC to make an informed decision. It's not about what you've got, it's mostly about who you know. Not complaining but I think it causes an echo chamber effect. Funds tend to swarm around a new play in the market but only the first couple are going to succeed.

[zclayton2]

Vinod Khosla said, "Privacy is a red herring, There are rules and laws and ways to address the privacy issue." Pretty clueless. Rules and laws are the red herring. Any good lawyer is going to tell you how to do something legally. Less creative ones will tell you not to do it because of rules and laws. Rules and laws are like security software. They are only good until a smarter rat figures out the way around them.

[private-internet]

Privacy is not a red herring - its part of the fabric of society. Your house is clearly private, rules and regulation ensure its privacy but you still put locks and fences in place. The Internet right now is not built to accommodate our expectations of privacy. Scott is only looking at it from a technology view point and not a social viewpoint.