Billions With Zero Knowledge

Sometimes the light’s all shining on me
Other times I can barely see
Lately it occurs to me
What a long strange trip it’s been.
Truckin, Grateful Dead

I wrote this post in October 2006 but delayed in posting it until I had time to get comfortable with blogging. Although I’ve edited it a bit in the last couple of weeks before posting, most of the content remains the same. I attempted to write a shorter version of it recently, but decided that I would retain the original format of the post I wrote almost six months ago. It is fitting that I’m posting this from the TED conference since it was the TED conference that inspired the idea for my new project, leading me to leave the company I founded with my brother & father.

It was almost a decade ago in the spring of 1997 when Hamnett and Hammie (my brother & father) and I had just sold our Internet provider Total.Net and had begun to work on a new venture. Our new company was based on the idea that we could build a number of services to protect individuals privacy and security online by making military grade encryption and privacy technologies easy for consumers to use.

There was a very large discussion going on about the fears of Internet users regarding privacy and we felt we could make a positive impact on millions of peoples lives with our solution.

While trying to come up with a name for our new venture, I developed a list of all the encryption & privacy related concepts and keywords that I sent to Hamnett & Hammie. It was my father, Hammie who in a meeting at my apartment keyed onto the words Zero Knowledge from a description of Zero Knowledge Proofs that I had sent around. Shortly thereafter Zero-Knowledge Systems was born. At the time, tongue in cheek names were all the rage and everyone was trying to stand out in the crowded early days of what would become the dot.com boom.

We knew going in that we would catch a lot of grief at times with a name like Zero-Knowledge - but we wanted to stand out. We stood for something different, and the name just seemed to fit.

Our Incredible Journey

The name of course, was only the beginnging of what would become an incredible journey that has lasted almost a decade for me personally.

Our staff would go on to plaster downtown Montreal and our office neighborhood with stickers proclaiming “Changing the World with Zero-Knowledge”. I’m still having to turn down requests from people who want to get some of our old T-Shirts or posters. We wanted the world to know what we stood for - power to the people - privacy for all - we were passionate about changing the way the future would look. We were social entrepreneurs believing that we could both make a profitable company and a contribution to the betterment of society at the same time.

I began capturing notes, journal entries, photo’s and video of the companies ascent early on. I had the idea of writing a book about the companies experience one day. This may have been youthful hubris & arrogance but at the time I was confident we would be a billion dollar company eventually and people would want to know how we did it. Given the time this was not a crazy idea, but you could say I was literally Chasing Billions with Zero Knowledge.

Did we ever have stories though, lot’s of good stories.

Over the course of the next nine years I would rub shoulders with incredible industry and world leaders, extremely well armed cypherpunks, brilliant scientists and luminaries of the technology and venture capital industries. (Too many links to post, but Google has a decent memory of my past activities you can peruse if you are curious.)

I began to spend time with incredible people actively involved in changing the world. I gave speeches at the World Economic Forum, traveled the world meeting and working with global leaders on issues ranging from Ethical Technology Design, Privacy, Security, International Cybercrime law, Canada’s technology innovation strategy, net neutrality, technologies role in social responsibility and many meetings on technology & human rights work.

Amidst the world travels we would also become media darlings, appearing on 60 minutes, CNN, WSJ, NY Times and in hundreds of publications as we became one of Canada’s highest profile Internet startups and acted as a regular expert on the issues of Internet privacy and security.

We brought innovative Silicon Valley style recruiting & retention ideas to Montreal as we exploded onto the Canadian technology scene.

We conducted intelligence agency briefings with most of the alphabet soup agencies, battled killer typhoons in asia, and were taxied to silicon valley in private jets as investors wooed us. We set Canadian records for our financing’s and for awhile were members of that generation of dot.com media darlings.

The Tough Times

There were also a lot of very tough stories and painful lessons we had to learn.

Reducing our head count by the hundreds because of undisciplined growth while reacting to the meltdown of the private and public equity markets. Managing teams while teetering on the edge of bankruptcy as we restructured debt, getting out of potentially crippling lease obligations & negotiating a recap with the investors to keep the company going. We faced the challenges of discontinuing the companies flagship product and having to completely reposition the companies products, target market, technology and structure while trying to keep the doors open.

We would experience some of the downsides of being media darlings as the companies shift in direction and layoffs became popular targets for reporters writing about the dot.com bust. Articles with sentences like “Blood runs in the halls at Zero-Knowledge as the firing carnage continues” to report our reductions in staff made each step that much harder as the articles made their way to partners and customers.

In early 2003, as the company started to generate positive cash flow - I started joking with my brother that if we ever told the inside story of our rise, fall and survival through the bubble that we should call it Chasing Billions with Zero Knowledge.

The phrase struck me as a fitting moniker for our own journey as a company, some of the investment trends that contributed to the dot.com bubble, and many of the ideas & entrepreneurs I encountered.

To be clear, I believe that most every company begins with zero knowledge. Assumptions and theories abound but actual knowledge of what the future may hold for the company is a pipe dream. There are so many questions from team, to product, to competitive landscape that the only real bet you can make is that shit will happen and things will need to change. Every enterprise begins with zero knowledge.

The process of building innovative enterprises requires experimentation and failure. How much experimentation is a function of risk appepitite and cost of money. The cost of money was incredible low and the risk appetite for technology stocks were so much in abundances that we were fielding random calls from retail investors looking to buy stock or get on a waiting list for the IPO for almost 2 years before we even had revenue.

I don’t believe even now in hindsight that we were ever chasing billions while clueless. We proved ourselves able to play by the rules of the that time and raised money and built real products & teams in a way that the market was rewarding (Getting big fast, become the market leader by the size of your brain trust and the broad range of your opportunities).

When the rules of the market changed, we changed with them and made sure we could continue to work with customers finding a business model and customer profile that would grow with us. We made a lot of mistakes that in hindsight now seem obvious. But we rushed into our mistakes recognizing them as valuable lessons and we were eager students.

A New Story - Radialpoint Emerges

I often get questions about the fate of Zero-Knowledge Systems. For those interested in our early experiences as a company, I’m posting a case study done by Professor David Phillips that was written over the course of many interviews and on site visits with our staff throughout the early days of the company. David recently sent me this copy to distribute.

Zero-Knowledge Systems - An Early Case Study in Systems of Surveillance. David J. Phillips, Professor University of Toronto

It highlights some of our successes, mistakes, and our early adventures as a company.

It is an account of the early Zero-Knowledge history (it ends about 2001/2 as we made the transition into the Radialpoint business and turned the company around). Like with all accounts, it can never capture even 5% of what was occurring behind the scenes, but it captures much of what was occurring around the company and provides a good account of our early rise and fall from grace.

When we started Zero-Knowledge my internal email signature carried the phrase “Make new mistakes more often”. Our team culture helped us to react and evolve as we saw new opportunities, identified failing products and responded to the dramatic shifts that occurred in the capital markets.

Zero-Knowledge Systems not only survived but changed its name and is now a thriving company called Radialpoint.

The company has emerged as one of Canada’s fastest growing technology companies, Quebec’s 2nd fastest growing technology firm and a market leader in managed consumer Internet services for broadband providers. The company has been profitable for years, is growing quickly and is now providing Internet value-added services for a community of more then 20 million broadband subscribers through its broadband provider customers. This is one of the largest aggregate broadband subscriber bases in the world.

Writing about the last bubble bursting and the dot.com graveyard that ensued was popular sport for many members of the media. Now we have reporters writing about the impeding Web 2.0 bubble and asking when it will burst. I think enterprising reporters could do well to explore companies such as Radialpoint that have survived the dot.com fallout and emerged stronger, smarter and battle hardened. There are great stories out there for those reporters not just looking to write about what Apple announced.

While I know this story well, and I believe in it with all my heart, the Radialpoint story is no longer my story to tell. The story of how Radialpoint emerged from the dot.com bubble and became one of Canada’s largest software-as-a-service companies that quietly cornered the ISP market for desktop delivered services will be told someday.

That story will be told by my brother, father and the team that continues to work with them there. It is their story to tell.

The team working there deserves to take a bow and get full credit for the incredible work they have done. I’m no longer part of the day to day operations at Radialpoint- so I will not be posting about it’s business on this blog.

I left Radialpoint, in June of 2006 to work on my new projects. This was a very difficult thing to do, but I was no longer the right person to help lead that company.

After the sabbatical I took to help my brother fight and ultimately die with dignity from his battle with cancer, things changed for me. It took me awhile after his death to find my footing again, but I needed to do that outside of the company in an area that I felt I could make a difference in the world. My mind and heart had drifted into a new domain and I couldn’t both follow my heart and try to do the work that Radialpoint needed at the same time.

I remain an investor, friend, family member and supporter in every way of Radialpoint and the team there.

In many ways, the team from Radialpoint plays a heavy influence on the work I am doing now since I learned an incredible amount from my brother, father, our managers, our teams and the staff we had. In the school of hard knocks and practical entrepreneurship I was incredibly lucky to have the mentors, partners and teams that I did.

I want to thank all the teams that worked with me throughout the years. I can say without a doubt, I learned more from you then the other way around.

Large amounts of thanks goes to the my brother and father, our management team (especially Marty, Veronique, Carlos that I worked with so closely) and all the direct reports and teams throughout the years. I also need to thank my assistant for almost a decade, Elizabeth. She has had the pleasure of seeing me at my best, and worst - and was always there working hard to make sure that others only saw me at my best, which I’ll be forever grateful for.

I had the incredible opportunity to work with family, an incredible management team and hundreds of bright staff as they navigated the changes required to keep our company thriving. Their support of my eccentric ideas, my crazy personality and most of all their support of me leaving to do a new project was crucial to me having the confidence to tackle what I’m now working on.

Billions with Zero Knowledge - The Blog

Since I won’t be blogging about Radialpoint that much, and my new project will most likely be operating under the radar for awhile this blog is very much a personal sandbox for me to play in. I’m not marketing or selling anything (at this point) - just having fun and looking to be part of the conversation.

I’ll be writing about topics that I feel I can add some unique point of view too. I won’t be covering or reposting other stories, tracking the latest moves of other bloggers or any specific industry.

I’ll be writing about the topics I care most about which are,

• The state of the Canadian startup scene from an entrepreneurs & angel investors perspective
• Promoting Canadian entrepreneurs
• Social Entrepreneurship
• Grass root authentic conversational marketing, Social media and Angel Investing
• Online communities, open innovation and collaborative open source models for community production
• World Hacking (finding easy hacks to make the world a better place), World Changing

One of my major complaints on all the government committees I participated on for innovation was the lack of a strong culture of mentorship in Canada. This combined with a little bit of angel investing from experienced entrepreneurs could help us nurture the next generation of startups and provide a farm system for the venture capital industry. I’ve seen this model work throughout the world in creating a culture of sharing of experiences resulting in the bundling of great advisory experience coming with risk capital.

I have been very fortunate to have had the experiences I’ve had and I hope by sharing my experiences that I can help a new generation of Canadian entrepreneurs begin to shape their own dreams.

My tagline for this blog is “Changing the World with Little Bits of Knowledge”. I believe that there exists within the technology community the power to change the world both for the good and bad, and I hope my projects and this blog help play a small but meanginful role in the postive aspects of this change.

On Thu 8 Mar 2007.