Silent Circle is in the midst of a troubled period

It continually depresses me that privacy and software security products have such a difficult time. I very much hope that Silent Circle makes it, but the landscape is littered with privacy/security products that went nowhere.

But there have been some billion-dollar success stories. Off the top of my head, they are:

(1) Security Dynamics who invented the little token with ever-changing 6-digit numbers that you have to enter to login to your remote office computer. You probably know it today as the RSA SecurID: https://upload.wikimedia.org/wikipedia/commons/3/33/RSA-Secu...

The hardware was simple (microcontroller, real time clock, and an LCD display) and the proof of concept for the software could've been written in an afternoon by a crypto-knowledgable programmer. I genuinely admire this idea as having the least amount of technical development required to create a billion-dollar market.

(2) Paper shredders. Fellowes created a billion-dollar market for personal shredders. Seriously, before this market existed, if you told the average Joe that they needed a shredder for their home, you would have been laughed at. Then came along all the brouhaha about identity theft, and now Office Depot and Staples sell dozens of home models.

(3) Firewalls. When I first heard the concept of a network firewall--and this is going back a long time--my first thought was "What a stupid idea, why don't they instead fix the bugs that would allow you to penetrate the network?" Turns out to be a multi-billion dollar market.

(4) Password managers like LastPass and 1Password. I doubt these have reached a billion in sales, but I figure they will.

(5) Certificate authorities. An early implementation of that idea made Mark Shuttleworth into a billionaire with enough money to visit the International Space Station just for fun.

Looking at the list, the threats are sometimes abstract. I do have a home shredder, but I'll admit that it's very unlikely I'd be a victim of identity theft if I never shredded. However, the threat that Silent Circle addresses is proven worldwide surveillance, yet it's a much harder sale. It's very difficult to predict what privacy/security product will succeed.

I been involved in the cryptography/security community for many years. I continually see privacy/security start-ups struggle. There are lots of reasons. But, I think the key one is that doing something online securely will always be more difficult and expensive that doing it insecurely. This truth was instilled like a law of physics when the internet was first designed.

There's only a certain number of people that are deeply passionate enough about their privacy to put in the extra effort or pay the extra cost. So, companies in the space tend to plateau after 2-4 years. They essentially saturate their markets and the (rather static) size of these markets are rarely large enough to sustain the company (this is especially true when hardware is involved in the business plan). In cases where they are sustainable, I have seen it be at the level of "life style business" rather than exponentially growing startup that can IPO at a level that will provide investors a significant return. While there have been exceptions over the years, I would caution people on HN from doing privacy and security startups until you sit down and honestly and truthfully estimate the size of the market that you are targeting.

Us old folk remember another secure phone company before SilentCircle/Blackphone - CryptoPhone. I have talked with some friends that remember the CryptoPhone product failure. Some thought that the Snowden revelations changed things. They thought that such companies would be viable now due to mainstream market apatite. But, I think over the next few years we'll see more evidence that this isn't the case.

Privacy is an area that is very easy to get passionate about and become emotionally invested in. But, it's probably not a great space for your startup (or for your investment).

I interviewed with them. It was team of very bright people and I enjoyed interacting with them. Hopefully everyone I talked to is still there and didn't have to be let go. Wish them all the best.

In general, for privacy related software there these large segments -- the enterprise, the government, personal / casual. Sometimes it is hard to find a single product to appeal to entice all of those segments. The requirements are just so different. (Well there is also the other type of segment -- the criminal segment, drug lords will pay cold hard cash for ability to secure their communications, but you know building a business selling mostly to them is not healthy for doing well in other segments).

Government wants to control and certify the system in certain ways. Just getting over the certification red tape mountain is huge hassle. Spending time doing that means ignoring other segments largely, just because of costs and time involved. Enterprise wants centralized management of devices (they'd have thousands or more potentially), that means monitoring and controlling what employees do or who they use the phones. Personal / casual might involve a free tier or being able to pay less, this needs to be very user friendly, with no hassles, and the biggest thing needed is a network effect. If none of ones' friends are on the network, it is hard to justify using the service.

As for Blackphone, SEAndroid (NSA Secure Android) research project has slowly been incorporated into latest version of Android but hardware remains a problem. If there is a closed source firmware blob running on the baseband processor, and if it can read main system memory, the situation is quite bleak, it is hard to convince governments or serious enterprise customers that the platform is secure. I believe the idea with Blackphone to address that was to ensure baseband processor talks to the main system via a serial interface + AT style model commands. So perhaps Silent Circle just need to publicize more those features?

Focusing on the Enterprise market is smart but perhaps it will take another Sony-like enterprise breach before companies will get scared into spending more on this.

How far will they go to save the company? Let's hope they don't take money from In-Q-Tel[1] which is probably eager to give them what they need (in exchange for certain things of course).

[1] https://en.wikipedia.org/wiki/In-Q-Tel

Honest question - who is the market for this phone?

Very security minded corporate it departments?

From first glance it would seem I would need other people to have silence circle in order for most of the features to be useful...I don't know anyone who uses it - why would I be an early adopter as a consumer?

When I first met Silent Circle and its products, my opinion was that their product design is impractical and not convincing for customers. With all respect to Phil Zimmermann (he really deserves a decent pension).

Either you ditch Android and go fully FOSS (no firmware blobs!) and OSHW with as little software footprint as possible and get software stack audited and thoroughly pentested.

Or you are fine with Android and you just provide some additional applications and maybe services. But this doesn't justify selling a _device_. You know, there's no such thing like Angry Birds Phone. There's no Facebook Phone either.

> in the belief it had secured big distributor agreements with three partners

This line reads very strangely, especially with the followup about one agreement having some legitimacy.

Did Silent Circle have actual, signed purchase agreements with these distributors? If so, are they suing, and why is it not mentioned in the article? If not, why did they think they had agreements?

Who provides the baseband for the Blackphone?

EDIT: To answer my own question. Qualcomm

Apologies for the meta comment: I'd like to read the article, but the obnoxious ads on Forbes and the even more obnoxious splash screen that won't let you through if you use a blocker show me that Forbes web presence is obviously in a troubled period. Does someone have the text of the article elsewhere?

When I clicked the link, I got a gray page with a "Quote of the day" in big font. Nothing else visible on the page, no X to close this or similar.

I was about to close the tab when it suddenly redirected to the article.

What kind of nonsense is this? I mean, seriously Forbes?

http://i.imgur.com/ALe3s1v.png

With how intrusive Forbes's ads are, even with uBlock origin, I wish HN would just disallow stories from forbes.

This letter makes me cringe. Is this how this stuff works, or they were stupidly naïve? https://www.documentcloud.org/documents/2941005-Silent-Circl...