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ProQuo, A Ventured-Backed For-Profit Privacy Company

We’re not an issue-oriented organization. We’re a for-profit company. We’re about providing choice to consumers in an environment of extreme privacy. The kind of services we offer and the breadth that we plan to offer probably will require about $50 million of capital over the next few years. -- Steve Gal, ProQuo
Earlier this month, I spoke with Chuck Teller of CatalogChoice, a not-for-profit do-not-mail organization. Following that interview, Steve Gal of ProQuo asked to explain their do-not-mail company on our blog, and we agreed. ProQuo takes a different approach than Catalog Choice. They're a venture-backed (Draper Fisher Jurvetson, Mission Ventures) corporation seeking to become an infomediary between marketers and consumers. They've raised $13 million to date, and Steve mentioned he hopes to raise a total of $50mil to build out the consumer data modeling business. Listen to podcast: RKGblog_Interview_Steve_Gal.mp3
Alan Rimm-Kaufman: I’m here today with Steve Gal of ProQuo. How are you doing, Steve? Steve Gal: Good, how are you? Alan:Good. Thanks for taking the time to speak with us today. So, what exactly is ProQuo? Steve:ProQuo was founded by a group of folks including myself, who have been in the data and analytics world for a long time, in a variety of roles, but most recently in preventing identity theft, using analytics and data, built a company that’s helped prevent an awful lot of identity theft for businesses. We were looking at what we came to call the market for choice, the idea ultimately that if we look at identity theft on the fraud side, as we looked at marketing on the opportunities side, what we saw was that so many decisions are made about consumers and what they want and what they get without the direct involvement of the consumer. And mostly that’s because of industries and technologies that grew up before the web came along. And if you think about it in the context of the web, where I might have a Netflix account, where I get exactly the videos I want, when I want them, it recommends all kinds of new videos for me in very powerful ways, but learns from what I do, what I rent and what I like. Compare that to what comes, for instance, the other end of the spectrum, in my home postal mailbox, which tended to be, before I did something about it, a pile of generally unrelated things, some of which was very interesting and some of which I couldn’t imagine why it would possibly be printed and sent to me. Think about behavioral ad targeting on the web, and the whole spectrum. On the web, of course, behavior targeting is heavily driven by what I like and what I don’t like, what I do and what I don’t do. And so what we wanted to do is introduce a platform, a technology set, and give consumers the opportunity, if they wanted, for free, to really exercise their choices about the things they wanted and didn’t want. And that could be done across all the different channels with the consumer and their profile at the center. So that’s what we do. Alan:To be concrete, folks can go to your site and opt out of catalogs, out of postal mail, out of e-mail? Steve:Let’s talk about that. So you’ve got to start somewhere. I saw you did an interview with Catalog Choice, which, by the way, we think is a great company. I know Chuck and I know people at the Overbrook Foundation. They launched almost at the same time we did, and it was interesting. Two groups of people, we come from privacy, they come from environment, working on the same similar projects at least in some levels, at the same time. But we didn’t know each other until the launch. And so we started very narrow in some senses. We’re starting with the data sets that drive mail. So you can come to our site and initially control, make decisions about it for free, what kinds of coupons you get, in terms of major coupon mailers and circulars. So those big circulars that fill your bins, all three major credit reporting bureaus marketing lists, including pre-screen opt outs. Most of the largest data brokers in the U.S., those folks who sell 10 billion a year of data to anyone legally, like Info USA, Action Choice Point and others. Online white pages, criss-cross directories, voting databases, you can put yourself on the Do Not Call list, and we have 33 of the largest subscription catalogs in the U.S. And for everyone that allows it, we give you true choice. So you can opt out or opt in for everything that provides that functionality. That’s very important. Alan:How many names on your database today? Steve:So we haven’t reported that, but I can say that there are hundreds of thousands of users registered for our service since we launched a few months ago, and when we get to a million, that’s going to be our first release and we’re on plan to do that in the next few months. Alan:Your company is organized as a for-profit entity with venture backing, yes? Steve:Oh, yeah. I think, you know, very different than, say, Catalog Choice or otherwise. We’re not an issue oriented organization. We’re a for-profit company. We’re about providing choice to consumers in an environment of extreme privacy. But the kind of services we offer and the breadth that we plan to offer probably will require about $50 million of capital over the next few years. Yeah, it’s a major operation, major security around the data, a team of security folks and backup around the data, because it’s important information for those consumers, a major investment of privacy. Alan:You did an $8 million round in January, your website reports. Steve:Yeah, we’ve raised $13 million to date. Alan:So clearly there has to be a very strong economic business angle to justify the VC investment. Steve:Oh, sure, absolutely. Alan:Do you see any disconnect here? The consumer-facing side of your site says "Stop junk mail you don’t want", but you’re building a marketing platform. Steve:No. This is important to note. There’s only one face of the site. ProQuo has one website, not two or three. There’s no 'business facing' website. There’s no ulterior motive either. If you read our home page, it says get what you want, stop what you don’t want. That’s the business we’re in. And then if you read our facts, it says clearly that we make money, and this is how we make money, by presenting you with offers that you tell us you want and explicitly agree to accept. So our business is very simple. We’ll do the job for free, of taking you off thousands of lists, in a very granular way that you choose, and there’s no other website anywhere that does what we do. So Catalog Choice is very powerful when it comes to catalogs. That’s one of, obviously, the many things that I’ve listed there in great detail. So in one place, and we can provide that for free, we are taking business away from traditional data brokers, because when you click on data brokers and others and you take yourself off their list, they can’t sell you. So marketers will come to us rather than those data brokers. Now, the difference is our privacy promise, which is worth reading, and that says it’s a privacy promise that no other data broker has. It says that you own your data. It’s yours, it’s not ours. You can take it away any time, you can delete it any time. You can see your profile with us and edit it at any time. You can’t do that with any of the major data brokers. And we will never provide your information to anyone without your expressed consent. We also keep track of your information and where it goes. We will get it back for you, take you back off of lists, and we take responsibility for the security of your information. So it’s a pretty broad set of services, and so basically we’re a lot like a data broker, with a couple of major differences. We work for the consumer. If somebody offers us a million dollars for your name, unless you want them to have your name, we will not and cannot sell your name or information to them. So we’re putting the consumer in control and we believe that by doing that, getting large consumer adoption, we’ll have a lot of marketers that are interested and consumers will have a better experience. Alan:Who are your merchant partners to whom you're selling names? Steve:Well, let me be more specific. When we say provide names, what we don’t do is we don’t sell lists. Well, let me give you an example. So all the catalogs on our site have opt in and opt out. With all of those catalogs that you see, when somebody comes and says, “I would like that catalog,” you could try out the product, you’ll see it flashes up. It says okay if we sell them your information. And when you choose that catalog and that information is transferred, that triggers a relationship with us and that cataloger. Alan:Does every opt-in generate revenue for you? Steve:No, not at this point. And actually, every opt on our site will probably never generate revenue, not all of them, because we’ll have non-profits and we may have different revenues, different causes, environmental and otherwise, that we might be helping. But you know, if you look at the scale of the data brokerage industry, and you take $10 billion and divide it among the number of marketable consumers in the United States, you know, when we get to five or 10 million consumers in a year, if everybody chooses just a few offers a year, we can run a business. If they choose more than a few offers a year or if we can really get targeted because we know them, we can add some value to the transaction, we can do more. Alan:Given that our blog readers are typically on the retailer side, can you give us success stories of merchants working with ProQuo? Steve: So let’s talk about that. So you may know we started this company in February of last year. From February to October, we focused completely on the consumer, because our whole business is based on large numbers of consumers adopting our product. Focus groups, research, studies around the United States, building different websites, interaction design, et cetera. Launched in late October of last year, and we focused the last several months entirely on marketing, getting the base of our consumer base going, and we’re now signing up people fast enough to hit our goals. And really, the company is turning heavily now towards the retailer community. And our prospect to them is very simple. We do opt people out of things, that is true, but we do have a community of consumers now who have come to us, said, “Hey, represent me. Help me get the things I want. Stop what I don’t want.” I think in almost every category we have consumers interested in seeing offers. And so we’re starting to reach out to the retailer community and saying, you know, “We know you do business with Axiom and potentially Choice Point, Harte-Hanks and many other companies. We have a community that’s now unique, self identified, direct relationship with them who’s interested in receiving something.” And I think people will be interested in that. Alan:Can you name some of the merchants that you’re working with? Steve:No. Well, a couple of things. As a for-profit company all our contracts with our clients are confidential. We would never name a client. We will, however, have certain clients that will do success stories, but we’re not at that point yet. We won’t be releasing those probably ‘til Q4. Alan:How many merchants do you have revenue relationships with at this point? Steve:Yeah, we don’t release that information. It’s a venture backed company. Alan:Your home page does use "opt in" language. However, there's a gentle line. To me, the sense of your home page is about getting junk out of your mailbox. Steve:Right. I think it’s very specific, but, you know, as everybody says, I think the home page in very big letters, and I don’t want to misquote it, says – Alan:"Choose the paper mail you want, stop the junk mail you don’t want." Steve:Yes, that’s exactly what we mean. The big letters are choose the paper mail you want. So we start with the fact that – by the way, a couple of things from our research. About half the consumers in the United States that we polled and worked with online and then in focus groups said, “Whatever you do, don’t stop my coupons.” The other half said, “Whatever you do, get rid of my coupons.” That was true of just about every category. What’s clear is there are things that consumers do want, and there’s things that frankly anger them to receive. And so when we say choose the paper mail you want, get what you want and stop the junk mail you don’t, what we’re saying is that those things you don’t want, I think you’d agree with this, things you get in the mail that you don’t want and you think are bad are junk, and things that you do want are the things that you would like to get.And so that’s our message. Alan:How does profiling, targeting, and consumer modeling play into your plans? Steve: So, you know, since our job is to get consumers to things they want, all of us have done heavy marketing analytics and fraud analytics and et cetera and data management at many other companies. So what we’re doing is we’re building a rich profile to the consumer that they own and they control and they edit and they can delete if they like. We’re giving them control over it, but we’re doing the analytics for them. So very much like Netflix does for their website, we will provide for consumers recommendations and things of interest based on their whole profile, eventually, online and offline. Now, but the difference is we won’t sell that. We’ll only provide that to people that consumers tell us they want to receive it from. Alan:Do you think consumers will have privacy concerns if Proquo said, for example, “Hey, we see that you’ve opted into right-wing causes; have you considered the National Rifle Association?” Steve:Yeah. I mean, so I’ve spent the last seven years working in the area of privacy, very closely both at the regulatory level, as a privacy advocate. I think the best evidence I can have that we’ve done our homework in privacy is that the first people to sign up for our website, and they’re in our press release, were the Identity Theft Resource Center, a non-profit that’s the leader in dealing with issues of data security and identity theft, folks I’ve been on the Board with for years. Basically, I think what people find creepy is that there are dozens, hundreds of companies buying and selling marketing lists with names like "gullible seniors from the New York Times" or "seniors with Alzheimer’s", and these companies that have their data and sell it, they never even heard of until they came to our website. I think if you look at our privacy promise, we’re essentially creating a bank for folks to put their identity in a safe place where they have real control. I mean, none of these other companies even let you see your profile, much less edit it, right? So I think what we’re really doing is we’re addressing a privacy issue with a strong privacy and security policy. We’ve gotten a great response. Alan:Of the consumer-mailer or consumer-retailer data pairs you collect, some of those will be opt-ins and some will be opt-outs. What is the ratio between consumers asking for marketing and consumers rejecting marketing? Steve:Yeah. You know, all that information, although we’re reporting it to folks like the FTC and other organizations in early sense, we’ll publish research, especially for our clients and then for others. But we’re very data and analytic centric, and we just – we don’t have enough data yet where we feel comfortable releasing, but we will and I’d love to keep in touch and when we release that, you know, brief you on it. Alan:For anyone that want to learn more, where should they go? Steve:Well, here’s what I would say, is, you know, for your community, and I was very excited to be able to come one, because as you know and could imagine, a lot of these services – first of all, we all get lumped in together with the Catalog Choice, Green Dimes and others, because the headline methods of stopping mail, and we’re all quite different, but I think we end up thinking of the environment. I know Chuck and the folks there have ended up thinking a lot more about consumer rights and privacy, because it’s all related in this area. So I would say if you’re a retailer or a merchant who’s interested in getting on our site or seeing what consumers we have that are interested, they would contact me. And if they’re a consumer, just go to ProQuo.com and try it. Alan:Steve, thanks for your time today.
Listen to podcast: RKGblog_Interview_Steve_Gal.mp3 never mail me cartoon
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