Silent Circle was never your regular tech start-up.
The company — known for making secure communications products such as the Blackphone — counts among its founders a former Navy SEAL, the inventor of a seminal e-mail encryption program and a former Apple software engineer. Unlike other tech start-ups, the average employee age is 41.
But Silent Circle has one problem most start-ups envy: It’s growing really, really fast.
Mike Janke, the Navy man and former defense contractor who serves as chief executive, is worried about growing too quickly.
“I have learned in my past business life that growing too fast can hurt you just as much as growing too little,” Janke said in an interview at Silent Circle’s National Harbor office.
Blackphone, the mobile device that Silent Circle developed with Madrid-based Geeksphone, hit the market in June. The phone allows users to make encrypted calls and send encrypted texts using Silent Circle software, and blocks third-party apps from accessing user data.
The company is on track to sell more than 2 million phones by next year, Janke said. Revenue is in the “several hundreds of millions of dollars” and the business is profitable, he said. The company plans to grow to 200 employees by early next year and is developing a secure tablet, as well as encrypted calling software similar to Skype.
Janke admits that Silent Circle got off to a “very lucky” start. Janke, co-founders Phil Zimmermann, the inventor of encrypted e-mail service Pretty Good Privacy, and former Apple encryption expert Jon Callas pooled their own money, along with friends and family, to start the business in 2011.
Soon after, Edward Snowden’s revelations about mass surveillance, as well as the need for organizational cybersecurity in the wake of hacks, propelled the issue of privacy into the spotlight, giving Silent Circle’s business a boost.
Snowden’s revelations are still having ripple effects on the mass smartphone market.
In recent weeks, both Apple and Google announced stronger encryption features for their iOS and Android operating systems that are meant to keep government from accessing people’s data.
Janke said Silent Circle customers tend to care more about the entire package of privacy, including preventing data from being accessed by apps, protecting themselves from government surveillance or giving network providers data.
That’s why more than 80 percent of the company’s customers are based outside North America, Janke said, mainly in European countries where the expectation around privacy is different. Although it maintains a presence in Maryland, Silent Circle moved its headquarters to Geneva, Switzerland, this year because of that country’s strong privacy laws. The company does count customers from at least eight U.S. government agencies including the military, he said, but declined to name them.
The company’s growth has not gone unnoticed by big tech companies.
The decline of Blackberry’s business, which dominated the secure communication market, came at the same time that Silent Circle was setting up shop.
Blackberry openly criticized the Blackphone in a company blog post this summer, saying it was good for individual privacy, but not for companies.
Silent Circle responded by acknowledging Blackberry’s contribution to the field, but pointed to the company’s falling revenues.
“If I was 21 and a start-up in Silicon Valley, we would be celebrating” the feud, Janke said. But age played a role in Silent Circle’s response. “You can do your business quietly and professionally without that kind of hubris,” he said.
The idealism of a start-up is still evident at Silent Circle.
Janke once insisted the company would never accept “a dime of venture capitalist money.” Additionally, the founders would only think about going public if it didn’t compromise the company’s ethos — the right to privacy, he said.
Nevertheless, the company accepted a $30 million investment from venture capitalist Ross Perot Jr. and private investment fund Cain Capital in May. Perot’s contribution was considered a friends-and-family type of investment, Janke said.
“Several of my board members are friends with Ross Perot and had worked with him,” he said. “Through dinners and conversations we found that his personal views about individual privacy and about protecting companies’ intellectual property matched ours.”
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