Burner app creator Ad Hoc Labs gets funding for controversial privacy solutions

By Michael Carney , written on October 18, 2012

From The News Desk

As mobile communications evolves, the need for privacy and identity solutions is increasing exponentially. Los Angeles-based Ad Hoc Labs, maker of the controversial disposable phone number creating iOS app Burner, has big ideas in the space and today announced a round of funding aimed at achieving them.

Participants in the round include 500 Startups, TechStars founder and CEO David Cohen, Say Media founder Ted Rheingold, Zynga SVP Robert Goldberg, Kevin Slavin, Ric Calvillo, and additional undisclosed funds and angels. Ad Hoc co-founder and CEO Greg Cohn declined to disclose the size of the financing, but revealed that it was structured as a convertible note and may be followed shortly by additional financing.

“Burner is a game-changer for privacy and identity on the phone,” says 500 Startups leader Dave McClure. “Companies like Ad Hoc Labs leverage technology to challenge people to look at traditional consumer behaviors, like making phone calls, in new ways.”

Since launching in August, Burner has serviced more than 300,000 voice minutes and delivered over 450,000 text messages. The $1.99 app allows users to purchase in-app credits that offer extended lifespan, minutes, and text messaging within burner numbers. Users can have multiple numbers and manage the where and how they're forwarded within the app.

The app which briefly cracked the Top 20 paid apps on iTunes, was initially a bit of a lightning rod. Many, including mainstream news organizations like Time magazine, suggested that it glamorized and facilitated illicit behavior. To the contrary, the company sees it as a way for individuals to protect their identities in everyday scenarios like apartment hunting, online dating, and fundraising.

Well aware of the possibility for misuse, the company had multiple early conversations with law enforcement, telecom regulators, and other relevant parties. The company is committed to protecting the privacy between callers, but makes no promises about hiding user activity from legitimate government inquiries.

According to the CEO, the company is making significant progress in partnership discussions around this idea. While no ink has been put to paper, Ad Hoc is looking to integrates its product with partners such as craigslist posting apps, online dating and social networks, crowdfunding platforms, and similar peer-to-peer networks.

The company’s new financing will be used to roll out a much-requested Android version of Burner by year’s end, as well as continue add additional privacy-related functionality to Burner and to build awareness around the product.

Cohn, a veteran strategy executive who previously ran Yahoo’s developer platform (before the company took a nosedive) and several other startups, is a bit of a maverick in his decision to build Ad Hoc on Los Angeles’ artsy east side.

Setting up shop in the Silver Lake neighborhood known more for hipsters than technologists or angel investors is turning out to me more of an advantage than one might initially assume. As Foursquare founder Dennis Crowley pointed out during our PandoMonthly fireside chat, there’s enormous value in getting out of the echo chamber and being able to test your product with real people at a bar.

Ad Hoc has big ideas around how to turn Burner into an entire privacy layer for smartphones. The creativity around how people are using the existing app and its basic functionality tell Cohn that he’s on the right path. This is one company to watch, if only to see what controversy it can drum up next.