Identity evangelist: Burner gets $2M to help consumers reclaim control of their mobile communications

By Michael Carney , written on September 26, 2013

From The News Desk

Welcome to the privacy era. Perhaps it’s a response to the ubiquity of Facebook, but the pendulum appears to have swung in the direction of anonymity and pseudonymity online. Look no further than the explosion of Snapchat and Whisper, two social services that allow users to post content without the fear of judgement or adverse consequences – both of which, incidentally, happen to be LA-based startups.

Ad Hoc Labs, another Los Angeles company looking to help mobile users regain a bit of privacy, today announced a $2 million Series A round led by Founder Collective and Venrock, with participation from existing investors 500 Startups, TenOneTen Ventures, and TechStars founder and CEO David Cohen. Ad Hoc is the company behind the popular, and occasionally controversial Burner disposable phone number app for iOS and Android.

Founder Collective’s David Frankel and Venrock’s Marissa Campise will join the company’s board of directors.

In conjunction with the funding announcement, Ad Hoc has released a fully redesigned version of its iOS app tailored for the new iOS 7 design language. The refresh includes limited upgrades to the core feature set, but rather gives the overall user experience a nice lift. It’s also nice to look at.

One thing that really separates Burner from the majority of consumer mobile apps is that it has been monetizing since day one. In fact, Burner launched as a paid download, generating substantial adoption, only to later shift to a free trial (not freemium) model.

The revenue stream allowed the company to control its own destiny, according to Ad Hoc co-founder and CEO Greg Cohn. Thus today’s fundraising is a choice reflective of the company’s desire to accelerate its growth and the opportunity to align itself with strong partners in Founder Collective and Venrock.

The trial download grants the user a free sample Burner number that lasts just one day and includes five voice minutes and 15 text messages. After that, the number can be disposed of or extended through the purchase of additional credits – available in packages of three for $1.99 to 25 for $11.99. Users can also manage multiple Burners simultaneously within the app.

The app has proven popular among those looking to maintain privacy while buying and selling items on Craigslist, or when communicating with those met through online dating, or teachers maintaining arms length communications with students. The company has generated some (seemingly unwarranted) controversy from overzealous media looking to associate the app with possible criminal activity. Notably, however, the name burner is common street slang for disposable cell phones used to avoid tracking by law enforcement.

Burner has “less than 10” employees today, and will look to rapidly ramp its team following the latest funding. The additional resources will be necessary if the company is to accomplish even a fraction of its ambitious goals. Not only does Burner have a lengthy product roadmap, according to Cohn, but the company needs to invest heavily into marketing – both to combat the undeserved media controversy and to increase brand awareness among consumers.

Cohn’s vision for Burner is to completely reinvent today’s notions of privacy and identity around mobile communications.

“We see it as a multi-billion dollar opportunity that’s receiving little to no innovation today,” he says.

Google Voice and its predecessor Grand Central was once a major disruptor in this category, but the product has been sorely neglected in recent years and has fallen well short of its early promise. Most of the investment today in the communication category is going into mobile chat solutions and video messaging. But while these platforms will surely have a role in our future communication stack, none of them address the fundamental privacy and anonymity concerns that are at the core of Burner’s value proposition.

“Separating phone number management from carrier control is a disruptive idea,” Venrock’s Campise said in a statement today.  “Moving the call and SMS interface out of the carriers’ stack provides true number portability, giving consumers more flexibility and control. We also believe there’s a longer-term trend separating user identity from a single mobile number.”

“Early on, the problem was we all had too many dumb phones and need one number to rule them all,” Cohn says. “Today, the majority of us have just one smartphone to rule them all, and now we need ways to partition that identity.”

Facebook ushered us all into the always public, overly transparent era of today. Apps like Burner are helping consumers slowly reclaim control of their identity. If there ever were a service people should be willing to pay for, this sounds like one that fits the bill.

[Image via Wallpager]