[Ecommerce] New organization Mailblocks aims to protect consumers from Spam

[Joy Spencer]

Start-Up Aims to End Spam
By JOHN MARKOFF
March 24, 2003

http://www.nytimes.com/2003/03/24/technology/24PHIL.html


SAN FRANCISCO, March 23 — Silicon Valley is continuing to hemorrhage 
thousands of jobs, but there are some here who say that the time has 
never been better for creating a start-up company.

On Monday, Phil Goldman, whose career as a software designer has 
included stints at Apple, General Magic, WebTV and Microsoft, will 
introduce a service that he says will permanently end e-mail spam for 
consumers who are being driven to distraction by unsolicited pitches for 
diet schemes and offers of great wealth from Nigeria.
Advertisement

Mr. Goldman, 38, who is self-financing his company, Mailblocks, said 
that the falling cost of new technologies and the slumping technology 
economy are making it relatively easy to enter new markets.

"It's incredibly inexpensive to buy computers, and network bandwidth is 
essentially free and there is surplus equipment," he said. At the same 
time, innovation has been frozen because Silicon Valley's venture 
capitalists are largely sitting on the sidelines.

"It's like a guy crawling in the desert who sees the oasis, but who 
can't quite get there," he said.

Mailblocks, based in Los Altos, Calif., is entering the crowded e-mail 
market with the premise that consumers will pay a small annual fee for a 
solution to spam.

The consumer e-mail market is currently dominated by Yahoo, Hotmail and 
America Online, which provide free basic services that are supported 
through advertising.

There are also already dozens of commercial add-in products that try to 
recognize and block spam. Moreover, Internet service providers in recent 
months have begun to make new efforts to respond to growing consumer 
frustration with spam.

In addition to legislative proposals before Congress and state 
legislatures, there are efforts under way within the direct marketing 
industry to try to deal with spam. And last week, the Internet 
Engineering Taskforce, a committee of technology experts that sets 
Internet standards, met in San Francisco to listen to proposals for 
technical solutions to spam.

The Mailblocks antispam service is based on a so-called 
challenge-response mechanism to block bulk mail sent automatically to 
e-mail accounts. When a customer receives a new message from an unknown 
correspondent, the system will intercept the message and automatically 
return to the sender a digital image of a seven-digit number and a form 
to fill out. Once a human being views that number and types it into the 
form — demonstrating that he or she is a person and not an automated 
mass-mailing machine — the system will forward the e-mail to the 
intended recipient.

Analysts who have seen the Mailblocks system are impressed by it, but 
some said it would be hard for a new entrant to become anything more 
than a niche player in the e-mail market. The International Data 
Corporation, a research house, estimates that there are about 700 
million electronic mailboxes in the world and that the number will grow 
to 1.2 billion in 2005.

"It's a really nice product, and it's pretty easy to use," said Jim 
Nail, a senior analyst at Forrester Research, a computer and 
communications industry research firm. "The question is how big a 
market. Do people want to pay anybody anything for these features?"

Mr. Goldman said he was trying to imitate the strategy of Google, the 
dominant Web search engine company, which entered its market late but 
quickly became the leading service in its field because of its ability 
to provide more useful Web searches.

Mailblocks will charge an annual fee of $9.95 for its personal e-mail 
service, which will give users 12 megabytes of mail storage and 6 
megabytes of allowances for attachments. Charter members will receive 
two additional years of free service.

Mr. Goldman plans for Mailblocks to offer related services in the 
future, like personalized domain names, calendaring, contact list 
management and other personal information functions.

The idea of a challenge-response system to protect against bulk 
electronic mail has been familiar to the technology community for 
several years. A number of programmers, in fact, have developed their 
own home-brew challenge-response systems, and so have several small 
companies including Mailcircuit and Frontier.

Mr. Goldman said he had come upon the idea independently in 2001, only 
to discover there were already many patents in the area. He contacted 
the inventor who held the first patent covering the idea and acquired 
that patent, as well as another in the same field.

With the depressed job market, Mr. Goldman said it had been easy to find 
a small team of people who were passionate about building an easy-to-use 
consumer mail system. The technology trends that are currently driving 
costs down will make it possible for the new start-up to "be patient" 
during the period that the business is being built.

Mailblocks has 15 employees, and Mr. Goldman said he estimated that he 
would need to add one employee for each million new e-mail customers the 
company attracts.

-- 
Joy Spencer
Consumer Project on Technology
P.O. Box 19367
Washington D.C. 20036

1.202.387.8030
1.202.234.5176