Baby Blue Chips: JiWire Inc.
Jun 21, 2006

Prosper

WiFi Watchdog Knows Hotspots

You’ve seen them in the local neighborhood coffee shop or in the airport waiting lounge with a “WiFi hotspot” window sticker. A woman in a well-tailored business suit and seated in an armchair uses her handheld personal digital assistant to check email. A man with a loosened tie sets his cappuccino onto the table in front of him, slides a notebook computer from a leather attaché case and downloads a spreadsheet from his company’s FTP server.
Nearby, a young man with a backpack and a couple of textbooks stares intently at his notebook computer monitor. He appears to be studying for a school exam. But instead, he may be studying the neatly dressed woman’s email message, or the cappuccino man’s spreadsheet. He’s a hacker, taking advantage of the security vulnerability of wireless “hotspots” and hoping to intercept user name and password information as people make online purchases or check their bank account balances.
But he’s unable to decipher data from another person’s laptop or PDA because, preemptively, the wireless signals have been encrypted using technology developed by a Sacramento-area company, JiWire Inc.
JiWire, with administrative offices in El Dorado Hills and South San Francisco, began business in March 2003 preparing tutorial articles on WiFi (a contraction of “wireless fidelity”) and compiling a comprehensive list of hotspots. With a name concocted from the words “joining invisible wires,” JiWire posted that material on its website, which was supported by advertising that generated the company’s revenues. JiWire’s site quickly amassed a following of 1 million visitors, whom JiWire polled and learned about their greatest concern: lack of security in WiFi connections.
That realization prompted JiWire CEO Kevin McKenzie to develop a proprietary WiFi security service called SpotLock. During a WiFi session, SpotLock encrypts data into an impenetrable code, protecting it as it travels between the subscriber’s notebook computer and JiWire’s secure internet servers. JiWire charges a $39.95
annual SpotLock subscription fee.

One-Click Encryption
“It essentially makes you anonymous to anyone around you,” says McKenzie, 35. “The security that we’ve developed enables a user without any IT experience to encrypt a WiFi session from a notebook to the access point and out to the internet with one click and no configuration involved.”
SpotLock has been available only for the Windows operating system. But a version soon will be introduced for Apple computers, promises McKenzie, who describes himself as “a huge Mac user.”
McKenzie has devoted his entire career to the internet. In 1994, shortly after graduating from California State University, Chico, with a degree in business and a minor in computer science, the Sunnyvale native went to work for the Internet Shopping Network — the world’s first e-commerce site. He went on to become senior vice president of shopping services for San Francisco-based CNET Networks Inc. In that position, he noticed the increasing prevalence of wireless-enabled products using Apple’s AirPort technology and Intel’s Centrino wireless chips.
“I felt that was a killer new technology, and that somebody needed to help end-users understand how to use it, and tell them where they could connect,” says McKenzie. “I took that theme to CNET’s management and they said, ‘You know what? Why don’t you go and start that business?’ ”

Word of Blog
With a business plan, McKenzie raised $600,000 in seed capital from CNET and other investors, whom McKenzie says he has promised to keep anonymous. He used unconventional means to formally announce the company’s founding — rather than a press conference, he held a “blog” conference by telephone with about 15 internet “bloggers” who specialize in WiFi topics. They quickly spread the word among WiFi enthusiasts.
WiFi is a registered trademark of a nonprofit organization called the WiFi Alliance, which in 1999 standardized transmission protocols for wireless computer local-area networks. T-Mobile, Boingo Wireless and other public hotspots now use the same technology as wireless routers made for home and office use, and their signals can be intercepted by anyone within a range of 50 to 150 feet.
Today, JiWire’s exhaustive database lists more than 105,000 WiFi hotspots in 120 countries — including 259 within a 20-mile radius of downtown Sacramento. Companies that pay JiWire for use of its database include Microsoft, Intel, CNET, Forbes, PC World, USA Today, Google and Yahoo. In June 2004, Time named jiwire.com one of its 50 coolest websites launched the previous year. McKenzie says JiWire is a singular company that has no competitors.
“There are companies that do bits and pieces of what we do, but no one has a complete offering like what we’re offering,” McKenzie says. “We are the de facto standard public registry for public WiFi.”
The stated intention of some municipalities to introduce citywide wireless coverage may make commercial WiFi system operators apprehensive, but JiWire views that emerging trend as a growth market. The company is negotiating with several cities to offer SpotLock encryption to users, either on a per-session basis or through annual subscriptions that users could purchase electronically.

More Money, Please
JiWire divides its 16 employees evenly between its two 2,500-square-foot leased facilities, with sales and marketing in South San Francisco and engineering and product development in El Dorado Hills, where McKenzie is based.
JiWire, which in November 2004 raised $2 million in venture funding from Scott Lenet of DFJ Frontier of West Sacramento and Sacramento “angel” investor Jim Schraith, is preparing to close a $7 million venture-funding deal with undisclosed Bay Area investors. McKenzie will not reveal revenues but acknowledges that JiWire is not yet profitable — nor does he predict a date when it will be.
“I don’t, because there’s so much opportunity falling in our lap that it might make sense to invest more in the company as opposed to trying to focus on profitability. It’s such a big market that it wouldn’t be right for me to do that right now,” McKenzie says.
If he had known in 2003 what he knows now, McKenzie would have done things differently.
“I would have raised a lot more seed money,” he acknowledges. “I thought the concept of WiFi as a public utility would take off a lot faster. It’s just starting to matter now, three years later. Everything took much longer than I thought — revenue, product, the whole thing.”
Although McKenzie is secretive about the number of SpotLock subscribers and the number of WiFi sessions that JiWire’s servers process monthly, he says that more than 80,000 people are using the software on a trial basis. And he says JiWire’s security servers handled as much traffic during the first quarter of this year as they did during all of 2005.
That’s due not just to notebook computers but also to other wireless products, including “smart” phones, palm PCs, gaming devices and digital cameras with built-in software that uploads photos to the internet.
So now you know how JiWire can help you keep your WiFi transmissions secure. But if you dump your cappuccino onto your notebook PC or PDA, you’re on your own.