Blackmailr: We Know
Posted on November 8, 2007
Filed Under Easy VC Money |
No VCs expressed an interest in funding PimpSpace despite the fact that my pimp friends are reporting record revenues from Silicon Valley johns this year. I still hold out hope that one of those wealthy johns will see the wisdom in funding PimpSpace even if social networks are commodities these days. But today I’m pitching a business that has some significant intellectual property and that offers a sure-fire way to monetize Web 2.0.
The Opportunity
The business of blackmail is a prominent part of the underground economy. While it is impossible to accurately estimate the total amount of money generated through blackmail, as early as 1916, New York Times writer William J. Burns stated “More money is being extorted through blackmail than is being lost by thievery.” In his July 23, 1916 article entitled “Blackmailing Now the Big American Crime” he noted that the vast majority of blackmail goes unreported.
Historically, blackmail has been a labor-intensive business. Blackmail targets would be carefully selected, as “digging” up dirt on an individual or setting him or her up is not always quick and easy. But today, with the advent of the Internet and the popularity of services which collect user-generated content, the business of blackmail is poised for a revolution. With hundreds of millions of people using social networks, photo sharing websites and other Web 2.0 services that allow users to upload and share personal content, previously unfathomable amounts of data about individuals’ personal lives are now easily accessible. This data often represents a vehicle for blackmail. The ease with which blackmail targets can be located and extorted creates an opportunity not only to make blackmail easier and more efficient, but to blackmail significantly larger volumes of people.
Business Description
Blackmailr is the first company poised to capitalize on this by leveraging the accessibility of personal information on the Internet to efficiently operate a wholesale blackmail business. The company has two divisions: one (Project X) exploits immediate blackmail opportunities while the other (Project Y) collects and stores as much data as possible from popular Internet services to take advantage of future blackmail opportunities that have not yet materialized.
Project X is focused on locating blackmail targets using content available on social networks like MySpace and Facebook. Project X locates these targets using three methods:
- Manual labor. Trained Blackmailr contractors located in developing nations scour services with significant amounts of user-generated content looking for blackmail targets. Because the number of users is so great, the company’s contractors focus on examining users who have been pre-qualified, such as users who have membership in an Ivy League network on Facebook.
- Referrals. Through Blackmailr’s referral program, individuals can provide the company with blackmail target leads and share in the revenues generated through successful blackmail attempts. For instance, if your friend is new associate at a major law firm and reveals on his Facebook page that he enjoys binge drinking, smoking marijuana and having promiscuous sex, you can provide Blackmailr with the lead and the company’s trained blackmail experts will take the information, determine if your friend is an attractive blackmail target and pass the blackmail attempt to one of the company’s extortionists. If our blackmail attempt is successful, you receive 10% of the proceeds.
- A proprietary artificial intelligence system. Blackmailr’s patent-pending BlackmAIl application spiders popular websites and uses sophisticated artificial intelligence algorithms to filter and analyze data. BlackmAIl not only locates content that could be used for blackmail, but scores the “blackmailability” of the user who posted it by cross-referencing the data collected on the social networks with data from other sources (public records, credit bureaus, etc.).
It is inevitable that a future presidential candidate will have at one point had a MySpace profile and that a future business titan will have at one point posted photos to a photo sharing service. Understanding that because social networks are so popular with younger generations whose members have not yet accumulated the wealth or positions of power that make them ideal blackmail targets, Project Y is focused on archiving the content provided on social networks for future blackmail attempts. Blackmailr will build a vast data archiving facility and has already developed a proprietary data storage system (Black to the Future) specifically designed to make storing large amounts of constantly-changing data from user-generated content services efficient. The company’s FlashBlack application works in conjunction with Black to the Future to search the stored data for blackmail-worthy data on specific potential blackmail targets.
Business Model
Blackmailr’s business model is simple: when a blackmail target has been located and the information required for a successful blackmail attempt has been acquired, Blackmailr’s experienced extortionists approach the potential target and use a variety of classic techniques to extract payment. Blackmailr is a “do no evil” company and is committed to the physical safety of blackmail targets. The company’s policy prohibits the use of violence in blackmail attempts valued at under $500,000.
Blackmailr has set up a network of intermediaries and front companies that protect the privacy and integrity of all parties in financial transactions.
Competition
Significant blackmail activity already occurs. There is considerable diversity in the structure of blackmail schemes and the number of entities involved in blackmail operations is large, from lone, local operators to organized crime syndicates. That said, blackmail is a growth business and Blackmailr is focused solely on leveraging the relatively recent popularity of Internet services to create new blackmail opportunities that didn’t exist before. In essence, Blackmailr is expanding the market.
With its strong technology and experienced team comprised primarily of former CIA and KGB operatives, Blackmailr believes that the company can become the leader in online extortion. The company does, however, encourage potential competitors to become business partners. Through its OpenBlackmail platform, existing participants in the blackmail business can partner with Blackmailr under an arrangement similar in nature to Blackmailr’s referral program. Blackmailr has already signed agreements with seven partners, including a large global crime syndicate.
Financial Outlook
Blackmailr estimates that it will generate at least $15 million in revenues in its first year as it ramps up operations and builds out its infrastructure. The company expects to become cashflow positive in year two and by year five, Blackmailr anticipates that it will generate profits in excess of $500 million annually from its blackmail attempts and the reinvestment of funds into alternative financial instruments. All profits, of course, are not taxed.
Exit Strategy
Funding
Blackmailr seeks $10 million in funding to build a Latin American datacenter and to purchase cutting-edge data storage technologies. The company’s founders have already invested $2.5 million to develop Blackmailr’s proprietary technology.
Who I’m Pitching
You don’t want to know. Let’s just say that these guys are in really private equity.
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Drama 2.0 spikes the Web 2.0 kool aid by providing critical analyses of Web 2.0, its people, its startups and its impact on the world of media. Other topics are explored when Drama 2.0 has been drinking too much 1975 Dom Perignon. Read more about the Internet's version of Keyser Söze here.
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Excellent idea! Of course, an insurance company! I could see you creating (and bundling) all sorts of risk-management products. This term. That term. Full-life. Could set rates based on content risk. Page rank. Nice! D2, you may be onto something here.
haha you are brilliant…..
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