Ignite Angel: Why Most Startups Shouldn't Raise Venture Capital with Lance Cottrell | Ep310

Lance Cottrell (0:00)

You know, we had a situation where we owed our COLO provider a quarter million dollars and ended up convincing them that, in fact, there had been a check that had cleared long enough for them to unlock the cage and allow us to take all of our gear out of there over 24 hours without taking the site down so we could move somewhere else. And then they went bankrupt, and we settled with them for 10 cents on the dollar by reaching out to the liquidation firm. The kind of extreme business practices that you have to get involved with as a startup just to survive and survival becomes the only criteria that matters because if you're not alive, you're not around to succeed later.

Brian Bell (0:59)

Hey, everyone, welcome back to the Ignite Podcast. Today, we are delighted to have Lance Cottrell on the mic. He was a physics grad student in early cyberpunk who wrote the Mixmaster Anonymous Remailer that left his PhD program to found Anonymizer, one of the first commercial internet privacy companies. He took it to a successful exit in 2008

And today, he is an angel investor, president of the North Bay Angels just down the road from us, and the host of Feel the Boot, where he coaches early stage founders. Lance, welcome to the show.

Lance Cottrell (1:27)

Thanks so much. Great to be here.

Brian Bell (1:28)

Yeah, it's great to catch up. I've been wanting to do the podcast for a while. I'd love to start with your origin story. What's your background?

Lance Cottrell (1:35)

I started off planning to be an academic physicist. My dad was, both my parents were professors, and so I was going down that path in the early 90s, working with the Hubble Space Telescope right after it was launched and the big telescopes in Hawaii.

But at this moment, the internet was really arriving. The World Wide Web was created, I think, in 91, 92

Being at UCSD in San Diego, I was directly on the internet backbone when I was doing research. I had a Sun workstation directly connected to the Supercomputer Center. I set up a website on CERN server 1 or something. And so I could see the amount of information that was getting collected. And I knew that, for example, astronomers like to steal each other's targets up on the mountains. They go through the computer. So we were thinking about privacy and cryptography a lot. And then the government came out with this idea that privacy was going to be important. Everyone should have encryption. They were going to build a specification for a crypto chip and keep a copy of all the keys. And I thought that was phenomenally bad idea. So that led me into the whole privacy cryptography space that then led to Anonymizer.

Brian Bell (2:42)

So what is Anonymizer for folks that don't recall that? I mean, it was 20 years ago, so.

Lance Cottrell (2:47)

Yeah, no, it's been a hot minute. Anonymizer, really, we were the world's first internet privacy company. So if you use Tor or if you've used VPNs for privacy, we were really doing that kind of thing well before that started. So having built the Mixmaster Internet's email privacy tool, I realized it wasn't very easy to use. It wasn't going to achieve mass adoption. And so I started the company to try to build tools that would be user friendly. And so Anonymizer was focused on consumers and originally web based privacy because the worldwide web had really started to arrive at that point.

Brian Bell (3:22)

So you were on the cyberpunk list back in the early 90s. You consulted on digital cash well before blockchain or PayPal or X or whatever is going on in the late 90s.

What did you guys believe the future would look like back then? I mean, you have this really interesting... You've seen it, right? Like, you know, I'm a little younger than you. I grew up in the 80s. I was born in 1980 So I was a child when all this stuff was happening. But you were an adult. Like, what did it feel like as the internet took off and all these things were starting to become a possibility?

Lance Cottrell (3:53)

Yeah, it was a really interesting time. You could feel the things changing under you. Almost not quite as fast as with AI this time. But it was obvious it was going to be a huge thing. It was interesting to see people talking about it as a fad or it'll just be this little corner of things. But people who were actually on the internet in the early days and saw it coming could see the degree of sea change that was taking place. In fact, I can remember the moment I decided to leave my Ph.D. and start the company. I was driving down the freeway and there was a billboard. So literally I saw a sign. And every day this billboard would be about the local shopping mall. It would be the Macy's Whitesale or whatever.