November 22, 2016 was a holiday at Israeli startup Hola. The company, which develops Internet browser add-ons aimed at making almost any content accessible to every surfer in every country, in the belief that access should be absolutely unrestricted, reached 100 million users. "Hola! 100,000,000!" was written in large letters on the walls of Hola's Netanya offices. Even a dog belonging to one of the employees expressed his delight.
Like many web app companies, Hola's success is measured by the number of its users (now 110 million). For cofounder and CEO Ofer Vilenski, however, Hola is much more than a number. He believes that the unrestricted Internet access provided by Hola is part of freedom of expression and freedom of information. "We're combating Internet censorship," Vilenski tells us. "Say you live in Syria, and you want to surf on Wikipedia, the most useful and popular site there, which is blocked in that country. You download Hola's add-on, and our software contacts other surfers outside Syria who have downloaded Hola and asks them for the parts of the website you want to load - a P2P model. When the requests are answered, the software builds the website from the parts, and contacts Wikipedia in order to obtain the remaining parts. Then you can surf on Wikipedia. It's like an information highway."
Hola began on its old format nine years ago, almost an eternity in Internet terms, and raised $29 million at the time. The company's most recent fundraising, a $17 million B round, was two years ago in May 2015. "The company is very profitable, and we have no need to raise money. We still have half of what we raised in cash, and we now have $15 million," Vilenski says.
Vilenski and cofounder and CTO and CSO Derry Shribman, former Check Point Software Technologies Ltd. (Nasdaq: CHKP) employees, began their entrepreneurial careers in 1998, when they founded Jungo. That company, which developed an operating system for home routers, was sold in 2006 to NDS (itself later sold to Cisco Systems) for $107 million, after having raised only $17 million. Jungo had 170 employees and made a profit.
This first experience in successful entrepreneurship encourage the pair, and they founded Hola. "Hola's initial goal was to reinvent the http Internet protocol in order to make the Internet faster, based on the P2P idea. In other words, anyone who installs the software helps the rest to make the Internet faster. After four years of development, we launched the solution, which makes the Internet 30% faster, but it was of no interest to anyone," Vilenski remembers with disappointment. He explains, "When you're surfing, say on the "Globes" website, by the time the story comes up, you have read the headline and sub-headline, and you don't really care whether the article appears after five seconds or three seconds. It broke our hearts, so we decided to take the technology and do something with it that did interest the user."
Thus was born Hola in its present format - an add-on that eliminates Internet censorship by changing the user's country of origin. "Through Hola, you can tell any website you want to access where you're surfing from, for example the United States, and not Syria. When a government, such as in Syria, forbids surfing on Wikipedia, it doesn't make the Wikipedia content illegal; it makes surfing this site illegal, and that's a significant difference," Vilenski says.
Another example is Turkish President Recep Tayyip Erdogan's decision to block surfing of YouTube, Twitter, and Facebook websites. "The government in Turkey is allowed to block, but the people are allowed to bypass the block, because they are allowed to surf," he explains. In addition to Syria and Turkey, the company operates in other countries on the list of "Internet enemies." Reporters without Borders (Reporters sans Frontieres - RSF), a Paris-based international NGO, began publishing this list in 2006.
"Globes": What other technological solutions are there for bypassing a block and what is Hola's advantage?
Vilenski: "One solution is to acquire a server farm, in the UK, for example, through which the user in Syria passes and is identified as British. Many companies are offering this solution. The problem is that this server farm has a known IP address, and Syria can realize that using it is designed to bypass a block, and block communications with that address. In Hola's solution, the user goes to a private address of someone in London, for example, and that is allowed by the government in Syria. Hola' solution is the only one that cannot be blocked."
I assume that you yourselves use censorship. What websites do you not allow to surf through Hola?
"Those for which it's clear to us that the purpose of usage is a crime, such as entering a gmail account in a different country that is not the user's original country. When you're outside of Israel and enter your gmail, Google, in its own ways, knows that it's you, so you don't need Hola. When someone else uses Hola to enter gmail, however, it's obvious that he is a criminal, not the real owner of the account. Another example is pedophile sites."
At this point, Vilenski emphasizes that we shouldn't mix law and morality. "My personal moral belief is that the Internet should be open and transparent to everyone. The law, on the other hand, is different - the military censor in Israel, for example. In the case of pedophile websites, it's legal for me to allow access to them for Hola users, but it's immoral. It's not my responsibility to monitor the Internet."
Hola serves not only important rights such as freedom of expression. One of the more popular uses of the company's add-on is ordering flight tickets and Internet purchases in general. "On websites of airlines and on ecommerce sites, there is geography-based price discrimination. If you surf the website of an airline, you'll see how the price of a flight drops when you change your location from Israel to Germany, for example. On ecommerce websites, the price displayed to you is adapted to the income of the country from which you're surfing. Is this discrimination legal? Yes. Are you allowed to bypass it? Yes. Is it moral for me to enable you to buy flight tickets more cheaply? I think so, and that's the moral belief that led me to found Hola.
"Hola enables me to see what I want to see, not what the content or service provider wants to show me. We bring the truth to the surface, and democratize information, meaning that everyone sees the same information," Vilenski declares.
Vilenski has another example of Hola's importance - Coursera, a US online open university that makes it possible to take courses at leading universities around the world. In January 2014, as part of the sanctions against Iran, the US administration demanded that Coursera block students from Iran and other hostile countries. "In response, Coursera, suggested that those students use Hola to bypass the block. In other words, Coursera applied its own morality,"
In Israel, a weaker version of the pornography law was passed, under which Internet providers are obligated to contact customers and inform them at no cost about the possibility of filtering such websites. The original bill provided for advanced filtering of pornographic websites as a default option, unless the customer asks otherwise. What is your opinion?
"Banning something sometimes achieves the opposite of what is meant. Prohibition in the US in the 1920s, which banned the sale of alcoholic beverages, eventually created organized crime. Similarly, an absolute blocking of pornographic websites or any other selected content requires expensive infrastructure that Israel lacks, but which Turkey has. Such a block has to be done in Israel's main connection to the Internet, and if and when it is done, it will slow down surfing speeds in Israel. It's like putting a guard at the entrance to Israel, not just at the entrance to "Globes," for example."
Hola's activity in countries like Syria is unquestionably generating complex and significant discourse about freedom of expression and information. In practice, however, most Hola users come from the US, Canada, and the UK - developed Western countries in which Internet censorship is virtually non-existent. "Americans are big sports fans, and when they travel overseas and want to watch some game on the ESPN Internet channel - and they have a paid subscription to the ESPN website - they download Hola, because these websites are blocked to surfing outside the US," Vilenski comments.
What is the company's business model?
"There are two possibilities: free of charge, but then the user is part of the Hola network. In other words, the company relays requests to other users through him, not just responses to his requests. The second possibility is a monthly subscription for $5. Most of our users choose the first option, without subscription fees, but when you have 100 million downloads, it's enough to generate revenue."
Hola's solution is not the only one, however, and is not the company's main source of revenue. Three years ago, the company launched Luminati - Hola for enterprises. This is a product that the company says adds transparency to the business intelligence market by enabling competitors to gather business information about each other, mainly by comparing prices of products they offer with those of their competitors, and to offer customers lower prices.
"Assume that you want to buy a shirt on one of the ecommerce websites. You compare prices, but those websites also want to compare prices. For example, Walmart will check eBay, and vice versa, but when some product on eBay is checked by Walmart working through a server farm, it will be identified by Walmart as a business, not a private consumer, and the price of the shirt it will see will be higher than the price it shows to the private consumer. Each of them therefore needs a solution like Luminati in order to camouflage itself and be identified as a private consumer."
So the overall goal here is to lower prices for the end consumer.
"Exactly. I want massive competition, because price openness is beneficial. Through Luminati, we bring everyone's prices to the surface."
Use of the Luminati website is what is called AD verification, i.e. verification of the advertiser's identity. According to Vilenski, the target market here is the social networks, for example, which are unwilling to take the risk that the advertiser is a forgery, and that the purpose is to install a virus. Luminati enables such a social network to camouflage its identity, thereby exposing such a fraud when it occurs. The business model for this solution is payment according to traffic (it is not available for free) passing through Luminati, not a fixed price. Luminati already has 1,200 customers in 17 different industries, and is adding customers at a rate of 65 a month.
The company's third and last product, launched two years ago, is HolaCDN - a content delivery network, which distributes video designed for content websites that upgrades the viewing experience to the same quality as watching on YouTube, but at lower cost. HolaCDN includes a special global network of servers that run the company's P2P technology, combined with code run on the viewer's side, using the Internet.
As the company explains, in contrast to the traditional CDNs, which stream video from a single server in the viewer's geographic area, HolaCDN streams video from a large number of sources (servers) simultaneously for a single clip at high utilization rates, while leveraging servers in the areas where the cost of using them is lower. In this way, the clip begins sooner, plays continuously (without buffering), and the distribution price is lower. HolaCDN is already used by 50 distributors, such as Mako in Israel.
The leading company in the CDN market, Akamai, listed on Nasdaq at an $11 billion market cap, was founded by ex-Israeli Daniel Lewin, who was killed in the Twin Towers terrorist attack. Vilenski has no hesitation about challenging such a huge company. He says, "We're taking this technology to the next generation. YouTube has already done this, but YouTube doesn't allow others to use its technology."
What is the business model of this solution?
"$0.01 per broadcasting hour."
Published by Globes [online], Israel Business News - www.globes-online.com - on March 6, 2017
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