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Imagine an Internet where unseen hands curate your entire experience. Where third parties predetermine the news, products and prices you see—even the people you meet. A world where you think you are making choices, but in reality, your options are narrowed and refined until you are left with merely the illusion of control.

This is not far from what is happening today. Thanks to technology that enables Google, Facebook and others to gather information about us and use it to tailor the user experience to our own personal tastes, habits and income, the Internet has become a different place for the rich and for the poor. Most of us have become unwitting actors in an unfolding drama about the tale of two Internets. There is yours and mine, theirs and ours.

Here's how it works. Advertising currently drives the vast majority of the Internet industry by volume of revenue. Silicon Valley is excellent at founding and funding companies that give you free apps and then collect and sell your data when you use them. For most of the Internet's short history, the primary goal of this data collection was classic product marketing: for example, advertisers might want to show me Nikes and my wife Manolo Blahniks. But increasingly, data collection is leapfrogging well beyond strict advertising and enabling insurance, medical and other companies to benefit from analyzing your personal, highly detailed “Big Data” record without your knowledge. Based on this analysis, these companies then make decisions about you—including whether you are even worth marketing to at all.

As a result, 99 percent of us live on the wrong side of a one-way mirror, in which the other 1 percent manipulates our experiences. Some laud this trend as “personalization”—which sounds innocuous and fun, evoking the notion that the ads we see might appear in our favorite color schemes. What we are talking about, however, is much deeper and significantly more consequential.

For example, federal regulations make it illegal to discriminate in pricing access to credit based on certain personal attributes. But, as Natasha Singer recently reported in the New York Times, technical advances in mining online and offline data have made it possible to skirt the spirit of the law: companies can simply not make any offers to less credit-attractive populations. If you live on the wrong side of the digital tracks, you won't even see a credit offer from leading lending institutions, and you won't realize that loans are available to help you with your current personal or professional priorities.

For the past decade, e-commerce sites have altered prices based on your Web habits and personal attributes. What is your geography and your past buying history? How did you arrive at the e-commerce site? What time of day are you visiting? An entire literature has emerged on the ethics, legality and economic promise of pricing optimization. And the field is advancing quickly: last September, Google received a patent on technology that lets a company dynamically price electronic content. For instance, it can push the base price of an e-book up if it determines you are more likely to buy that particular item than an average user; conversely, it can adjust the price down as an incentive if you are judged less likely to purchase. And you won't even know you are paying more than others for the exact same item.

These blind walls also appear in our digital political lives. As Eli Pariser has observed, the Internet shows us “what it thinks we want to see” by serving up content that matches the hidden profiles created about us based on our daily online interactions. This behind-the-scenes curation reinforces our political points of view through online “echo chambers” that affirm, instead of challenge, what we already believe to be true. As Harvard University scholar Cass Sunstein has written, liberals and conservatives who deliberate questions openly only with people of the same political stripe become more confident and extreme in their views.

Segregation and separation are on the rise. The fun of personalization has a dark side.

Original article: http://www.scientificamerican.com/article.cfm?id=rich-see-different-internet-than-the-poor&print=true

Only clairvoyants or perhaps Nate Silver can say with certainty what's on tap for technology next year–but here are eight educated predictions: 

1. Social commerce margins collapse.  

Why, you ask? Surely companies like Gilt Groupe, One Kings Lane, HauteLook, etc., are hot, hot, hot? I don’t think so–at least, not forever. Like social gaming, most will be seen as more of a flash-bang, not a steady flame. The Internet is responsible for a motivated and empowered consumer, who researches the best deals with a few fast clicks of her iPhone. Unfortunately, that translates into the absence of brand loyalty for social commerce companies.  Unless a company has exclusivity–it’s the only place to get a deal on Armani, for example–it’s just part of a passing parade of options for the growing legions of Web-savvy consumers. This trend will really take off as meta-price engines accelerate. 

2. Hard Tech makes a comeback. 

We’ll see more Silicon Valley companies return to their roots next year and embrace hard tech. If enterprise value is not generated from exclusivity, it’s created by intellectual property–inventing and owning something unique.  Assuming it’s wanted or needed, that innovation will drive consumer demand. Patents for that intellectual property will once again signify that a start-up should be taken seriously. Its initial growth may be slower but its competiveness over the long haul has greater potential to be exceptional. 

3. The incubator starts to die (again).  

Incubators, which take fledgling start-ups under their wing for mentorship, support, and funding, are struggling and some will take their last breaths in 2013. Even the most successful (or perhaps the only successful) example, Y Combinator, recently announced that it will now take less than 50 start-ups into its classes–versus the 84 it had previously welcomed. This means a higher bar for early-stage companies to hurdle but for those who make it, better odds of meaningful interaction, funding, and perhaps a faster path to maturation. 

4. Venture funds will stop copying the "full-service" model. 

There will be blowback against the "full service" model in the venture capital community, as a strong negative self-selection bias becomes clearer. If you are an entrepreneur who wants (and needs) a VC backer that offers full services, the odds are that you’re simply not as strong as others. Plus, the fund that’s rapidly becoming the most famous for this model actually seems to be doing full service most effectively for itself–with a record of major media hits–and overpaying for its investments. 

5. The "techno left" and "workers’ rights left" will face more fissures generated by technology.  

Uber is a prime example. The start-up provides an app that lets people quickly summon a car service–to the criticism of the established taxi industry, which says that Uber operates like a taxi company without the requisite licenses, lacking appropriate insurance and threatening jobs, etc. This is a case that has divided two groups–technical progressives and workers’ rights advocates–that would typically align. As technology pushes the boundaries, that division might be an emerging theme. And we may see some new and surprising (read: odd bedfellow) alliances as a result.  

6. At least two major data breaches, compromising consumer credit, will happen.  

Hackers devote enormous creative energy to crossing the virtual moats, breaching the barriers, and storming the castles of governments, top companies, and organizations. But it’s often simple human error, too–think the case of New York State Electric & Gas Company, when a contractor inadvertently exposed the sensitive personal information of 1.8 million customers. Regardless of intent, it’s a fair bet to think that at least two major data breaches will occur next year, either north of $100 million or involving the data of millions of people. 

7. Cybernationalists will target companies as political statements, Saudi Aramco-style.  

The Internet is both a weapon and a target for those who wage cyberattacks, enabling perpetrators to inflict harm and seize safeguarded and sensitive information. Cybernationalists may or may not be doing the bidding of their governments with these attacks–or may simply be expressing their ire toward another nation. This summer’s cyberattack against Saudi Aramco, Saudi Arabia’s national oil company, was “one of the most destructive hacker strikes against a single business.” Successes like the damage to Saudi Aramco will embolden cybernationalists to strike again, with greater force. It’s a good bet that consequently, governments will step up their offensive abilities (ahem, Stuxnet) and defensive postures. 

8. Outdated laws plus leapfrogging technology will continue to equal conundrums for the courts.  

If the law were an animal, it would be the plodding tortoise, struggling mightily to catch up to the leaps and bounds of technology’s hare. But unlike that old fable, it’s not yet clear whether the law can accelerate to an appropriate pace. As a result, there will be more areas of gray than pure black and white. Companies will ask how they can stay on the right side of the line when it’s always shifting. Courts will be asked to do more in 2013 than ever before and slowly, a body of precedent will develop. Think more cases like Occupy Wall Street and Twitter; Noah Kravitz and PhoneDog; and international pressure for companies like Facebook and Twitter to enforce anti-harassment and abuse policies. 

What are your best guesses for tech in 2013?

Original article: http://www.inc.com/michael-fertik/8-major-tech-predictions-2013_Printer_Friendly.html

When Randi Zuckerberg got all bent out of shape last week because a photo she posted on Facebook was shared on Twitter without her "permission," she failed to see how the whole situation dripped with irony.

After all, here was a member of social networking's royal family – she's Facebook founder Mark Zuckerberg's older sister and a former Facebook employee – sharing more of her private life than she intended. And this occurred even as the Menlo Park company dealt with the blowback over ways it could use photos shared by users of its Instagram app to generate revenue.

But she was not alone in 2012. The year was filled with news of social-media miscues that got athletes banned, workers fired and people arrested.

They were the kind of blunders that begged the question, "What in the heck were they thinking?"

Even after two-plus decades of Internet use, there are people who still don't understand that anything that goes online stays online, and can be seen by many.

"I think people are ahead on e-mail and behind on social media," said Michael Fertik, founder and chief executive officer of ReputationDefender, a Redwood City firm that helps people and businesses clean up their online personas.

"Five or 10 years ago, they figured out that they shouldn't say bad stuff on e-mail because it gets captured forever," Fertik said. "Yet they don't get that the same rule goes triple for social media."

Social networking gives even average Joes a way to instantly share their thoughts and ideas with the world, or at least with their corner of the Internet. Under the right circumstances, it can change minds or topple governments.

But obviously, some people can't handle that kind of power.

For example, common sense might dictate that if you tweet "the Secret Service is gonna be defenseless once I aim the Assault Rifle at Barack's Forehead" and "Ima hit president Obama with that Lee Harvey Oswald swag" that law enforcement officials might just see it and soon be knocking at your door.

That's what happened to Donte Jamar Sims, 21, a Charlotte, N.C., man who allegedly tweeted those thoughts right before the Democratic National Convention in that city. He was charged with making threats to the president.

And right after the election, social media was rife with racist messages, such as this Facebook post from a 22-year-old Turlock (Stanislaus County) woman: "Another 4 years of this (racial epithet). Maybe he will get assassinated this term."

In an interview with Sacramento TV station Fox40, Denise Helms said she didn't think the post was "that big of a deal." The Secret Service looked into the matter, but her employer, an ice cream chain, immediately sent Helms packing.

And it wasn't only Obama haters. The president's supporters also tweeted threats to kill Republican challenger Mitt Romney if he won.

Athletes' big errors

Twitter also tripped up athletes like Greek triple-jumper Voula Papachristou, who threw away years of training for the 2012 Summer Olympic Games in London when she tweeted what she thought was a joke about an influx of mosquitoes in Athens: "With so many Africans in Greece, the West Nile mosquitoes will be getting home food!!!"

Critics saw the joke as racist. Greek Olympic officials threw Papachristou off the team

for making statements "contrary to the values and ideas of the Olympic movement."

Yet a few days later, Swiss soccer player Michel Morganella, upset about his team's loss to South Korea, went on Twitter to say South Koreans should all "burn" and called them a "bunch of mongoloids." He, too, got booted.

Recently, former Golden State Warrior Stephen Jackson, now of the San Antonio Spurs, tweeted a message to Serge Ibaka of the Oklahoma City Thunder. "Somebody tel serg Abaka. He aint bout dis life. Next time he run up on me im goin in his mouth. That's a promise."

Jackson didn't exactly explain what he meant, but the National Basketball Association called it a threat against a fellow player and fined Jackson $25,000.

A 49er's woes

Locally, San Francisco 49ers running back Brandon Jacobs, frustrated by his lack of playing time, tweeted in November one should "never work in a place where you hate your boss so much."

Jacobs later said he was referring to his brother's boss, not his head coach Jim Harbaugh. But not long after, he went on Instagram to post photos of himself in happier days with the New York Giants, saying he was "rotting away" on the 49ers. He was suspended for at least the final three games of the regular season.

Even employees in the business world who should know better seem to have taken leave of their social senses.

Bad for business

During one of the presidential debates, a member of home appliance maker KitchenAid's social-media team tweeted a snide comment when the president mentioned his late grandmother: "Obamas gma even knew it was going 2 b bad! She died 3 days b4 he became president."

The problem? The now ex-social-media team member posted the message on the official KitchenAid account instead of a personal account.

Not long after, someone used StubHub's Twitter account to call the online ticket seller a "stubsucking hell hole." The company pulled the tweet after an hour and apologized, although never said whether the remark was from a disgruntled employee or a hacker.

Really awful timing

British online fashion retailer CelebBoutique probably wished it could blame a hacker instead of a clueless public relations employee who in July saw that "#Aurora" was a top trending topic and tweeted that it must be about a Kim Kardashian-inspired dress with the same name. The employee, who did not work in the United States, didn't bother to check developing news of a mass killing by a gunman in Aurora, Colo.

The next morning, the National Rifle Association's publication American Rifleman sent this ill-timed tweet: "Good morning, shooters. Happy Friday! Weekend plans?"

Even top executives stumble. In July, Netflix Chief Executive Officer Reed Hastings wanted to share a fun factoid with his 200,000 followers on Facebook: Subscribers had enjoyed more than 1 billion hours' worth of video in the previous month.

But this month, the Securities and Exchange Commission notified Hastings that he probably violated federal disclosure regulations that govern publicly traded companies.

"These modern digital channels are used to communicate with various internal and external stakeholders, including customers, and pose a myriad of challenges because there are virtually no barriers to prevent employees from using them," said Shellye Archambeau, the CEO of Palo Alto enterprise risk management firm MetricStream.

"Besides being low-cost and easy to use and access, these channels are also immediate and pervasive in their reach. This introduces several risks when it comes to appropriate use and inappropriate misuse."

ReputationDefender's Fertik suggests anyone using e-mail or social media should pause, whether it's for five minutes or 24 hours, before clicking the button to post. Sometimes "one more reality check" through a trusted friend or co-worker could save years of embarrassment, he said.

"The Internet is forever," he said, "and there's no delete button."

Original article: http://www.sfgate.com/technology/article/Tweeters-say-the-dumbest-things-4156171.php#ixzz2R92VvfiH

A man in his late 40s suddenly found himself unemployed during the 2008 financial crisis. The good news: His industry experience and resumé were both strong, and he was able to schedule multiple interviews over the next few months. Each interview went exceedingly well and each company seemed impressed with his track record. But time after time, no follow-up phone call came, and he was left jobless.

Frustrated, the continually rejected prospect turned to Google and realized that his hometown had recently digitized all of its public records. When he searched for his name, the top result was an arrest record from the ‘70s, when he was 18 years old. That was before he entered college, then grad school, and graduated at the top of his class. His interviewers had seen this arrest record, too.

If you’re not adding content to the Internet connected with your name, you’re allowing others to control your own personal search results. Whether it’s an embarrassing photo from your pre-professional life, or simply a case of mistaken identity where someone else has the same name, finding and reclaiming your online identity can be of vital importance.

With a little bit of work, you can find out what the Internet is saying about you and swing the pendulum back in your favor.

Where the Information Originates

There are two types of personal information that exist online. The first is social content created by individuals themselves, and the second is content created by third parties. Self-created content takes the form of social media websites such as Facebook, LinkedIn and Twitter, as well as personal blogs and photo albums. Most of these hubs have privacy controls, which allow the user to set certain information public or private, but most privacy experts recommend assuming that anything posted online may someday be seen by a potential employer.

Noah Lang, vice president of business development at ReputationDefender, warned that going through and cleaning up your active social network personas might not be enough. “People often forget about legacy information that exists online,” he warned. “Myspace profiles still show up in search results, even if the user has forgotten the login information.”

The second type of online personal information, from third parties, can be classified as “people data content.” This includes marketing data, public records and educational footprints. Entire businesses have sprung up that collect and sell this data to companies and individuals.

Websites such as Spokeo.com and BeenVerified.com allow anyone to search for a first and last name and view a wide range of information, often including home address, phone number and a list of known relatives. These listings, however, may get even more personal, displaying information such as a person’s religion. As more and more industries are becoming digitized, the amount of personal content available is growing significantly.

“A lot of the more rich information is from someone else’s publishings,” said Patrick Ambron, co-founder and CEO of BrandYourself.com. “Even if you don’t have an online profile, it doesn’t stop someone else from mentioning you. Facebook posts, blogs, articles: It all goes online now.”

Background Checking Yourself

With the amount of data gathered every day, it’s no surprise that Google is the best source of personal data and background check information. Entering search terms such as your full name, nicknames and email address returns the most readily available, and thus most seen, personal data.

Although search results for an individual name, depending on popularity, may result in the thousands, the first page of these search results is all that really matters. “Most people, around 94 percent, don’t leave the first page of Google,” Ambron said. Lang agreed: “People give a lot less credence [to results] on page 3 or 4, if they even go that far.”

Searching Google is a great way to see what information is available now, but doesn’t help with things that pop up days, weeks or months later. Ambron recommended setting up Google Alerts (google.com/alerts) for key terms related to your name. Once activated, Google will automatically send daily or weekly emails featuring new search results related to your specified parameters.

Your personal information may also be publicly available on numerous “background check” websites, such as Intelius.com, Spokeo.com, BeenVerified and WhitePages.com. Search for yourself in these directories, note if any personal information is displayed and check each site’s content removal policy. You may need to refine your search results by state to locate the correct result.

Who Might See It?

If you’re able to find unwanted information about yourself online, anyone with prying eyes can find the same content. That includes potential employers and company recruiters. Businesses are turning more and more to the Internet to find out about prospective employees.

“We’re seeing 80 percent of recruiters admit to looking at Google right off the bat,” said Lang, “with 23 percent continuing on to social networks.”

According to a hiring manager who asked to remain anonymous, Google and LinkedIn are often used to verify that a candidate’s information is consistent between the resumé and what he or she is claiming. “I don’t care what people do on their free time,” the hiring manager said, “but not implementing some very basic privacy controls…and compromising personal information [shows] carelessness.”

These days, personal information found online may be more important than resumés and cover letters. “Resumés are terrible,” the hiring manager continued. “What you find through Internet searches gives a much clearer picture of what a person’s career looks like over time.”

Beyond potential employers, there can also be negative consequences when private information is found by current co-workers and employers, or even nosy friends. If you have public information available online that you wouldn’t share with everyone you meet, your Internet reputation could use some cleaning up.

How to Take Control

It’s impossible to maintain constant control over your online identity, but there are ways to shake off the undesirable information. The first step is knowing what information is out there, and the best place to look is Google.

These search results fall into two main categories: content you control and items posted by a third party. Within these two groups, the sentiment can either be positive or negative.

“Once you know what’s out there, shift the control back to your favor,” Lang recommended. “The content should be owned and controlled by you. Even if the content is neutral, you want to shift the sentiment back to you.”

This can be done by creating content to bury unwanted search results. “You need a personal hub,” Ambron said, citing the WordPress blogging platform, Tumblr or a BrandYourself.com profile. Websites like About.me and Flavors.me allow users to create a single-page website that links to authenticated social media profiles. “[This acts as a] central website that links to everything about you that you’re comfortable with people finding…[things that] you’d tell someone who you met at a party.”

Sign up for accounts at social media websites such as Facebook, LinkedIn, Tumblr and Twitter, even if you don’t plan on using the services. Use your real name and fill these sites with information you’re comfortable sharing. Large social media sites rank well on Google and will soon climb to the front page of your search results.

Both Lang and Ambron recommend purchasing your own .com domain, specifically yourname.com, if it’s available. “Get your own domain name…even if you don’t plan on using it,” urged Ambron, “so someone else doesn’t hijack it.” In addition, a domain name that includes your full name will rank high in Google search results.

Websites such as BrandYourself.com and ReputationDefender specialize in online background checks and optimizing personal search results. These websites help build and promote, using established search engine optimization techniques and positive personal content that will help users take control of their search results.

Staying on Track

Online reputations are important for everyone, from the social media maven to those who haven’t even created a Facebook account. As more information becomes digitized, the risks from exposed private data increases.

The first step to seizing control of your online identity is to know what information exists and replace the negative and neutral sentiments with your own positive content. This can be done on your own, by signing up for social media websites, creating blogs or through assistance websites.

Allowing your online reputation to run amok can have negative consequences, both on future prospective opportunities as well as current situations. It’s important to be aware of your online presence and take steps to swing things into the positive.

“The fact of the matter is that people are going to look you up online,” Ambron said. “If you don’t take control of it yourself, someone else will take control for you.”

Original article: http://blog.laptopmag.com/how-to-background-check-yourself-online

Vice Chairman Howard Bragman shares why your online reputation is like real estate – worth owning, protecting and building up.

One voice has been missing from the ongoing debate, hand-wringing and consternation about the looming "fiscal cliff": startups.

As the CEO and founder of a startup, here's the deal: While the "fiscal cliff" will be destructive for Apple or Facebook, it will be absolutely cataclysmic for startups, whether they're located here in Silicon Valley or across the United States.

That matters because, simply put, startups power the job creation and growth in the United States. New companies add 3 million jobs in their first year on average. In comparison, existing firms lose about a million jobs a year and, perhaps counter intuitively, do not continue to "bulk up" as time goes on. Small businesses also employ 50 percent of all private-sector workers.

So if we're plunged into a fiscal free-fall, this is what will happen:

•   Venture capital dries up. The first capital to go in an economic recession is risk capital — and venture is the riskiest. We saw this in 2008. Remember the Sequoia Capital R.I.P. memo, which painted a very gloomy picture of the consequences of economic downturn (the VC's parting shot — "Get real or go home" — resonated bleakly in all corners of the Valley). I vividly recall trying to raise funding shortly before the Lehman Brothers collapse. Funding on any kind of acceptable terms became impossible, and I was forced to reduce our workforce. For us, the story ultimately turned out well: we continued to have growth quarters, were able to raise money in the spring, and now have about 160 employees. For others, the picture wasn't — and won't be — as rosy.

•   There's less to go around. In addition to venture capital grinding to a halt, startups will feel an outsize impact as customers put their dollars on slowdown. Most established or cash-positive companies can afford to absorb those punches for a time. Late-stage startups like ours will also be less affected than early-stage companies, which will feel these impacts as body blows.

•   Goodbye to good people. When you can't raise money and your customers are cash-tight, startups have to take a hard look at staff. As a CEO or founder, you're straining to find that sweet spot of right-sizing the staff while still creating good innovation to sell. That's tough to do no matter the size of your business, but it's exceptionally difficult at a startup because you are (or should be) fairly lean. As you say goodbye to very good talent, the burden of performance increases on your existing staff and there's only so long before dissatisfaction and eventual burnout.

Our leaders must implement what's needed in a measured, thoughtful and bipartisan fashion: reform and strengthen our entitlement programs, make health care more efficient, limit future cost growth, and enact a comprehensive, pro-growth tax reform strategy that includes some sensible portion of the Simpson-Bowles Commission's recommendations for raising revenue and reducing deficits, as suggested by the Campaign to Fix the Debt, which I support.

When a butterfly flaps its wings in Washington, D.C., there's the potential of an economic typhoon here in Silicon Valley. Too often, our elected officials look at Google and Facebook as the sole representatives of our tech community — but in truth, we're much more vibrant, diverse, versatile and volatile than just these long-established companies. A freeze in expenditure or a recession will absolutely rock us to our collective core.

Let's keep the engine of our country's job creation revving by taking concrete action now.

Original article: http://www.mercurynews.com/opinion/ci_22211126/michael-fertik-fiscal-cliff-will-be-disaster-startups?IADID=Search-www.mercurynews.com-www.mercurynews.com

Forward-looking countries are adopting new policies to attract entrepreneurs, especially as the United States becomes less welcoming to immigrants.

In particular, these countries are hoping to attract technology entrepreneurs because start-ups in this sector are responsible for rapidly creating jobs and wealth.

Michael Fertik, the American entrepreneur and author, has coined a term for this trend: venture countries…..(read more here)
 

As well as formulating a theory about "venture countries", Michael Fertik has spent a lot of time considering the importance of reputation in the digital age. He is the founder of a company called ReputationDefender…(read more here)
 

“You are walking around naked on the Internet and you need some clothes,” says Michael Fertik. “I am going to sell you some.”

Naked? Not exactly, but close.

Mr. Fertik, 34, is the chief executive of ReputationDefender, a company that helps people manage their online reputations. From his perch here in Silicon Valley, he views the digital screens in our lives, the smartphones and the tablets, the desktops and the laptops, as windows of a house. People go about their lives on the inside, he says, while dozens of marketing and analytics companies watch through the windows, sizing them up like peeping Toms.

By now many Americans are learning that they are living in a surveillance economy. “Information resellers,” also known as “data brokers,” have collected hundreds to thousands of details — what we buy, our race or ethnicity, our finances and health concerns, our Web activities and social networks — on almost every American adult. Other companies that specialize in ranking consumers use computer algorithms to covertly score Internet users, identifying some as “high-value” consumers worthy of receiving pitches for premium credit cards and other offers, while dismissing others as a waste of time and marketing money. Yet another type of company, called an ad-trading platform, profiles Internet users and auctions off online access to them to marketers in a practice called “real-time bidding.”

As these practices have come to light, several members of Congress, and federal agencies, have opened investigations.

At least for now, however, these companies typically do not permit consumers to see the records or marketing scores that have been compiled about them. And that is perfectly legal.

Now, Mr. Fertik, the loquacious, lion-maned founder of ReputationDefender, says he has the free-market solution. He calls it a “data vault,” or “a bank for other people’s data.”

Here at ReputationDefender’s headquarters, a vast open-plan office decorated with industrial-looking metal struts and reclaimed wood — a discreet homage to the lab where Thomas Edison invented the light bulb — his company has amassed a database on millions of consumers. Mr. Fertik plans to use it to sell people on the idea of taking control of their own marketing profiles. To succeed, he will have to persuade people that they must take charge of their digital personas.

Pointing out the potential hazards posed by data brokers and the like is part of Mr. Fertik’s M.O. Covert online profiling and scoring, he says, may unfairly exclude certain Internet users from marketing offers that could affect their financial, educational or health opportunities — a practice Mr. Fertik calls “Weblining.” He plans to market ReputationDefender’s data vault, scheduled to open for business early next year, as an antidote.

“A data privacy vault,” he says, “is a way to control yourself as a person.”

ReputationDefender is at the forefront of a nascent industry called “personal identity management.” The company’s business model for its vault service involves collecting data about consumers’ marketing preferences and giving them the option to share the information on a limited basis with certain companies in exchange for coupons, say, or status upgrades. In turn, participating companies will get access both to potential customers who welcome their pitches and to details about the exact products and services those people are seeking. In theory, the data vault would earn money as a kind of authorization supervisor, managing the permissions that marketers would need to access information about ReputationDefender’s clients.

To some, the idea seems a bit quixotic.

ReputationDefender, with $67 million in venture capital, is not making a profit. Although the company’s “privacy” products, like removing clients’ personal information from list broker and marketing databases, are popular, its reputation management techniques can be controversial. For instance, it offers services meant to make negative commentary about individual or corporate clients less visible on the Web.

And there are other hurdles, like competition. A few companies, like Personal, have already introduced vault services. Also, a number of other enterprises have tried — and quickly failed — to sell consumers on data lockers.

Even so, Mr. Fertik contends ReputationDefender has the answer. The company already has several hundred thousand paying customers, he says, and patents on software that can identify consumers’ information online and score their reputations. He intends to show clients their scores and advise them on how to improve them.

“You can’t just build a vault and wish that vendors cared enough about your data to pay for it,” Mr. Fertik says. “You have to build a business that gives you the lift to accumulate a data set and attract consumers, the science to create insights that are valuable to vendors, and the power to impose restrictions on the companies who consume your data.”

THE consumer data trade is large and largely unregulated.

Companies and organizations in the United States spend more than $2 billion a year on third-party data about individuals, according to a report last year on personal identity management from Forrester Research, a market research firm. They spend billions more on credit data, market research and customer data analytics, the report said.

Unlike consumer reporting agencies, which compile credit reports, however, business-to-business companies that calculate consumer valuation scores, or collect and sell consumer marketing data, are not required by federal law to show people the records the companies have about them or allow them to correct errors in their own files.

Marketing industry groups argue that regulation is unnecessary. They say Web sites have privacy policies to explain what data they and their business partners collect. They add that third-party data collectors do not know Internet users’ real names and compile consumers’ online marketing records under customer code numbers. Besides, they say, Internet users who are uncomfortable with seeing ads based on data-mining about themselves may use an industry group’s program, Your Ad Choices, to opt out of receiving customized pitches.

As the popular conversation shifts from practices like privacy policies and opt-outs to ideas like consumer empowerment and data rights, however, marketing industry efforts have not kept pace with changing public attitudes, analysts say.

“Consumers are leaving an exponentially growing digital footprint across channels and media, and they are awakening to the fact that marketers use this data for financial gain,” Fatemeh Khatibloo, an analyst at Forrester, wrote in the report. “This, combined with growing concerns about data security, means that individuals increasingly want to know when data about them is being collected, what is being stored and by whom, and how that data is being used.”

A variety of industries could respond by providing services that offer consumers greater control, she wrote. These might include online companies like Yahoo, Microsoft and Google that already house certain categories of data for consumers; social networks like Facebook and LinkedIn; data vaults like Personal, which allow consumers to store and manage certain kinds of data; and companies like ReputationDefender whose business model already relies on customers willing to pay for data privacy.

In a phone interview last month, Ms. Khatibloo described how such an ecosystem might work.

Consumers could choose a variety of companies or institutions to house and manage different categories of their information. They might select a financial institution as the gatekeeper for their financial data, a medical center to manage their health data, and a consumer data locker as their retail manager. Then, when a person is ready to buy a car, she could authorize her personal vault to share relevant financial and insurance information with a car dealer. Or a person might allow his home insurer to survey his retail data vault for purchases every month and automatically increase his insurance coverage if he buys expensive items like a home entertainment system, she said.

“What is necessary to make that happen,” Ms. Khatibloo said, is “an inflection point of consumers adopting technology that makes it more valuable for marketers to come to them directly for their data.”

Marketers and information resellers will also have to acknowledge that consumers have some rights to information collected about them, she said. If the industry does not update its data capture practices, legislators and regulators are likely to mandate public data access, she said.

With increasing complaints by consumer advocacy groups and investigations by the news media, the surveillance economy is attracting greater government scrutiny. Two separate efforts in Congress are now examining practices by third-party consumer data collectors. Regulators at the Federal Trade Commission and researchers at the Government Accountability Office are also investigating. In a report this year, the F.T.C. recommended that Congress pass a law giving consumers the right to have some access to the records data brokers compile about them.

“We have a right, I think, to all of the data we have a hand in generating,” Ms. Khatibloo said. “I have the right to know who is tracking me online, who is looking at my behavior as I move from site to site, what data they are collecting, all of these.”

MR. FERTIK, blue marker in hand, sketches his vision of a data vault on a white board in a conference room at ReputationDefender’s headquarters. “The problem is you don’t own your data,” he says. “Now, imagine owning your data.”

He sketches a silo and labeles it “data privacy vault.” To the left of the silo, he draws an arrow saying “IN: data about people.” To the right of the vault, he draws another arrow which says “OUT: data to vendors.”

It is a system he has previously described at the World Economic Forum in Davos, Switzerland; at Harvard Law School; at the Aspen Institute. He points to the diagram.

“This is the future. Let me demystify it. This is not difficult technology,” he says. “It’s a database where you put your data, or we put it for you, and there are some rules as to how it is externalized or shared.”

Mr. Fertik’s thinking on consumer privacy developed in part from what he called his Upper West Side, civil rights, “Jewish, lefty, pinko” upbringing and his Dalton, Horace Mann, Harvard College, Harvard Law School education. The result, ReputationDefender, founded in 2006, is a part social justice, part profit motive.

“I thought something was wrong,” Mr. Fertik says. “You know when you go into a bank or an insurer that you may get offered different rates than the next person, but you have no idea when you go on the Internet that your options, the offers you get or whether you get a coupon, have been defined 20 steps before you get to a site.”

For $99 per year, clients can have the company remove their personal details from databases maintained by various information resellers. They can also install company software that blocks Web tracking by 200 data brokers, advertising networks and ad trading platforms. For $5,000 a year, ReputationDefender also offers a “white glove” service for executives who want their personal details removed from list brokers with more cumbersome opt-out processes.

Reputation’s forthcoming data vault service is just a more elaborate attempt to monetize consumer privacy.

Mr. Fertik says he doesn’t think it will be difficult to persuade people to store their data in the vault and share some of it with selected companies in exchange for benefits like cash, coupons or status upgrades. The companies that get permission to gain access to his clients’ records, he adds, will have to sign contracts agreeing not to sell or share them with third parties.

Still, some people may not be comfortable with the fact that ReputationDefender has already amassed files on millions of Americans mainly by scraping the Web. Other people may wonder whether a consumer data vault is truly secure. Mr. Fertik says ReputationDefender will never share or sell clients’ information without their permission.

Convincing marketers that ReputationDefender’s vault has more valuable information and consumer insights than an ordinary data broker is another challenge. “In order to make our information attractive to Best Buy, Amazon or Disney World, we’d have to tell them we have 5 percent more information about you and better insights than other sources,” Mr. Fertik says.

EXECUTIVES in technology, retail, marketing and other industries like to say that data is “the new oil” or, at least, the fuel that powers the Internet economy. It is a metaphor that casts consumers as natural resources with no say over the valuable commodities that companies extract from them.

Data vaults could give consumers more control over who sees certain kinds of information about them and how that information is used.

It is already a common practice in health care. Patients of the Kaiser Permanente system, for example, can use an online health manager to handle information about their health care, prescriptions and insurance. Elderly parents might also choose to give access to their health vault to offspring who help manage their care.

Still, consumers may not care enough about data-mining by marketers and information resellers to patronize data vaults. And legislators may eventually require information resellers to periodically provide consumers with free data reports, Ms. Khatibloo, of Forrester, said. That would put a dent in the fee-for-service data vault business.

In fact, some politicians and regulators already argue that services that charge people to control their personal data are not an appropriate solution to comprehensive online data collection.

“Having to pay a fee in order to engage in a retrospective effort to claw back personal information doesn’t seem to us the right way to go about this,” David Vladeck, the director of the Bureau of Consumer Protection at the Federal Trade Commission, said at a Congressional hearing in 2010.

Regulators are moving to give consumers more control over data without having to pay for it. In February, for example, the White House assigned the Commerce Department to supervise the development of a “Consumer Privacy Bill of Rights,” a code of conduct to be worked out between industry and consumer advocacy groups.

While governmental efforts inch along, companies like ReputationDefender are forging ahead with new services that promise consumers more insight into the data collected about them. This month, for example, the direct-to-consumer division of Equifax, the credit information services company, plans to begin offering its customers a separate personal data report from ReputationDefender in addition to their credit report. Some Equifax customers will also be offered the option to have ReputationDefender delete personal details, like home addresses and phone numbers, from certain information broker databases.

“We see broadening consumers’ understanding of what’s out there about them online as a very natural extension of what we do today,” said Trey Loughran, the president of Equifax Personal Information Solutions.

Next spring, TransUnion Interactive, the consumer division of the TransUnion credit information company, plans to offer its customers similar services from ReputationDefender.

These deals in no way signify that data vaults are a sure thing or, if they are, that ReputationDefender is the company to take them to the masses. But the sudden interest from corporations like Equifax and TransUnion gives credence to the idea that consumers increasingly want to see data collected about themselves and that there is some commercial benefit in showing it to them.

After all, Mr. Fertik says, “it’s your data.”

Original article: http://nyti.ms/16EmbNH

The Silicon Valley Business Journal selected ReputationDefender's founder and CEO as one of its '40 Under 40."  Learn more about Michael via this fun Q&A; click here.