Interview Gene Hoffman is one of the founders of PrivNet, which in 1996 developed Internet Fast Forward, the internet's first commercial ad blocking software. He helped found the company as a student at the University of North Carolina at Chapel Hill, with the help of fellow students Mark Elrod, Jeff Harrell, and James Howard.
PrivNet released Internet Fast Forward in mid-1996 and by November of that year, Pretty Good Privacy (PGP) announced that it was buying the startup.
Hoffman has been involved in the creation and sale of two other companies, EMusic.com, sold to Vivendi Universal in June 2001, and Vindica, sold to Amdocs in 2016. He's currently president and COO of Chia Network, a cryptocurrency platform founded by BitTorrent creator Bram Cohen.
In an interview with The Register, Hoffman revisited the early days of ad blocking and discussed how the technology industry has changed over the past 25 years. What follows is a transcript of the discussion, edited for clarity.
Hoffman: I had a friend from high school who originally went to MIT and ended up back in North Carolina. UNC was kind of oddly central to the development of the internet. A lot of people kind of don't know the deep roots there, but Usenet was created to stop people from getting drunk and crashing their VWs as they went back and forth from Duke to UNC, because all the Dukies would go to Chapel Hill to party and bad things would happen on the way back.
Linux was hosted locally at SunSITE at UNC back in the day. When I got to college as a freshman, the World Wide Web was just finally a thing. Gopher was still something you actually used a lot. The first moment in the fall, when there were thunderstorms rolling through and I downloaded real-time radar data and watched it on, you know, some painful old Macintosh, it was like, "Oh my this is going to be big!"
We'd seen Netscape IPO, you know, we'd seen that things were going the way we all kind of thought they would. [My buddy James] had thrown around various ideas, because he was like, "I'll start an ISP," and I'm like, "Not differentiated, not interesting, not a problem." [After] the first ad showed up [on HotWired in '94], and I took a look at that and I went, "I know how this stuff works. That's optional. We should fix that."
And I had some friends, because I was originally recruited to manage Carolina basketball and through the basketball team, one of my associates also knew a guy who was a Windows programmer. And so basically I took my buddy from high school, James, Mark Elrod was the friend of my buddy Jeff Harrell at the basketball program, and we basically sat down and I went, "Look, you know, this is huge. We could build a real software company based on it."
[PrivNet was formed in the late summer of 1995.]
Honestly, Internet Fast Forward was very much a marketing product. It was our attempt to, you know, rise above the noise and then build a real software company.
We were received pretty amazingly. Basically, every single IPO of Excite and @home and Yahoo!, everybody had to do the CNBC grilling: "So what about Internet Fast Forward? How will you make money on the internet with Internet Fast Forward around?"
And in fact, Coach Smith walked up to me – I was running our summer camp at the same time – he was like, "Gene, are you on my TV every 30 minutes?" because basically it was on Headline News. It was a huge breakout story. It was covered in the business section of the New York Times and it accelerated from there.
It was making sure people got to choose, especially back in the day when you were on a 56k modem
Behind the scenes, though, we were seriously thinking about building a software company. Netscape Mail was actually one of the better mail clients at the time, and we decided we would try to use the technology we're using to rip into Netscape to do ad blocking to actually add PGP encryption automatically into your Netscape Mail.
That was just about the time the US government was giving up on pursuing [cryptographer] Phil [Zimmermann], and Phil went out and started a company [PGP]. And shortly after they had bought back the Viacrypt stuff, which was their commercial assets, basically, we reached out to license. Now a very old friend of mine, Bob Cohn was like, "You guys should come out and visit and we'll talk about the license."
And Mark Elrod and I flew out to California and sat down and during the conversation they turned the tables and turned it into basically something between an acquisition and an acqui-hire. For four guys from Chapel Hill who were digging the internet and having a hell of a lot of fun, going and working for PGP was, you know, a dream come true.
At PGP, [Internet Fast Forward] was part of the privacy suite. We still continued to ship it and make it a piece, but it was fun to watch it go open source. It really was, I think, the right thing for it to become something that multiple vendors had and that, you know, it's kind of core to your experience. I mean, ultimately I think the web would be a far worse place if it weren't for ad blockers. That's the only thing that keeps the worst of ad marketers' intentions in check.
The Register: How have things changed since then? Do you think about ad blocking differently now?
Hoffman: No, not really. It was always about individual empowerment. It wasn't about saying that ads are bad necessarily. I ended up owning and running Rollingstone.com and Emusic and selling ads, right?
But it was making sure people got to choose, especially back in the day when you were on a 56k modem. I mean the ad content back then was getting disgusting. And we saw an echo of that – there was this period, I guess, eight-ish years ago where the mobile networks hadn't really caught up with the amount of ads that your mobile browser was getting. It solved itself to some extent but that caused another major kind of wave of adoption of ad blockers because it was like, "Look, you know, I can't even read the content because there're so many ads coming down my 3G connection."
The Register: As the web has evolved from a document-based model to an application-based model, it's become more complicated for web users to alter content on the fly. Is the web moving back toward a model that disempowers client-side intervention?
Hoffman: Because of the third-party nature of the way that advertisers want to be able to have their ad run in different places, that makes it hard to design the kind of ad delivery network where you can't figure out what's an ad and what's not. I'm not saying it's not impossible, but it's hard and doesn't fit the kind of economics on the ad delivery side very well.
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You're watching this happen on a different level with the whole Google Chrome first-party cookie battle – I'll pause and add that one of the big parts of the Internet Fast Forward story was we were the first cookie management. We were the ones who made people aware that these cookies were there. We built in what now you assume is part of the browser. It was not part of the browser until we added in Internet Fast Forward and Cookie Cutter.
So I understand why Google certainly wants to be the only source of truth that you're viewing as you take that bitstream. But there's a whole lot of people for whom that's not exactly in their best interest, and that includes Amazon and Apple. So because you have that kind of multi-party effect, I think there's always going to be a decent corpus of ads that are blockable.
In some ways I think ad blocking had an influence on what Google did initially. It was, you know, let's make the ad content feel more like the actual content and be unobtrusive. I also think Google is shying away from that these days. It's getting harder and harder to see what's the webpage and what's the ad. Fundamentally making the user experience of the web better in that way was never a bad thing for the influence that ad blockers had.
The Register: Has privacy become a more viable business today than it was back then? Two decades ago, it was a tough sell.
Hoffman: I think it's changed dramatically in the last few years, and a lot of it has to do with the Snowden revelations. But back then, you're absolutely correct. One of the hard things at PGP was selling PGP to people who actually needed it. It was kind of like, "Oh what, do I have to?"
Individuals should make a choice about whether they want to be monitored with a cookie or not. They should make a choice whether they want to download that ad or not
One of our best customers – I guess I can tell this story now, it's probably old enough... So the Boeing 757 has Rolls-Royce engines on it in the EU. And that was because, when they were trying to get airworthiness certification, the French intelligence service was reading their email. And so every morning when they came in, the French knew exactly what the Boeing breaking point was, and so the negotiations went horribly for Boeing. And the NSA, of course, was watching the whole thing go down behind the scenes, knowing exactly what was going on and tipped Boeing.
So until you had that kind of experience, you know, why would you pay for security? Like, it's email, right? This is safe. But then I think when people fully realized that everything they're doing is being recorded to hard drives in Utah, I think it changed people's view about whether or not they'd like security or whether or not they'd pay for security, to some extent.
The shift to Signal, the shift to secure WhatsApp... It's interesting to see normal folks actually going, "You know what, I would like Signal in the integration, please."
I think that's also happening [because] the financial infrastructure is getting a bit weaponized. The United States uses it to project power on all sorts of countries that maybe, or maybe shouldn't, have that power projected on them. And there's also a politicization of [payments]. It's easy to do a payment in the United States, but don't be near the sex industry and certainly don't be in the gun business. That's also driving I think a different kind of, "Do I want to have ultimate control of financial privacy or not?" At least to have the escape mechanisms to be able to do it.
The Register: Which brings us to the subject of cryptocurrency, which you're currently involved in. It's a short line between cryptographic security and cryptocurrency.
Hoffman: We were really excited about the PGP opportunity because it was like, "Look, we all need to be able to know who we're talking to and only who we're talking to," and, you know, we could all kind of look forward and know how we got to the Five Eyes and the NSA.
A college buddy of mine was a subcontractor to the NSA, effectively, and he was out intercepting radio transmissions. So any transmission was going to be intercepted. The neat thing is being able to push that strength and that power out to the individual's hands. That's kind of the unifying theme here. Individuals should make a choice about whether they want to be monitored with a cookie or not. They should make a choice whether they want to download that ad or not. They should be able to make the choice about whether or not they want financial privacy or not, whether they want communications privacy or not. And those things need to be real, and they need to be usable and they need to be adoptable by mere mortals.
The Register: Is that becoming more feasible or less so?
Hoffman: One of the sadnesses of the current cryptocurrency efforts has been that digital money should be easier to use than cash.
Bitcoin is this amazing thing, it created an infrastructure that many of us didn't believe was possible. But you know 11 years ago you kind of didn't know what the application stack needed to look like. What would you want to do with a Bitcoin?
Certainly Ethereum came along to try to answer some of that but it wasn't necessarily the best technology and the best architecture and really thinking through what you could do at scale and with more security.
We think we've actually unlocked that with Chia and we're just starting to really talk about it because you know we launched Chialisp on May 3. It's gonna let you do things like self-custody and crypto safer than your debit card, safer than your cash.
It's things like rate-limited wallets. If you leave your wallet in a restaurant or a bar, you may come back the next day and cash is gone. If you leave a digital equivalent using Chia and you have it set for 1/7th of your spending money per day, then 1/7th is gone but 6/7th are still there. And those rules are enforced by the blockchain... That's how this all should work and people just haven't been building it that way.
The Register: Do we need more regulation around cryptocurrency? It seems there's a lot of opportunity in the cryptocurrency market but not much to reassure non-technical people that they're operating in a safe environment.
Hoffman: I totally agree with you that regulatory clarity is what's needed. However, I actually believe that the current regulatory environment, when embraced correctly, actually works quite well. There is a tremendous amount of effort being put into overturning the 1933 and the 1934 Securities Acts. And it's hilarious to me because the people kind of pushing on that have no idea of the history. The history of those two acts is to stop exactly what everyone is trying to do and ICOs and SAFTs. We've seen the show in the '20s, about 100 years ago, and it does not end well.
We have never sold our coin for investment of money or money, period, full stop. And it's a great way to not be a security because I've never promised an investor that coin rates would go up by buying my coin. Now I have had investors buy my stock and my Delaware corporation using the 400-year-old technology of a joint stock corporation...
My commodity is truly decentralized at its core, very, very similar to Bitcoin. The only difference being that it is using proof of space and time instead of proof of work that it has a Turing-complete Development Language running on top of it.
That new programming environment [Chialisp], it's going to allow us to do things like custody control, asset issuance, and identity that have been really hard to do either on Ethereum or on Bitcoin.
It is scary to self-custody crypto. I mean, I used to be one of the signatories on the PGP software signing key. Talk about a high-value target. Right now if you have 100,000 or a million bucks on a Ledger Nano, you feel like a hell of a target when you're carrying that thing around.
But when you start talking about being able to easily recover it, being able to share a signature, to have more than one person sign a transaction – these are the devilish details that are necessary to make this stuff feel like using a credit card or using cash.
The Register: So after starting three companies and enduring in the industry for something like 25 years, is there any wisdom you might have to share with those hoping to travel similar paths?
Hoffman: There are deep thoughts and less deep thoughts. The deep thought is that reality is a bit of a thin veneer and if you have a sense for both technological and the social, you can often bend reality a bit to a different path.
A college buddy of mine was a subcontractor to the NSA, effectively, and he was out intercepting radio transmissions. So any transmission was going to be intercepted
I'll give you a story that I think really illustrates this. At first, when I was raising money for Emusic, I was actually having a hard time getting private equity and venture capital folks to believe that CDs weren't very good. In hindsight, this sounds hilarious, right? But you're trying to pitch the digital music future to a bunch of at the time 40 to 50-something white guys in Connecticut. I was sitting there, you know, running up against a brick wall.
But I finally figured out a good way to explain the story. I would start my presentation, "OK, who here has a CD changer in their car?" Four hands go up. Right. And I'm like, "OK, so, which one of you remembers the last time you changed the CDs and the CD changer in your car?" Now, I watched them all kind of lean back and [think about it]. And then I popped what was going to become the iPod, but the OEM-from-China version, and said, "Look, this carries your entire music collection, you would sync it wirelessly, ultimately into your car, and you'd have all your music as some of the music. This is the digital music feature we're talking about." And all of a sudden, you know, I'd finally hacked their brain for them, to understand that the thing they thought was OK was actually a piece of crap.
I see this with banking. Unless you've actually recently sent an international wire transfer, you did not know how infuriating that process is. You don't know where it is, you don't know how long it's going to go and you don't know how many banks are going to take obscene amounts of cash off the top of your wire transfer.
The Register: Is there anything we haven't touched on you'd like to mention?
Hoffman: Not really, I just want to underscore the importance of individual empowerment and using these tools so that real people make their own choices. ®