A Startup Looks for Business in Secrecy

By Douglas MacMillan and Danny Yadron 

To stay anonymous in the Facebook age, Nico Sell carries black business cards with no phone number or email address, refuses to say her age and wears sunglasses in photos to thwart facial-recognition technology.

Now, Ms. Sell is testing whether there is a business in that much secrecy.

This week investors pumped $30 million into Ms. Sell's startup, Wickr, a mobile-communication app that uses high-tech encryption to shield messages from prying eyes. The messages also self-destruct.

The investment, led by James Breyer, a Silicon Valley venture capitalist and early Facebook backer, is among the largest in consumer-privacy technology since Edward Snowden started leaking classified secrets last year. Wickr's new investors also include CME Group Inc. and Cyprus-based videogame maker Wargaming, maker of the "World of Tanks" series.

The cash infusion also puts pressure on Ms. Sell to speed her transition from hacker hero to profitable entrepreneur. Ms. Sell is best known as an organizer of Def Con, a hacker conference in Las Vegas where speakers sometimes wear masks and detail exploits like hacking into a pacemaker.

Ms. Sell founded Wickr in 2012 with the goal of offering government-grade encryption to the masses. The free app for iPhones and Android phones is now used to send about one million messages a day, from discrete business communication to parents who want to privately relay notes to their children, she says.

Wickr's potential as a business hinges on how well it lives up to Ms. Sell's bold claims about its security, based on a proprietary type of encryption. Users get a special key for each message session that is used to decode jumbles of letters and numbers. If a spy agency intercepted this traffic, it'd be unreadable, Ms. Sell says.

For the Internet's leave-no-trace crowd, that is an enticing pitch.

But cybersecurity experts and mathematicians said it is difficult to create encryption that is both unbreakable and easy to use.

To date, there has been no public audit of Wickr's encryption setup. "Having a third-party assessment would go a long way in meeting that expectation," said Erik Cabetas, founder of Include Security, which tests apps and consumer technology for security holes.

Ms. Sell says she is hesitant to publish too much about her app's inner workings because she considers them a trade secret. That means users have to trust her, essentially.

Wickr's app is free, but in coming months it will begin charging users for extras, like video calling and graphical stickers (one depicts a black helicopter), Ms. Sell says.

She also plans to license Wickr's encryption technology for use in other programs and apps. One app for a financial-services company will store messages for seven years -- the period required by the U.S. Securities and Exchange Commission -- and then delete them. Wickr will make additional revenue by charging outside developers for its security tools.

The licensing effort could help Wickr compete in the crowded field of mobile messaging apps. Hundreds of millions of people already use popular apps like WhatsApp, purchased by Facebook in February for up to $19 billion, and Japanese chat program Line. Instead of competing directly with these services, Wickr could help improve their underlying security, said Mr. Breyer.

"I believe that what Nico is doing is extremely complementary to Facebook and how Facebook is developing its messaging strategy," Mr. Breyer said. "There is room for what Wickr is doing to greatly enhance the effectiveness and the utility of messaging."

Write to Douglas MacMillan at [e-mail] and Danny Yadron at [e-mail]

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