On November 15, 2016, the Detroit Police Department was notified that Savannah Rayford, an 11 month-old baby suffering from life-threatening anemia, had been kidnapped. The kidnapper was known: Marquita Dupree, her biological mother, who was deprived of custody because of her mental state. Dupree got on line to see the doctor to whom Savannah's adoptive mother had taken him, and took advantage of the car stopping on the return journey to grab the infant and escape.
The Detroit police were in a race against the clock. The main clue for finding the mother quickly was the mobile telephone number that she used from time to time, but it was not registered in her name. The police investigators fed the number into Thomson Reuters Clear online investigative computer program, and located several addresses linked to the owner of the telephone number. The mother and baby were found within a few hours at one of these addresses.
The event in Detroit is one of many that has made Clear very popular with the FBI, many US police units, the tax authorities, and other government agencies. Feeding an item of information into the program, such as a telephone number, accesses a full portrait of the person linked to it: residential addresses, e-mail addresses, businesses, relatives, social network profiles, and criminal records. In 2015, the program helped bring about the arrest of a former member of the armed forces who threatened to shoot up a school in San Bernardino, California, and a wanted sex offender in Vermont was caught by using the program.
US law enforcement authorities are probably unaware that a large proportion of Clear's database was created in the Petah Tikva industrial zone at a company named Pipl. Company founder and CEO Matthew Hertz has taken great care to stay under the radar since founding the company in 2005. "I like anonymity," he explains in his first Israeli media interview.
"I agreed to this interview only because I realized that the company is paying a price for its anonymity. Most of our customers in Israel didn't know that we were here before they started working with us. Now that we are trying to recruit employees here in competition with companies like Google and Facebook, we need people to know who and what we are; otherwise, it will be hard for us."
"Google doesn't know how to find people"
Anyone who has tried using Google to search for particulars about another person through a telephone number or e-mail address knows how useless the effort is. Hertz spotted this weak point already in 2005, and decided to build a search engine that would do more thorough work. He was only 27 years old at the time, but was already an experienced entrepreneur who had sold two companies. "This was a difficult development project. I took my time at first. After two exits, I thought that I would work part-time - only 30% - but it quickly became interesting, and since then, I have been working time and a half."
Pipl's main asset is a focused identities search engine that has generated profiles to date for over three billion people with some online presence. In addition to the information gathered from open online sources, the profiles are enriched with billions of information items from offline sources, such as telephone directories and lists of professionals. "We thought that we would make a depth engine for everything that Google doesn't find, but we very quickly realized that the product was excellent mainly in finding people. We were far beyond the technology that people expected at the time, and we found things that no other engine found. Google has made no progress in this area, called deep web, or in searching for people, for the past 10 years. You will never be able to get such profiles on Google."
The beginning was modest. "We started as three people, and simply sat down and concentrated on development. Once we came out with the product, we very rapidly reached millions of users. We didn't spend a shekel on marketing, but there was exposure through TechCrunch, and things spread by word of mouth. In late 2007, less than a year after we came out with the product, we were breaking even financially. It turned out it not only worked, but that a lot of people wanted it, and as soon as you have five million users, advertisements generate a significant amount of money," Hertz recalls.
Over the years, the company continued to attract relatively little public interest. Pipl yesterday announced that it had completed a $19 million financing round from the Israel Growth Partners (IGP) fund, which invests in companies with at least $10 million in revenue. Following this investment, IGP general partner Moshe Lichtman and partner Assaf Harel will join Pipl's board of directors. This is the first substantial investment in Pipl, which Hertz has financing almost by himself to date, with a little help from family members. Hertz plans to leverage the money raised in order to increase the number of the company's customers from 1,000 to 5,000 this year, and to diversify its products. As of now, Pipl has 75 employees in its development center in Petah Tikva and 30 more in Idaho, where Piple is incorporated for tax reasons. Hertz, who still interviews every new employee, plans to reach 300 employees within a year and close to 1,000 within two or three years.
"How we discovered jewelry fraud"
Like other companies in its sector, Piple's model raises quite a few troublesome questions about privacy. Not everyone wants strangers to know where they live, their telephone number, and their children's names, even if this information is circulating on the web. The combination of such databases with government agencies, despite its contribution to crime prevention, is likely to make people shudder. Many people are unaware of the existence of Pipl and services of this type, and in the post-Edward Snowden era, with Facebook and Google having to deal with the question of their effect on privacy, Pipl's product may be effective, but it is also causing alarm.
Hertz, of course, tries to soothe the criticism. He says that he has refrained from selling advanced functions of systems to dictatorial regimes, carefully selects his company's business customers in order to prevent misuse, and adds that the company refrains from displaying especially sensitive information, such as criminal records that do not appear on the Internet. "We're very aware of the fact that despite all the open sources, in the end, this is information about people, and there has to be control over it. If someone wants to remove information, we'll do it, for example to disconnect a Facebook account from his profile. We explain, however, that such removal has a price. If a risk management company or a company that wants to prevent financial fraud uses our services, certain deals you make are liable not to pass," he warns.
"Globes": How many people ask you to remove information?
Hertz: "Maybe 10 a day."
Up until 2014, the company generated most of its revenue from the version of its search engine open for public use, which includes only basic profiles. Since then, however, it has accumulated nearly 1,000 business customers that generate over 95% of its revenue. The customers use Pipl's engine to verify identities, prevent ecommerce fraud, enrich information in customer relations management (CRM) systems, conduct inquiries, provide financial services, and recruit personnel. In addition to the US government, many other governments use the system, among other things through the company's strategic partnership with Verint Systems Inc. (Nasdaq: VRNT) (when we asked about the Israeli government, Hertz refused to answer). In the business sphere, nearly 200 online websites use the product, in addition to companies such as Microsoft, IBM, Walmart, eBay, Twitter, BBC, and Oracle.
"In the past, when you ordered a delivery from overseas, and the address you gave was different from the credit card company's address, the delivery was stopped in most cases. They had to call you or the credit card company in order to add the address - a complicated process that caused a huge loss. This almost never happens now, for a simple reason: as soon as you type in your telephone number, they know who you are, and realize that the address is your work address or your mother's address. All of this takes place behind the scenes. An enormous number of transactions went through us on Black Friday," Hertz says.
The use of the system to prevent fraud is not confined to verifying the purchaser's identify on the web. Hertz mentions cases in which swindlers saying that their credit cards were used without their permission and demanding a refund were caught by cross-referencing information. In one case, customers claimed that the jewelry that they bought had not reached them, but the program found a photograph of the jewelry on one of the social networks. In another case, a person was photographed in the Caribbean Islands who claimed that someone else had used his card to order a plane ticket.
Another use of Pipl is in customer management systems. Companies like American Airlines and Oracle use the system in order to discover whether a new customer is a young student or an employee of a large company, to whom an experienced salesperson should be assigned. Among other things, Twitter uses Pipl's technology to obtain information about users behaving like trolls or threatening their friends.
"I studied in yeshiva, and then I cooked shrimp"
Throughout the conversation, Hertz tries to avoid talking about himself, but gives in after several attempts. "I come from a haredi family in Bnei Brak. We are nine brothers and sisters. I'm the middle one. Several of my siblings are no longer religiously observant. My older brother is a brain surgeon. My younger brother worked at Pipl when he was a student at the Technion Israel Institute of Technology, and built the previous version of the search engine. I'm not concealing this. Everyone around me knows where I came from, but it is very easy to make this the main story, and I don't want that."
Hertz left the yeshiva (Jewish religious seminary) and religion when he was 17. He moved to Tel Aviv and studied for his matriculation exams. "I learned nothing in the haredi education system, but my mother was an enlightened type - one of the few haredi women with a degree at that time, and I learned a lot by myself from books with her help. I was exposed to geography and mathematics. I became a child who asked questions. She taught me to think. My first job after I left yeshiva was assistant chef in a French restaurant, because I knew how to cook. I spent time in the kitchen with my mother since I was nine years old."
Was the restaurant kosher?
"It wasn't. They had shrimps and steak in cream sauce. It was the Tamara restaurant."
That is a big change.
"It was something that I had been thinking about for a long time. At age 12, I already had questions and doubts. And you know, there is no answer. You can put it off again and again, but in the end, a point will come when you can stand on your own two feet. While I was still at yeshiva, the IDF decided not to draft me. They considered me to have only four years of schooling, and considered putting me in a unit for dropouts."
Just before his 19th birthday, Hertz decided to study computer science at the Open University, and to work as a salesperson for human resources management software. At one of his work meetings at Flying Cargo, when then represented FedEx in Israel, he thought about founding an ecommerce website for deliveries in Israel, on which the delivery companies would compete for offering the best price. He managed to get to the global IT manager at UPS and raised a little money from the companies, but gave it back after he discovered that there was not enough activity to justify the website's existence. "Keep in mind that this was in 1999. Internet then was like bitcoin is now - you got money right away. When I look at this now, it really wasn't logical to give a 20 year-old entrepreneur money on his first attempt."
In that same period, during which he spent a large part of his time in the US, he changed his name from Moti to Matthew. While going back and forth between Israel and the US, he completed his degree in computer science at Tel Aviv University. He founded his first mature startup, Ombek, when he was 23. The company developed a service for transmitting SMS messages between different networks at a time when it was not yet taken for granted. "The exit was a merger into WSC, and it later underwent more mergers and acquisitions. We succeeded in reaching three mobile providers in the US three or four months after launching the product. When I left, it was installed in Sprint, Nextel, and other companies."
He founded his second startup, Mail-Info, together with former ICQ CEO Ariel Yarnitsky. The company developed a product capable of determining whether an e-mail sent was received or rejected as spam. The company was acquired by Speedbit in 2005.
You said that you couldn't be an employee. Why is that?
"Being an entrepreneur is not being a soloist. I'm still in a company, and I can't things by myself. But if things have to move, then they move. If you have a dream and you want something to happen, you don't have to persuade a great many people who may or may not agree. You simply go to the end with your vision and make things happen, even if they laugh at you and tell you to stop smoking whatever you're smoking."
Published by Globes [online], Israel Business News - www.globes-online.com - on January 16, 2018
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