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Haynes is hoping he'll get a lot in return from that moment of inspiration. And, he believes, millions of customers will one day see some gains as well. Last September, a few months after unearthing his cookie file, 32-year-old Haynes quit his job at Chicago venture-capital firm GTCR Golder Rauner, moved to Los Angeles and founded mValue.com. The idea: give Web surfers a tool that lets them decide who can access their personal information, and -- if they choose -- receive cash in return for revealing it. GOOD TIMING. mValue hit the market with impeccable timing: Spurred by consumer concerns, lawmakers in Washington have proposed dozens of bills calling for privacy on the Internet. Many of these would prevent companies from accessing personal information about individuals without their knowledge or permission. "Any legislation that creates a market in which consumers control their online demographic data works in our favor," Haynes says. Adding fuel to the fire is the recent backlash against Web advertising giant DoubleClick, which gathers demographic data about consumers. Early this year, DoubleClick sparked a Federal Trade Commission investigation after it revealed plans -- now abandoned -- to link offline data such as names, addresses, and catalog purchases with surfers' online profiles. Haynes believes the controversy will encourage large corporations to distance themselves from DoubleClick and other online ad networks. "These companies don't want people thinking they are consumer-unfriendly" and will prefer working with mValue, which is up front about the data it gathers, he says. Privacy experts are taking notice of the startup. "It's an excellent concept," says Alan Westin, president of the Center for Social & Legal Research and a privacy consultant to several government agencies. According to a survey Westin commissioned, 53% of Web surfers would be willing to reveal their demographic information if they knew how it was going to be used and if they received something in return. "Offers like mValue will have tremendous appeal to these people," Westin says. TARGETING BEHAVIOR. On one level, Haynes's formula isn't terribly unique. Members of mValue can earn 50 cents an hour for Web surfing, not unlike dozens of other sites such as AllAdvantage.com and CashSurfers.com that pay users to spend time online -- and, the sites' backers hope, look at ads. On top of that, mValue allows users to hand-pick which companies can place cookies on their computers, through a pop-up window that appears each time a new site is accessed. Again, not unusual. Several other companies, including PrivaSeek and Privada, allow members to determine how their personal information is disseminated over the Web. But mValue throws in a twist: It also ponies up for demographic information. Through a service called mExchange, advertisers can contact individual mValue members and offer them a payment -- generally from $1 to $10 -- in return for their age, gender, Zip Code, and other information. Members can specify the data they want to sell, and if they're not satisfied with the amount of cash on the table, they can bid up the price. Haynes believes it's a winning proposition for advertisers as well as consumers. "We're allowing consumers to unlock value they couldn't get otherwise," Haynes says. What's in it for advertisers? Say that auto maker Nissan wants to figure out how to reach women aged 18 to 34 -- a group the company believes would be prime customers for its Sentra sedan. Through mExchange, Nissan could flash messages to mValue members who fit that demographic, offering to buy their click-stream data, which tell Nissan where those women go on the Web. "Then we can turn around and craft a more targeted advertising message, and we can integrate it into sites that those women are visiting," says Steve Bava, e-business marketing manager for Nissan. "We have been trying to move away from targeting our advertising just by demographic characteristics to targeting it to actual consumer behavior. This is a great solution." BROWSER BAR CRASHES. Nissan is something of a pioneer. To date, Haynes has signed up just 16 other advertisers. But he has brought in a dozen salespeople in an effort to boost that to more than 200 by this autumn. To meet that goal, he's going to have to persuade thousands of Web surfers to download the mValue browser bar. To beef up his customer numbers more quickly, mValue will soon offer its browser bar to Internet service providers and portals that want their own, house-branded version of mValue for their customers. So far, mValue has 250,000 members and has raised $6 million in venture capital. Haynes says he'll need at least 1 million members for the company to catch fire among investors and advertisers. He faces plenty of hurdles. For starters, setting the system up has been more trouble than Haynes anticipated, says Rick Smith, a venture capitalist and mValue investor and board member. "There's a ton of information being sent back to mValue all the time, and it all has to be tracked and stored," Smith says. And early versions of the browser bar were prone to crashes -- effectively denying users payments for time spent online, says Mary Ann Hyder, a lawyer in Kittery, Me., and an avid user of pay-to-surf products. Haynes appears to have sorted out the worst of the problems, though. After months of troubleshooting, mValue released a new browser bar in May. Hyder says it now operates without glitches and that the program has become her favorite among such services. "They pay well, they have a very good search engine, and they have privacy options that others don't have," she says. Haynes may not have the market to himself for long. The Washington-based Online Privacy Alliance says there are some 700 products and services designed to give consumers control over their personal information on the Web. And rival PrivaSeek has confirmed that it will launch a competitor to mValue's mExchange service shortly. Nonetheless, Haynes remains confident that his model will prevail. "Your personal data is very valuable," Haynes says. And so far he's the only one who offers consumers the chance to get cash for their data. If that simple notion catches on, Haynes may well get a big payoff in return for those cookies he found buried in his computer. Weintraub covers technology from Business Week's Los Angeles bureau |
