by Adam Tanner
As rivals ran into turbulence, the Monahans began to recover. They had avoided some of the industry’s more dubious tactics, such as subscribing users to the service after one mistaken click. They also tried to differentiate themselves by offering a money-back guarantee on searches. Between 15 percent and 20 percent of users took advantage of the offer. Sure, some users complained, but the Monahans escaped high-profile lawsuits and inquiries. “As the site got better and as our customer base grew larger and as we made more updates and understood the customers better, that’s ultimately how we survived the Intelius price drop. We had enough customers that kept using us,” Matthew says.
Building on the cell phone ID service, the brothers started gathering more information on people. They wanted to compete against the more comprehensive offerings of rivals but in what they called a privacy-friendly way. They figured out who were the personal data wholesalers and started frequenting the annual conferences big data firms attend, like that of the Direct Marketing Association. Some vendors initially resisted working with the baby-faced brothers, but they gradually warmed as the Monahans established a track record. For their part, the Monahans found some of the personal data aggregators sleazy and some of their rivals a bit unsavory. But they thought transparency would help them win market share over the long term.
“There are a lot of people, they are not bad people, they are just aggressively trying to make money, very aggressively,” Brian says. “You’re talking to these people who are like, you know, creepy and weird and not someone that I would ever invite to my home and not someone I would want to spend time around, but not evil. They are not trying to hurt people even if their business practices do, and a lot of that is because they’re only scraping by too.”
Matthew says dealing with such people was not the most fun aspect of the job. “It has also been an industry—direct marketing as well as data providers—that attracts maybe a little bit more of an aggressive or, I don’t know, renegade style,” he says.
In September 2010, the Monahans launched their first full-fledged name lookup service, PeopleSmart.com, the core of their business today. They raised $30 million in investor funding and christened their parent company Inflection. “By aggregating billions of public records into one easy-to-use interface and managing the information with cutting-edge privacy technology, PeopleSmart makes it fast, easy, and safe for people to find and learn about one another online,” it advertised.19
In gathering public records from government agencies, the Monahans also discovered a deep well of historical documents. Prodded by their mother, who became interested in genealogy after their father’s death, the brothers set up GenealogyArchives.com in 2009 to help people research their ancestry. Eventually they bought the domain name Archives.com for $170,000, an incredible investment at the time, which ended up paying off big. In 2012, rival genealogy site Ancestry.com bought Archives.com for $100 million. The brothers planned two trips with their share of the windfall: to the Burning Man festival in Nevada, which they attended in 2012, and into space, a journey that still lies in the future.
Matthew and Brian Monahan at Inflection’s corporate headquarters.
Source: Author photo.
Inside the Cheez Whiz
So where does the information sold by companies such as PeopleSmart come from? It begins with public records. But rather than contact a myriad of local government agencies such as the Clark County Recorder’s office—as Wynn did to find Las Vegas newlyweds—companies buy from data wholesalers that purchase directly from government agencies. These are typically firms you have never heard of such as AccuData, a direct mail marketing company based in Fort Myers, Florida, and CoreLogic, a data company in Irvine, California.
The process of assembling such data has become dramatically easier in recent years. The Clark County Recorder’s office says that until 2004, firms obtained bulk data on microfiche. Data broker clerks had to painstakingly re-enter the information into their own systems. In 2004 Clark County started providing computer disks, and in 2007 data wholesalers began acquiring the information directly from FTP file transfers on the Internet. Nowadays, it costs $374 to buy a month’s worth of marriage data from the Clark County Recorder’s office.20
After obtaining public data, people-search sites sprinkle in phone book information, details from marketing lists, commercial records, and other information. Through such documents, data brokers know where you live and have lived, your phone numbers—often including cell phone—your neighbors and relatives, educational history, past lawsuits, bankruptcies, criminal history, and many other details. The data broker websites mix all this information together, much as a food manufacturer pours twenty-five ingredients into a batch that becomes a packaged snack. Think Cheez Whiz. Once the Cheez Whiz glops onto your plate, there’s no telling where its ingredients originally came from.
Today Inflection spends between $3 million and $5 million a year to buy and rent the personal data that appear on PeopleSmart.com. Inflection relies on ten to fifteen companies for the bulk of its personal data, with another ten to fifteen adding supplementary information such as educational backgrounds and criminal records. Confidentiality agreements bar Inflection from naming its suppliers, but they are among the big personal-data companies. Top players in the field include Acxiom, Epsilon (see Chapter 7), Experian, TransUnion, and Equifax, the latter three best known to the public for their credit bureau operations.
Wholesale data prices vary greatly, with more reputable aggregators charging more. Some charge 10 cents per address; others charge 50 cents for the same information. Some data wholesalers offer all-you-can-eat plans. Unlike the bargain Las Vegas food buffets, unlimited access to records on most US households costs hundreds of thousands of dollars a year. Government agencies charge anywhere from $60 to $6,000 for access to batches of records, Matthew Monahan confirms.
PeopleSmart gathers personal information from many sources. Source: Inflection (reprinted with permission).
The data wholesalers do not have a prominent public profile. Few consumers know CoreLogic, but the firm advertises itself as “the premier supplier of U.S. real estate, mortgage, consumer and specialized business data.” It employs more than five thousand people to supply a stream of public- and private-sector information into its data files, and reported a $130 million profit on $1.3 billion in sales in 2013.21 Rick Lombardi, the vice president of data solutions licensing at CoreLogic, says the company does not sell to the general public because such a business is expensive to operate.
Another company little known by the public, LSSiDATA, advertises that it can supply more than one hundred million cell phone contacts22 and one hundred thirty million landline records, including unpublished numbers and Voice over Internet Protocol (VoIP) numbers.23 The company obtains the data directly from local exchange carriers and other telecommunications providers. “Contact information is also sourced from cable companies, VoIP providers, CLECs, and wireless carriers across North America to create one of the most robust contact resources available,” it says.24
The United States Postal Service plays a vital role in the data broker ecosystem. Whenever a person changes an address or forwards mail, he or she signs a form whose fine print authorizes the USPS to share the information with companies “already in possession of your name and old mailing address.” Such information allows data brokers and companies to update older lists continuously. For example, the 1999 Gramm-Leach-Bliley Act limited the use of credit header data, the information on top of a person’s consumer credit report. Such information contains name, address, telephone number, Social Security number, and date of birth. Some data brokers use the USPS change-of-address records to keep that old credit header data updated.
A New Rival Emerges
After the hugely successful sale of Archives.com, the Monahan brothers kept reinvesting in their people-lookup business, which had become a major player in the field. By 2014 the Monahans oversaw a full-time team of about ninety people in
Redwood Shores, in the heart of Silicon Valley, and 170 worldwide. Their offices overlooked a verdant park with ponds and ducks; among their neighbors were Electronic Arts and Oracle.
They embrace the Silicon Valley ethic promoting a healthy work-life balance and encourage employees to work from home on Tuesdays and Thursdays, a welcome perk in a region plagued by traffic jams. As at far wealthier Silicon Valley companies, Inflection caters lunch every day and provides snacks, all free of charge. Workers take a daily recess together. The company organizes yoga and massage classes. Beanbag chairs in the conference rooms invite staffers to relax as they work.
The company continues to advertise with Google, as well as with Bing and Yahoo, on eighteen million individual names (John Smith, John Jones, John Williams, etc.), so that an ad for a searched name often pops up to the side of the search result. Because many people share the same name, that number allows PeopleSmart to advertise most of its records. As in the past, Inflection, as the advertiser, pays 10 to 20 cents every time someone clicks. A dime a time adds up to tens of thousands of dollars a day, or millions of dollars a year.
More than ten million unique US visitors came to PeopleSmart.com monthly in 2012 and 2013. Yet the old math in attracting customers still proves true. About 1 percent who click on search ads become customers, and about a third of those pay $35 to $720 for annual subscriptions, with rates depending on how many services and lookups customers use. When people do pay, the Internet connects them to an underground server vault in Santa Clara, a Silicon Valley town home to companies such as Intel. If they call customer service, they reach a call center in Omaha, the same town where Warren Buffett had inspired Matthew years earlier. And programmers in Kiev, first contracted during tough economic times, continue to develop the software powering the site.
As Inflection has tried to establish itself as a transparent and more honest leader in the industry, it has lost money in recent years. Despite tens of millions of dollars a year in sales, Inflection still expects to lose a few million dollars over the next few years as it invests in product development and hiring. (Caesars has also lost money in recent years, having acquired massive debt after their leveraged buyout shortly before the 2008 financial crisis.)
PeopleSmart does not list cell phone numbers, it removes celebrities and VIPs from its database, and it enables users to send email to people they’re trying to locate but does not give out the addresses. Still, some people object that the Monahans sell any data. “I am also wondering why they then have the RIGHT to make a profit off of my private information that I did not authorize,” one person asked about PeopleSmart on an Internet bulletin board. “How are they able to OWN my information when I did NOT sell it to them?”25
The brothers understand such sentiment and say they make it easy for people to opt out of their databases. “It’s a legitimate vein of sentiment that says, ‘Hey, my information is out there and I don’t want it to be out,’” Matthew says. “There is no one who said, ‘Okay, Inflection, you are blessed to be the government’s provider of personal data and you are officially doing a public service here.’”
Both brothers say they can help millions of people reconnect without harming privacy.26 “I don’t think it’s evil. You need to be careful, you need to be responsible,” Brian says. “If people don’t want to be in our database, we don’t want them there. We’ve always made opt-out free and easy and online.”
Not every company is as cautious when it comes to personal data. The Monahans learned about a new rival via spam that highlighted a different approach to marketing such information. “Damaging Information Posted: MAY EFFECT HOW OTHERS VIEW YOUR CHARACTER,” the headline on one email read. “DONT RISK this information staying online publicly too much longer. It could ruin your life by ending personal relationships or even your current career. The time is now to view it.”
Another email read: “RISK ALERT: Very Negative Information Was Added To Your Online File (See what it was). Unfortunate news just came across my desk that I thought you should know about. Negative information was added to your personal online records about 30 minutes ago. There is still time to correct this.”
The email did not mention the name of the sender, but when Matthew clicked on a link, it led to the home page of what became his company’s latest nemesis, Instant Checkmate.
Be Cautious When Using This Tool
Instant Checkmate embodied the clever and brash kind of company seeking opportunities on the Wild West frontier of personal data. By using aggressive marketing, it attracted a stream of new users. Even within a young industry, it surpassed existing businesses to become a leading site selling personal dossiers to the public, with a focus on criminal records. Its rivals took notice.
“Whereas Intelius was our most irritating nemesis and someone that we focused on differentiating ourselves from in 2008 and 2009, Instant Checkmate is now that company. They have grown to be quite large, and their site gets more traffic now than Intelius,” Matthew Mona han acknowledged. “It is arguably our biggest challenge from a competitive perspective.”
His brother Brian added, “These guys are incredibly sophisticated at marketing.”
The success of the Monahans’ early site reversephonedective.com came after they figured out how to place ads for millions of phone numbers. Instant Checkmate also flourished by understanding how to gain attention when the raw data—the criminal or marriage records, for example, or contact details such as addresses and phone numbers—are often the same among competing companies. Marketing savvy is essential, and Instant Checkmate stood out from the moment someone arrived on its site, when an eye-catching pop-up screen appeared.
“This site contains REAL police records (driving citations, speeding tickets, felonies, misdemeanors, sexual offenses, mugshots, etc.), background reports, marriage/divorce history, address information, phone numbers, a history of lawsuits and much more. Please BE CAREFUL when conducting a search and ensure all the information you enter is accurate,” it said. “Learning the truth about the history of your family and friends can be shocking, so please be cautious when using this tool.”27
Coming online a few years after the Monahans entered the business, Instant Checkmate called itself the “most popular background check website on the Internet.”28 It attracted around twenty million unique visitors a month in early 2014, according to the site compete.com. Traffic had tripled from 2012, making the site among the one hundred most visited in the United States, ahead of PeopleSmart and other rivals.29 A counter on Instant Checkmate’s home page advertised that it had conducted more than 180 million searches by the spring of 2014.30
The company’s marketing brilliance lay in convincing people they needed regularly to conduct background searches. For example, Instant Checkmate suggested that parents should conduct online criminal searches to keep their children safe and secure. “Parents will no longer need to wonder about whether their neighbors, friends, home day care providers, a former spouse’s new love interest or preschool providers can be trusted to care for their children responsibly,” the company advertised.31 Children should also do a background search on their parents: “Do you want to liven up the upcoming holiday dinners with family? Background check your folks and see what sort of mischief they got themselves into before you were around.”32
Check Your Mate
When Californian entrepreneur Kris Kibak started Instant Checkmate in 2010 along with a partner, he was inspired by the growth of online dating and came up with his site’s name thinking of “check your mate.” “We were astonished to see how much time was spent on dating sites and their increasing popularity in our society,” he says. “We then thought about the danger that women (and men) could face when meeting someone they met online in person—what if you were chatting online with a sexual predator or a person with a violent criminal history?”33
Since dating sites at the time did not provide background checks, he decided to provide access to personal data, including arrest records.
The FBI does allow the public to look up individual names in its sex offender registry for free, but people have to know such a site exists.34 In addition, that service does not offer a broader background check. “Our primary concerns revolved around sexual predators or other dangerous people using dating sites to find victims,” Kibak said.
“We had an idea I liked (protecting vulnerable people from potential dangers) and that I thought was good for society, and I was excited to pursue that idea.”35 He worked from San Diego but set up a call center in Las Vegas, across the highway from the Strip, down a quiet street at the back of a parking lot no tourist would ever stumble across. It shared the Vegas address with the public as its mailing address.36
Less than six months younger than Matthew Monahan, Kibak is the son of a professor at California State University, Monterey Bay. He grew up in Santa Cruz, a beach town that embodies the California dream, with a boardwalk and an amusement park along the Pacific Ocean. He has ruggedly handsome looks, with some photos showing him with a few days’ beard. Kibak set up his first website at age twelve.37 Before graduating from the University of California, Santa Cruz, in 2006, he had already established several Internet businesses.
From its early days, Instant Checkmate issued many blogs and press releases. Some detailed the merits of conducting background searches before giving away an unwanted pet,38 explained why it is a good idea to conduct a search on yourself,39 and noted how well stocked Instant Checkmate keeps its refrigerator.40 Even if sometimes trivial, the postings and news releases can help boost search engine ranking. Google and other search sites look for links to a website, among other things, to rank popularity when deciding its results.
