From: Forbes
Parmy Olson
The Swiss reputation for low taxation and secrecy is well known when it comes to money, but it’s also becoming a popular place to store data, thanks to the country’s strict, data-protection laws that are at odds with those of the European Union.
While U.S. encryption services like Silent Circle are planning to establish servers in Switzerland for that reason, a scrappy startup called PrivacyAbroad has begun promoting itself as a rare conduit to Swiss data services.
Run by a small team of expats and Swiss nationals, the company sells an encrypted e-mail service in Switzerland costing a relatively expensive $92 a year, an annual subscription to a virtual private network for $130, and a data storage service called Digital Safe, costing $70 a year. A cellphone encryption service is coming in September, costing less than $100 a year.
The company is betting that American businesses and individuals will buy Swiss to better avoid prying government eyes in the wake of recent revelations about the NSA and concerns about cloud security. All services it sells operate out of Switzerland, with data stored in the country too — buyers are paying a premium for geography, since you can subscribe to VPNs for less money in the U.S. and other parts of Western Europe.
What’s unusual about PrivacyAbroad is that it avoids providing any of these Swiss services itself, instead marketing them on behalf of two other local companies: Swiss hosting service iWay, which provides the e-mail service, GlobeX, which provides the Digital Safe, and local data programmers that the company has hired on a contractual basis to create their sole in-house product, a VPN.
David Baron, an American expat who moved to Bern, Switzerland from Atlanta, Georgia two years ago, established PrivacyAbroad in January 2013. He and his co-founder, retired pharmaceutical executive Richard Webb, financed the company 50-50, and say the firm became profitable after its first month in operation. Baron says revenues have risen by almost 200% since launch.
That success came from approaching their two Swiss partners at the right time, Baron says, and offering to sell their privacy services to Americans. Baron says he has amassed a network of 300 part-time sales associates in the United States, all working on a 25% flat commission for each service sale. He calls the sales associates “consultants,” and claims they can make $500 to $1,000 a month, in profit.
They have mostly come to him via word of mouth. “People will email us and say, ‘Hey I’m interested in being a consultant,” says Baron. “I get a lot of those emails every week. We have not advertised. We haven’t see the need.”
Baron does not have a technology or security background, but began his career in the plastics industry before moving into sales and marketing. His company has about 10 full time staff, including am IT support manager in Palm Springs, Calif. and seven bookkeepers and administrative assistants in Switzerland.
He moved to Switzerland with his wife two years ago to be close to their son, who had enrolled in a local International Baccalaureate high school. “It was a huge [step],” Baron says “but we didn’t just want to send him.”
Baron set up the company and marketing network in January 2013 because he saw a need. “I’ve been a Gmail user for years. I got sick of the spam and got tired of my email being hacked… That’s what led to the VPN. So that started with the email to flush out the spam. It started really simple. We didn’t think it would grow to this magnitude and catch on, and the news that was coming our way.”
Baron says he’s not aware of any other Swiss-based companies that have the U.S.-marketing network model that he has set up. However, data centers in Switzerland have been seeing renewed interest in recent months following concerns about the breadth of U.S. government surveillance operations, both domestically and internationally.
Switzerland’s biggest offshore hosting company, Artmotion, says its revenues grew 45%-50% last year, with large clients that include oil and gas companies who typically approach the Swiss company after data has already been stolen.
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