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Security - Monday, June 18, 2007

The LifeLock X-Files

When we posted on the scandal at Lifelock late last week the story was only marginally interesting as it was so black and white. Here you have an identity protection startup founded by a seriously shady dude. The startup is backed by the likes of Bessemer and Kleiner Perkins who get egg on their face by lending respectability to the company. Several posts by Wired, Mashable, Valleywag and others also report the stark reality.

Over the weekend, however there when can best be described as a backlash. Techcrunch agrees with the sordid facts but asserts that the reason LifeLock is a story is because Experian, Transunion and Equifax want to destroy Lifelock. We don't understand the case against the credit agencies well enough but the logic seems to be that ID protection services like Lifelock are threatening because the big agencies also want to sell you ID protection.

This post was followed by Bessemer VC's Dave Cowan, lashing back at Valleywag for making the issue personal. Cowan indicates that he knew all about Lifelock's founder's checkered past, but gave the guy a pass because he has bipolar disorder. Cowan insists that he knew all the sordid details on Lifelock, but believes the company provides a valuable consumer service and is making money hand over fist.

Later still, Lifelock investor and WallStrip founder Howard Lindzon calls Techcrunch out for falsely impugning Lindzon's reputation. Writes Lindzon: "Mike Arrington of TechCrunch has chosen to carefully craft a post that implies me being accused of some bad things as it relates to Lifelock and the recent gossip. It’s just wrong, a lie and a real sloppy, shitty thing to do (but definitely premeditated). He obviously has a bone to pick with me and is thinking of me often."

All of these reactions and responses were unexpected. A conspiracy by the credit unions to bring down Lifelock is great dish but Techcrunch has to connect the dots or it shouldn't try to make the case. Just because you get a detailed document in PDF format doesn't lead a rational mind to the conclusion that it's the credit agencies that did it.

Cowan's declaration that he knew he was dealing with a liability but a liability that knows how to make coin is just poor rhetoric. Tony Soprano may be bipolar and he knows how to make money but Bessemer would lose respectability for itself and its portfolio companies if it were to back him.

It would be great to see TechCrunch nail the credit agencies with proof that they tried to discredit Lifelock, but it wouldn't be Pulitzer Prize worthy as discrediting competitors is the law of business jungle. Cowan is in a bind. How do you defend your stud startup after it has behaved badly without sounding like an apologist? Shoving Valleywag isn't the answer. Better to reassure Lifelock subscribers that you are pissed and that there is going to be an overhaul of Lifelock to ensure that no ID thieves are employed as management or staff. Remember, you might have dined with the LifeLock gang and love them like brothers, but all we the consumer knows are the Las Vegas mug shots.

Read - The Very Organized Hit Job On LifeLock
Read - Bessemer Bamboozled?
Read - Howard Lindzon blog