The Wall Street Journal

Spam, or Not?

Plaxo's Service Stirs Debate

By MYLENE MANGALINDAN
Staff Reporter of THE WALL STREET JOURNAL

Lately, many internet users have been receiving e-mails like this: "Hi, I'm updating my address book. Please take a moment to update me with your latest contact info."

The messages seem to come from people the recipients know, and the intent -- automatically updating senders' electronic address books -- seems innocuous enough. But the messages are actually from a start-up called Plaxo Inc., and they've stirred up a storm of protest.

"PLEASE take my e-mail ... OFF of your list IMMEDIATELY!!!! I DO NOT want to receive any more bogus e-mails," read one note the company received. Another Internet user sent repeated demands: "WARNING -- STOP SPAMMING!"

Plaxo says all it's doing is offering a service updating e-mail users' electronic address books. It works like this: People who register with Plaxo download its software to their computers. That software connects a registered user's e-mail address book to Plaxo's servers, which make a duplicate copy accessible only to the user. The idea is that Plaxo will safeguard the data if the user's own electronic address book is lost, erased or damaged in some way.

As part of the service, users can tell the Mountain View, Calif., start-up to e-mail some or all of the people in their address book, asking them to confirm, or update their contact information. Users can have updates done as often as they wish. Plaxo generates the e-mails, which contain the address of both the company and the registered user. What recipients see, in the "from" line of their e-mail, is only the registered user's name. But what has triggered so much concern is that when recipients hit a reply button to update their contact data, they find themselves at the Web site of a third party, Plaxo.

That's not the only reason e-mail recipients are up in arms. Some recipients worry about what Plaxo will do with the data it gathers. When the Internet bubble burst in 2000, many Web surfers were burned by failed dot-coms that sold or traded their users' records when they went bankrupt or were acquired. Other critics question how secure the contact information is once a recipient hits reply and sends it off to Plaxo's server. Some organizations fear that Plaxo's software, once inside their own servers, could act like "spyware" that sends other forms of confidential data to Plaxo.

The security issues are of such concern, that several federal agencies, including the Health and Human Services Department and the White House's information officer, Carlos Solari, have urged their employees not to use Plaxo. A Pentagon official also worried that his employees' highly sensitive contact information could be copied from Plaxo's computers and potentially misused or hacked.

And once someone sends contact information to Plaxo, that person can't delete it either: Plaxo says that's because the data belong to the registered user who requested the data to begin with. That doesn't sit too well with some, such as New York entrepreneur Louis Tharp. He calls Plaxo "deceptive opt in" -- a common feature of spam -- because it takes away "the personal control we have over our own privacy," he says.

But the service also has plenty of fans, including Keven Ellison, who uses Plaxo to maintain as many as 4,000 entries for friends, customers, vendors and others in his computer address book. The marketing vice president for CU Direct Corp., Rancho Cucamonga, Calif., which provides technology for processing auto loans, says Plaxo is especially helpful when he's traveling and needs a contact's information. "It's a great product, it's made my life a lot easier," he said.

Plaxo says its e-mails aren't unsolicited mass-mailings from unknown senders. Registered users must know the people the company is contacting, Plaxo says, otherwise they wouldn't have the recipients' e-mail addresses. Often complaining e-mail recipients who say they don't know the sender, did in fact know that person, says Rikk Carey, Plaxo vice president of engineering. The recipient simply forgot a previous connection.

Plaxo also says it won't sell or distribute the personal information in its database, and that if the company closes down, it will notify registered users of the shift and give them a chance to delete their accounts. The company also tweaked some of the most controversial aspects of its service. For example, now recipients of a Plaxo e-mail can tell the company to notify the sender they don't want to be contacted again, and they also can tell Plaxo they don't want to be contacted by the company again. And if registered users of Plaxo get cold feet, they can delete their accounts completely by talking to the company, Mr. Carey says.

As for listing the user -- not the company -- in the "from" line of the message, Plaxo says it plans to require senders to include their company name and a phone number, to help e-mail recipients more easily identify the senders. "We want to keep you [the registered user] connected to the people you know," said Sean Parker, one of Plaxo's three co-founders. But, he also acknowledged the flood of concerns his company has received about control over the information Plaxo gathers. The new features it has added, he says, is aimed at "giving control to everyone, users who have chosen to download Plaxo and giving control to people who receive update requests."

Plaxo doesn't charge for this service as yet, because the company says it wants to get as many clients as possible. The company does charge a fee if a client wants to reach a live person for technical support. Plaxo says it has yet to develop a business model whereby it can turn a profit on the service. Backed by venture-capital firm Sequoia Capital, Menlo Park, Calif., the closely held company has raised $13.5 million in funding and boasts tech luminaries on its board, such as former Yahoo Chief Executive Tim Koogle.

Even amid all the controversy, Plaxo is gaining die-hard fans. Mark Hatcher, a 42-year-old Lake Worth, Fla., photographer and artist, reconstructed 200 addresses when his computer crashed, thanks to Plaxo. "Plaxo saved me tons of grief," Mr. Hatcher said. "I told Plaxo, 'You guys are life savers.'"