The announcement was made public in a blog post by CEO and founder, Jack Cator. In the post, Mr. Cator used inspirational terms such as “joined forces” and “teaming up” with AVG. It is, however, a good, old-fashioned acquisition we are dealing with here.
The selling price is reportedly $40 million with an additional $20 million bonus if a certain growth goal is met within a defined timeframe.
Not soon after the announcement, HideMyAss announced a price drop on it’s on 1-month subscriptions to it’s premium VPN product. The price was reduced from $11.95 to $9.95. The prices on 6 and 12 months subscriptions was unchanged. This move is clearly an attempt to grow it’s userbase and thus meeting their acquisition goals for the additional $20 million bonus.
HideMyAss has approximately 250,000 paying subscribers worldwide to the premium product. Beyond this, it offers a range of free proxy tools for online anonymity and Internet security.
With it’s current userbase of 250,000 paying customers, the acquisition deal equals an impressive $160 per customer. While this number sounds high indeed, we believe the reasoning behind the premium price tag is two-fold. Existing customers are in general satisfied with their product and tends to keep paying for the product for a relative long time. Secondly, HideMyAss has millions of users on their free products, and AVG is betting on being able to convert these users into paid subscribers through lowering their prices.
AVG themselves has a reported 202,000,000 active users on their own across multiple applications. Marketing HideMyAss to their own customer base could prove extremely lucrative, even with a low conversion rate of, say, 1%,
HideMyAss was launched in 2005 by Jack Cator. By the time he registered the domain name he was 16 years old. The initial version of HideMyAss was a simple web-based proxy.
In 2009 HideMyAss announces their Pro VPN service. By 2010, Mr. Cator incorporated the business and appointing himself as CEO. The name was initial Netco Solutions Ltd. but he changed it’s name to Privax in 2012. Since then, HideMyAss has grown into a world-wide business.
The British daily, The Guardian, recently published a lengthy feature on Mr. Cator which described how he started a multi-million-dollar business from his room in his parent’s apartment.
We’ve reached out to Privax / AVG to find out if the acquisition will result in leadership changes at HideMyAss. They’ve reported that Jack Cator will stay in a leadership role as CEO of Privax, although he may spend a little less time on the day-to-day business.
AVG Technologies is a Czech company formed in 1991 by Jan Gritzbach and Tomáš Hofer which specializes in computer security software. Their products include AVG Internet Security and AVG Anti Virus.
What does the change mean for existing users? At VPN Creative, we’ve been recommending HideMyAss to our readers for several years. It’s basically a solid product. For now, our advise it to keep it while monitoring future development. AVG has a proven track record of building security products, albeit none of us at VPN Creative are using any of them ourselves.
It’s definitely an interesting development and we always appreciate a little shakeup in the industry. AVG has a tremendous opportunity to become market leader in the growing VPN industry, but if they ruin the core product offering of HideMyAss, luckily as a consumer, there’s plenty of other great VPN providers to choose from.
Update: This article was updated with details on CEO Jack Cator’s role in Privax following the acquisition.