Color hacked: recorded private conversations leaked, scandal ensuing

Twitter is negotiating sale to Facebook for $5B; Color’s CEO arrested

Hackers broke into Color’s servers, stole thousands of hours of private conversations recorded by the popular social application, and passed a number of scandalous ones to WikiLeaks.

Early adopters who rushed to install Color did not pay much attention to the fact that the app activates the phone’s microphone and listens to the ambient sounds to determine who is hanging out with whom. If two phones are capturing similar audio, then they must be close to each other. To be compared, the two audio tracks are transmitted to the Color’s datacenter, and everything is logged there, on the company’s servers. Now hackers apparently stole all these recorded conversation, along with all photos, timestamps, GPS data and login information. And some of those records have already proven quite scandalous.

In one, Twitter’s co-founder Evan Williams is heard selling the company to Facebook, for $5B. The rumor that Mark Zuckerberg was negotiating a $5B deal was reported by VentureBeat two days earlier (http://t.co/teBXUHh). “A patron of Palo Alto Sol on California Avenue told VentureBeat that Zuckerberg sat at a table in the back of the restaurant with one other man. At one point, Zuckerberg was overheard saying, ‘So we’ll do it at $5 billion?’” Now the leaked conversation confirms that that “one other man” was Evan Williams. Moreover, he was negotiating the deal behind the back of Jack Dorsey, the other co-founder who had just returned to Twitter as Executive Chairman, displacing Mr. Williams. The latter hardly concealed his frustration with Dorsey’s taking over the company, and was rather willing to sell it than to let Dorsey have the last laugh.

In another conversation, at Evvia restaurant in Palo Alto, Kleiner Perkins’s John Doerr is heard barking commands to an associate, instructing the fellow to find a startup “bigger than Color” and saying that the firm had already set aside up to $50M to invest in it. Mr. Doerr’s famed VC firm lost the Color deal to archrival Sequoia who led the much talked about $41M investment. During the conversation, the two men also mentioned that Kleiner Perkins was bidding, via a shill, $250,000 to purchase the smell.com domain name from a squatter. (Color paid $350,000 for color.com.) Also, apparently referring to the mentioning in TechCrunch that Sequoia is the only VC firm that actually tests the products of startups who pitch them, Mr. Doerr is heard saying: “That Arrington hack thinks only Sequoia tries the f&*$ing stuff. Ha! We do it, too!” In doing so, Mr. Doerr apparently did not realize that after you take one snapshot with Color, the app keeps working in the background, diligently passing all the “ambient sounds” to the company’s servers.

But in the most ironic and surreal episode, Bill Nguyen, the Color’s co-founder and Chief, found himself arrested for … violating the State wiretap law. It so happened that when Mr. Nguyen was dining at Taiphoon restaurant, the three men at the adjacent table were plain-cloth police officer, gently discussing their business. The extra-sensitive microphone of Mr. Nguyen’s iPhone picked up bits and pieces of that conversation. Somehow, the officers got the wind that their conversation had been recorded and leaked. Next, the Santa Clara County D.A. office accused Mr. Nguyen of wire-tapping a conversation of an official without his consent, which, to the surprise of most people, is a crime punishable by up to 20 years in prison (http://t.co/BHLghVY). In the wee hours of April 1, Mr. Nguyen’s house was raided by a SWAT team of heavily armed agents who took him away in handcuffs.

UPDATE: the latest leak indicates that former President Bill Clinton got back with Monica Lewinsky. The latter apparently installed Color and signed up under her real name. Her ever-diligent iPhone logged her as staying for roughly 1.5 hours during lunchtime on April 1 at an undistinguished Motel 6 at 6711 Georgia Ave. in Washington, DC. The identity of her companion leaves no doubt: the voice is clearly recognizable, and she calls him ‘Bill’. She also cracked a joke about “his cigar”. The ambient sounds that followed left no doubt that though they briefly mentioned Bible and “that minister with his ... advice” a theological discussion was not the primary purpose of their meeting.