Yesterday, I met with someone launching an exchange for privately held companies. The idea is to have a marketplace that is somewhere between the inefficient one-off negotiation of secondary sales on one end, and going public on the other. Pretty quickly our discussion turned to the disclosure of information about these private companies. One of the reasons given for being a private is so as to not have to disclose a lot of information to others (including potential competitors). So how do you control the information in such a new marketplace? The proposals generally revolve around having some kind of controlled distribution lists and the ability to “block” some potential recipients.  Yet, once you release information to a sizable group, it  is a lot more likely that information will wind up with people you were trying to block.

The fundamental structure of this problem is the same we are all grappling with in different guises: the boundary between private and public (in the example above even with those terms). Abstracted, the issue is as follows: we have some information that we (believe) we want to share only with some people and not with others. But with the cost of capturing and distributing information at essentially zero, “redistribution” or “leaking” of this information is becoming widespread. This is the problem of the music industry. It is the problem of disclosing data on a private company, etc.

There have been two divergent responses to this problem. The first is the attempt to impose constraints. These come in may different forms — from controlled distribution lists and approved friends all the way to “trusted” computing and DRM. The effectiveness of such a constraint depends on the cost that it imposes relative to the value of the information. The value of music, computer games, etc. is extremely high and not surprisingly, all the investment in DRM has failed to stop redistribution. But the same logic applies for something as simple as the “looking for” field in Facebook profiles. Most changes to that field are not sufficiently “valuable” for anyone to bother to redistribute, but when Marissa Meyer had hers set to “random play,” a screenshot of it quickly appeared on Valleywag and can still be found on Gawker.

The second response has been to design systems which default to sharing.  These include flickr for photos, del.icio.us for bookmarks, twitter for status, Covestor for investments and of course all the blogging platforms out there (del.icio.us was and twitter and Covestor are USV portfolio companies). They are premised on the idea that there is a lot of information for which the benefit of others being able to discover it freely far outweighs any potential harm.

I believe that it is a lot more likely that information and usage will migrate from the constrained “walled-garden” design to the “open” design than the other way round. The changes underway at Facebook seem to support this. Ultimately, I believe what we are seeing is the transition from society trying to impose its existing structures and norms on technology, to technology reshaping society. This has happened time and again for other technologies, ranging from moveable print to genetic engineering. Now we are likely to see a fairly dramatic shift between what’s private and what is public.

Personally, I am excited because I believe that this shift will ultimately result in a more open, tolerant and connected society. Much of what we are trying to protect through privacy today are the very things we should be proud of, such as our thoughts and feelings — they are what connects us to each other while at the same time affirming our individuality. The balance falls into the category of secrecy and there I firmly believe that less is better whether it is government, research, corporations, partnerhips or relationships.