AnchorFree's Growth Strategy: Make Wi-Fi Free, Secure

David Gorodyansky believes he has found a perfect recipe for his AnchorFree Wi-Fi company to continue growing: offer consumers connection to a virtual private network (VPN) connection and set the price of the Wi-Fi service at free.

Gorodyansky, president and co-founder of AnchorFree, said in an interview Wednesday that the firm's hot spot members number nearly 11,000 and he attributes much of the recent growth to the company's offering of its version of a secure virtual private network (VPN).

"We think we have the world's largest global Wi-Fi network," Gorodyansky said. "We're getting hundreds of downloads a day." AnchorFree's network is a combination of company-owned hot spots and hot zones and business relationships with operators of Wi-Fi hotspots around the world.

AnchorFree placed paid Wi-Fi hotspots like T-Mobile's paid Wi-Fi network in its cross hairs. "We think Wi-Fi should be free," he said. "People often don't now that there's a free alternative to paid Wi-Fi. For practically all paid Wi-Fi hotspots, you can go around the corner and find a free hotspot."

Gorodyansky said users can download the AnchorFree VPN once and use it on any of the hotspots listed on the firm's Wi-Fi directory. He adds that business and professional users tend to be downloading the VPN feature in great numbers because of its security functions; students usually don't care whether their connections are secure or not. A new AnchorFree feature enables users to download addresses of its Wi-Fi hotspots onto their iPods.

Founded in 2003, AnchorFree built a hot zone in Palo Alto, then added five more hot zones in San Francisco. The company recently added to its roster of hot spots by its acquisition of MetroFreeFi.com. AnchorFree's business model calls for advertising-supported Wi-Fi hotspots with revenue to be shared with its independent partners. Gorodyansky said AnchorFree has certain "guidelines" it seeks to enforce with its partners -- 5 Mbps down and 7 Kbps up speeds, for instance. AnchorFree has signed up Wi-Fi partners all over the world. In Mexico, for instance, there are 24 affiliated hotspots. Other countries represented range from Brazil and South Africa to Russia and China.

The company recently raised $6 million in venture funding. Included in its lineup of private investors is Bert Roberts, former MCI WorldCom chairman. AnchorFree's five San Francisco hot zones -- each with about 150 hotspots -- place it in the forefront of the city's effort to provide free Internet access.

Does this mean AnchorFree is on a collision course with powerhouse Google, which is in the process of deploying a Wi-Fi network with Earthlink in San Francisco?

"No," says Gorodyansky. "We're looking at different markets and at doing different things." He noted that Google is likely to compete with existing DSL and cable broadband technologies while AnchorFree is focused on free and secure Wi-Fi hotspots. At higher speeds, Google-Earthlink users are expected to be asked to pay for services.

At 24, Gorodyansky is already a seasoned entrepreneur. Several years ago, he was a founder of Intelligent Buying Inc., a profitable asset management and IT equipment reseller. He still keeps a hand in the operation of the firm. Before that he founded a Web-based competitive intelligence firm.