Jason Heltzer
Mar 10, 2015 · 6 min read
Photo Credit: Sherurcij at English Wikipedia

This is the third (and last) post in a series. Consider reading the first and second posts.

Before there was the Internet, there were bulletin board systems (BBSes). Like the Internet, the BBS world had an underbelly. There was a hierarchy of people in the dark corners, a social order that I found fascinating. Up until now, we’ve been talking about the small time software pirates (users) and system operators (distributors). In this post, we ascend up the hierarchy, examining the following roles in the ecosystem which were really sketchy, but critical to the functioning of the software piracy underground.

Crackers: The Copyright Mechanics

Climbing the “questionable” scale further were the crackers. These guys had respect from the underworld because their role was to buy software in a store, bring it home, and permanently defeat the copy protection. This required a lot of technical gymnastics, especially disassembling executables, changing the assembly code, and recompiling. Sometimes it was easier and a simple hex editor of the machine code could do the trick. I was able to do that on a couple of occasions just so I could learn, but that circumvented only the most basic of copy protection obstacles. I never circulated anything I cracked; in addition to being sketchy, it would have been embarrassing and akin to bragging about your mini-golf score when you are 35 years old. By the time I knew enough assembly in college to crack something, I was no longer actively pirating since there were better distractions.

But as piracy became a bigger problem, software studios invested more in copy protection. The problem for the software studios was that a smart teenager has a lot of time on his hands, and the challenge of breaking the copy protection (we call it DRM today), and the associated glory in the BBS world of being the first to crack a sought-after title, was a set of ingredients that was hard to compete with. The crackers kept cracking and respect for them increased.

In my venture career I’ve come across some copy protection schemes/companies, and they can often deter, but it’s a cat-and-mouse game between them and the crackers and the crackers will find a way. My view, which was molded by my experience as a kid witnessing crackers, is that you can’t build a castle wall infinitely high. You build it reasonably high to discourage most of the would-be intruders, but every castle has a weakness, especially with determined attackers. It’s true today more broadly in network security. For smaller morsels of content, publishers have generally given up on DRM by charging low prices and making it a good user experience. No web of network security can 100% stop a determined and well-funded attacker.

Crackers all went by aliases and they were typically associated with a group or syndicate much like hackers are today. The syndicate would have a text file called readme.txt that would be the equivalent of a deal tombstone, laying claim to be the first syndicate to defeat the copy protection. These tombstones would be in glorious and clever ANSI or ASCII graphics that gives them a distinct look to this day. These guys were pretty hardcore and revered — at least in the BBS world. I always wondered what these folks were like in real life.

Phreakers: Phone System Hackers and Pirate Market Makers

To really gain status at a BBS, you had to be the one to deliver newly cracked software first. The more elite the BBS, the more competitive it was to accomplish this. In those days, software was written mostly on the west coast and a pocket of games studios in Chicago. Titles would show up on store shelves in those locales first. Software would get cracked there, and get uploaded on to the local BBSes first. So one strategy to gain rockstar status on the east coast would be to make long distance phone calls to a west coast or Chicago BBS and download the new software. Only one problem: the best software took a long time to download- maybe 45 minutes. With long distance rates, that added up to a lot of money, especially considering that most of the people in this world were teenagers. Not to mention call waiting would interrupt a download and you often had to restart the whole thing. The advent of call waiting wasn’t good for everyone….

Enter the Phreakers. This is was a strata of people who knew various shortcuts and secrets to the Bell phone system. They would use software called war dialiers that would literally dial several thousand phone numbers at night in an effort to find special phone numbers used by phone technicians to test the long distance system. If you ever got a phone call late at night in the 1980s and answered the phone and no one was there, followed be a click, you probably got war dialed. This would annoy a lot of people, but phreakers didn’t care- this is before Caller ID or *69. Once these special phone numbers were identified, phreakers used special software-generated control tones and numerical codes to illegally place long distance phone calls for free. The war dialers were necessary because the phone system periodically changed the special numbers to deter phreaking. Again, this was a cat-and-mouse game that the teenagers were going to win. There were also special codes and tricks you could use on a payphone to make calls for free. There were several Phreakers guides available on BBSes. I read some of the guides and learned a lot about the phone system but never tried any of it or had any desire to be a “national” guy. I thought that was crossing a line I didn’t want to cross. Occasionally those guys would get caught too.

Credit Card Thieves

The BBSes were also used to trade stolen credit card numbers. While I earned my modem the hard way, apparently there were people who preferred “alternatives”. A common method was to order a shipment to a house under construction or that was vacant using a stolen credit card. Then the perp would pick up the package on the doorstep. This, among others, is the reason that some retailers will only ship to the address that matches the billing address on the credit card used to make the purchase. Those types of checks weren’t available back then. I was frightened of these people (I was 14 remember) and they didn’t operate as much in the open as the phreakers or the crackers. They were on the fringe.

Hackers: Breaking and Entering

Finally you had the hackers. Being a hacker today has both a good and bad connotation. Back in those days, it was always a bad connotation. These are the War Games type people. These are people who would intentionally break into government systems for sport, and usually not to do any malicious harm. They would do it for bravado and bragging rights. I grew up near Washington, DC, so there were plenty of US government systems that were a local phone call away. Our local public school system also had a modem dialup number. The hackers and the crackers earned the highest technical respect from the ecosystem, and while some people did both, they were different skills. Hackers had to know Unix and understand networks and security. Crackers had to know copy protection schemes and know assembly. They were more programmers.

I look back on these years with a lot of nostalgia. I learned a lot about software and how it worked. I learned how to code for real. What I really wonder is what became of all those people who I met and knew in the BBS world. Like Iceman from Iceman’s Palace. Or some of the top crackers. Are you out there?

Venture Evolved

Jason is a venture capitalist, business school professor and former software engineer. Jason is a Partner at Origin Ventures and he has been in the venture business since 2001. He also teaches the venture capital and private equity lab class at Chicago Booth.

Jason Heltzer

Written by

Dad, venture capitalist at @OriginVentures, @chicagobooth professor, Chicagoan. I was a nerd before it was cool to be a nerd.

Venture Evolved

Jason is a venture capitalist, business school professor and former software engineer. Jason is a Partner at Origin Ventures and he has been in the venture business since 2001. He also teaches the venture capital and private equity lab class at Chicago Booth.

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