Deal Radar 2009: AppRiver

Deal Radar continues its analysis of the Web security landscape with App River, which provides companies of all sizes a with simple Web security solution. AppRiver’s solution incorporates the latest spam and virus protection, e-mail encryption, and Web security available. The company also provides a complete managed service for Microsoft Exchange.

AppRiver was founded in 2002 by Michael Murdoch, CEO, and Joel Smith, CTO. Murdoch had founded WAVEnet, a company specializing in systems integration, offering hardware and software solutions for managing servers and data centers. Smith’s previous company was Plugit.com, a Web development and hosting company. In 1999, their paths crossed when Murdoch called on Smith to introduce a device that would make Plugit’s servers more efficient. Although Murdoch didn’t make the sale, the two hit it off and as their friendship grew, they also realized they shared a deep entrepreneurial spirit.

Murdoch and Smith began exploring the possibility of a company that would provide Internet-based, on-demand security applications that could be delivered and adapted in real time. They conceived a company that would answer businesses’ needs by successfully combating the rapidly evolving IT threat landscape. These applications would flow from developers to downstream users much like a river. With this in mind, AppRiver was formed after Murdoch and Smith sold their interests in their previous companies. AppRiver is entirely organically grown and debt-free with no outside investment.

When AppRiver was formed, one big problem was the increasing bandwidth and manhours being wasted on unwanted email. Companies were being inundated by rude and often virus-ridden spam messages that clogged inboxes and frustrated IT staff. Hardware solutions were expensive and limited in their effectiveness. Software had to be updated continuously and was often too late to catch the latest waves of malicious messages. This problem represented an opportunity that the founders realized was custom-made for their new business model, and they set out to quickly develop a solution.

Smith realized that by passing messages through a proprietary filtering system that could be updated in real time, messages could be identified immediately as spam without ever entering a user’s network. Of the messages that passed initial testing, AppRiver’s filters would then quickly weed out any remaining spam. 

In a few months, AppRiver’s customer base grew into the thousands.  At the same time, satisfied AppRiver customers began asking for more than just spam; they wanted AppRiver to host their Microsoft Exchange email system, too, which the company felt was a natural fit.

AppRiver protects businesses of all sizes from multi-vector blended IT threats by securing every connection to the Internet. It also uses a customer-centric methodology, and it is the only network optimized for Microsoft Exchange. Understanding the need for high-performing, always-available applications, AppRiver teamed up with Akamai, a provider of Web application acceleration and performance management, to make the Internet behave more consistently for business-quality application delivery. By implementing the Akamai platform within its service, AppRiver allows its users get quick and reliable access to Outlook, Outlook Web, and Mobile Device applications, regardless of their location or what is happening on the Internet. AppRiver also offers users unlimited mailbox storage and on-demand delivery and management of its in-the-cloud security services with a centralized user interface.

The company has developed a new Customer Portal with added features that gives each customer a single point of entry for all services. By integrating its entire technology suite into a single unified interface, AppRiver hopes to eliminates the complex processes businesses face as they manage their messaging environments.  Customers can now customize the interface, review, and select appropriate security applications not yet implemented into their network, and several other features.

AppRiver works on a subscription model. Businesses are granted access to enterprise-grade applications in datacenters for a fixed cost per month, which is usually much less than traditional in-house IT costs. Companies can add services on-demand on a pay-as-you-go basis.

As we have seen from many posts on this blog, the industry is shifting toward a cloud computing infrastructure, which offers tremendous cost savings, scalability, and ease-of-use and management. Industry analysts predict that cloud computing will become a $42 billion industry by 2012 with application services (SaaS) accounting for almost half of the pie.

This industry is already crowded. Some players offer their services in the form of software, while others are available through a SaaS offering. McAfee, WebSense, Blue Coat, and Symantec are some of the stalwarts in the industry. There are smaller companies such as Fortify Software, Red Seal, and recently covered companies, Barracuda Networks and Trustwavealso provide security products for large organizations and SMBs. 

Since its inception, AppRiver has sustained an impressive 95% customer retention rate while growing its customer base to over 40,000 companies and over 6 million mailboxes worldwide. It aims to increase that figure to more than 50,000 corporate customers by the year’s end. Most customers are in the SMB space. Clients are spread over six continents, and AppRiver is one of the largest e-mail security managed service provider to the business market. It has been recognized as one of the top five hosted Exchange providers worldwide.

In the past five years AppRiver revenue has grown 722%. In spite of the faltering economy, AppRiver had its best year in 2008 with 52% employee growth and over $20 million in revenue. Murdoch was recently selected to be a 2009 Ernst & Young Florida Entrepreneur of Year.

In 2010, AppRiver intends to offer a bigger product portfolio, improved product quality, better sales support, and more marketing to win additional customers. AppRiver’s channel program is currently strong, and this year it has received several awards.  Services will be pushed more aggressively throughout the channel in 2010. When asked about future plans, Murdoch said, “We look forward to continuing to build a healthy and profitable company.”
 
Recommended Reading:
Security Industry Overview
Deal Radar 2009: ViralHeat

This segment is a part in the series : Deal Radar 2009