In October of last year, Keystone Mercy, Pennsylvania’s largest Medicaid managed care program, reported a lost USB drive. The drive contained personal health information on 28,000 Medicaid recipients. In the UK, there was an outcry when the Guardian and other newspapers reported that members of the Ministry of Defence had lost or had stolen, among other electronic devices, 340 laptops worth £612,000. While it’s difficult to pin numbers on the true cost of data loss and related problems such as identity theft, the need for encryption and other protection is clear. SaaS developer AlertBoot offers a managed disk, USB, and e-mail encryption services for businesses of all sizes.
The Las Vegas–based company was founded in 2007 by Tim Maliyil, who started his career in data security at a Web security firm called Netegrity. In 2001, Maliyil founded Data Guard Systems, which manufactured and hosted SaaS-based point of sale software for the retail cell phone industry. To capitalize on his past experiences, in early 2007 Maliyil partnered with government contractors specializing in providing IT security services to various departments of the U.S. federal government. He recognized the difficulty that government agencies faced when deploying the disk encryption software they were purchasing on a very large scale. In many cases, the government would spend several million dollars on software that would never be deployed. Even when it was, there was no way to actually prove compliance or manage the encrypted PCs.
AlertBoot products include hard drive encryption software featuring the SafeGuard Enterprise Security Engine from Sophos; Port Control, which limits a user’s ability to transfer data to removable devices and drives and synchronizes with devices remotely; AlertBoot Central to manage client applications over TCP/IP (all users, machines, files, recovery keys, and other functions can be administered remotely); customizable auditing and reporting; and content encryption to protect files and portable USB keys, so they stay encrypted regardless of where they are used.The retail price of the product suite is $12.95 USD/month per PC, with discounts for larger or multiyear contracts.
AlertBoot’s most popular market segments are financial services, healthcare, and retail. These markets deal with sensitive customer data that is required by law to be encrypted. Within those markets, AlertBoot’s customer size has a wide range, from the sole proprietor with a single PC to large enterprises with thousands of PCs. AlertBoot’s largest customer is a European investment bank with more than 10,000 PCs protected. Additionally, the company serves many small businesses.
To gain traction, AlertBoot launched into an immediate beta program in 2007, with its technology partner bringing the startup its first enterprise customer. During this beta period, AlertBoot built the automation tools for its service, which went live in early 2010. It also blogged about data breach scenarios in which encryption could have prevented damaging outcomes. By the time the service went live, AlertBoot already had a strong pipeline of new prospects.
The competition was not SaaS-based when development began on the AlertBoot product. Current competitors are McAfee, Symantec, and Checkpoint. There were more competitors when the founders embarked on building the AlertBoot service, but many of those have since been acquired by the companies mentioned above, such as PGP, covered in Deal Radar previously. The nature of encryption solutions is that they are complicated, error prone, and in many cases, difficult to support. AlertBoot aims to compete by making encryption easy with small (3–5 MB) but powerful Web-based disk encryption solutions that can be deployed quickly such that even small businesses can afford enterprise-class security.
AlertBoot’s revenue is in the $2 million–$4 million range, and the company is profitable. The company has been bootstrapped with personal savings and debt secured by Maliyil’s assets. Maliyil has stayed away from finance vehicles, such as factoring, because he considers the expense of such financing unreasonable. He now plans to embark on building a comprehensive Infrastructure as a Service (IaaS) business with the help of outside investors. Because AlertBoot and its staff can provide much of the software assets, business connections, and technical skills needed to bring the business to life, Maliyil believes the venture will have a strong head start in its development.
Since there are serious plans to re-use AlertBoot’s assets to build other cloud based businesses, there is no short-term plan to sell the AlertBoot business. The current strategy is to build other cloud businesses that license AlertBoot’s assets and have an investor exit planned within three to five years. However, management would seriously consider offers for AlertBoot’s security service once the company exceeds $5 million in revenue.
In the 1M/1M Deal Radar series, we celebrate entrepreneurs who have reached at least $1 million in annual revenue. It is part of the One Million by One Million (1M/1M) global initiative.
This segment is a part in the series : 1Mby1M Deal Radar