7 Ways that Security Firm Rapid7 Is Bucking IT-Business Trends

9/24/12Follow @gthuang

In case you’ve forgotten, cybersecurity is still one of the biggest issues in the tech world—and one that is being fiercely contested by many companies in New England and beyond.

One company that stands out from the fray is Boston-based Rapid7. We’ve previously written about the firm’s approach to developing software to protect against cyber-espionage and test businesses’ IT networks for security flaws. Rapid7 also made our recent list of biggest technology bets in the area; it has raised $59 million in venture funding to date. Plus, you’ve got to like a company whose new innovation center is on the 14th floor of a building whose elevator only goes to 13. (More on that in a minute.)

I recently caught up with Mike Tuchen, Rapid7’s CEO, at the company’s newest office, in Kendall Square (see photo above). We covered a range of security topics—among them, the recent Java software attacks; the Apple-FBI unique-device-identifier data leak; and this summer’s failed U.S. cybersecurity bill. Sadly, there’s no sign of any slowdown in attacks, Tuchen says. “The root cause boils down to economics. Cyber attacks are a huge, multibillion-dollar, illegal business,” he says. “As long as there’s things to be stolen on the Internet, there will be people doing it.”

And there also will be companies making a living by protecting others. It struck me that Tuchen’s firm does a lot of things differently from the conventional wisdom in tech-business. Whether it will all pay off in the end, it’s too early to say—but it should be instructive for the rest of the industry to watch. Here are seven ways that Rapid7 is going against the grain:

1. Setting up shop in Cambridge (from Boston). The company opened its new innovation center on the aforementioned 14th floor at One Main Street in Kendall, in June. This happened as a lot of tech startups have been moving out of Cambridge or choosing to set up their offices in Boston. Rapid7’s presence in Kendall is still relatively small—20-some employees out of around 150 in the Boston area, most of them in the Prudential building (and north of 275 total)—but the office space itself is something to behold. It’s full of hand-carved wood, furniture built out of the floor (see above), intricate ceiling décor, and stunning views of the river and skyline.

2. Inside sales, not enterprise sales. The traditional industry practice is to hire a big sales team, buy expensive ads, and build relationships with high-paying customers over years. But the trend has shifted to Internet sales platforms, try before you buy, faster sales cycles, and lower costs. As part of that, Rapid7 is not targeting Fortune 100 companies, but everyone else is fair game. “I believe it’s the way of the future,” says Tuchen.

3. Emphasis on customer service and experience. A lot of companies say they focus on this, of course, but it’s a key tenet of Rapid7′s culture. Tuchen tells the story of his first iPhone: The on/off button stopped working, so he booked an appointment at an Apple store. The store worker got him a new phone and replaced the plastic case, all for free, in five minutes. “What was brilliant about that was, Apple had empowered the guy in the front to solve the problem,” Tuchen says. “Think about it—how many companies really get it?” (Not T-Mobile, DirecTV, or New York Times delivery, in my recent experience.)

4. All support and development in North America, none overseas. This one is interesting because it seems like a given these days that some of a company’s developers or support staff will be in lower-wage countries. Not so for Rapid7. Tuchen says he tried hiring workers in India and Argentina in 2010-2011, but it didn’t work out. “There’s not the same talent as in Cambridge,” he says. “It’s absolutely critical to have great support.”

5. Gender balance in executive staff. A quick look at the company’s leadership page shows that five of the 14 top-ranking execs at Rapid7 are women: Christina Luconi (chief people officer), Carol Meyers (chief marketing officer), Kara Gilbert (VP of sales), Jennifer Benson (VP of customer experience), and Patty Wright (VP of professional services). It’s not 50-50, but it’s more balanced than most tech companies.

6. Investing in the downturn. This one can be claimed by a few more companies—at least ones that are still thriving. Tuchen joined as CEO in 2008, just as the recession was hitting. In 2009, Rapid7 made a key acquisition in Metasploit and started putting venture dollars to work. Now its revenues are about 10 times what they were in the year before he arrived, Tuchen told me earlier this year, and the firm has added lots of new staff. “We’ve tripled the company in the last few years,” he says. (Rapid7 says it has had 13 straight quarters of record revenues, including 58 percent growth in the past quarter compared to the same period last year.)

7. Looking to IPO instead of getting acquired. Most companies will say this, of course, but the track record of security software companies in the area suggests the opposite (see NitroSecurity, bought by Intel/McAfee, Q1 Labs, bought by IBM, and so on). Tuchen says an IPO is a goal of the company. He could be blowing smoke, but I sense that it’s true. If Rapid7 continues on its growth trajectory, an IPO would be a viable option. But the company will have to stay ahead of the hackers in an ever expanding cat-and-mouse game—and if it does that, who knows if a better option might come along.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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