StillSecure Executives: Sale, Pivot an Attempt to Capitalize on BYOD

6/6/13Follow @MichaelXBD

StillSecure announced Wednesday that it has sold its managed security services division to Connecticut-based SilverSky for an undisclosed amount. That’s obviously significant news for the Superior, CO-based company, but in the long run it might be less important to StillSecure’s future than its announcement it will now focus exclusively on its network access control (NAC) product, Safe Access. The product reorientation is an attempt to capitalize on the major shakeup the “bring your own device,” or BYOD, trend is creating in the IT security world.

StillSecure also announced the promotion of new CEO James Brown. Brown, who was StillSecure’s CTO, and co-founder and chairman Rajat Bhargava, who Brown replaced as CEO, discussed the new developments Wednesday.

The deal with SilverSky, a Connecticut-based company, spins off a substantial part of StillSecure. The managed security services unit accounted for about 40 percent of StillSecure’s headcount, Bhargava said. He declined to say how many employees remain, but media reports said StillSecure employed about 100 before the sale.

StillSecure was split between its managed services and NAC units, which were evolving along different tracks. NAC looks more promising in the long run, in StillSecure’s view.

“Both industries are becoming more specialized, and ‘bring your own device’ has created new opportunities in the NAC space,” Brown said.

Those opportunities for StillSecure come from the challenge BYOD creates for companies trying to protect their networks as employees connect with their own smartphones, tablets, and laptops. In a blog post explaining StillSecure’s shift, Brown noted that most of the devices are unmanaged and not compliant with employers’ security policies, which makes their networks vulnerable.

StillSecure will market Safe Access as the most scalable and easy-to-use mobile device management software. StillSecure will spend the next year building its business around Safe Access and focusing on its core markets, which include the military and financial, retail, and healthcare sectors, Brown said.

The sale to SilverSky is a good outcome for StillSecure and the employees who are being transferred, according to Brown. SilverSky is better positioned in the managed security services market and has larger market share than StillSecure.

SilverSky will get about 40 employees, complementary technology, a broadened partner base, and additional security operations centers, SilverSky vice president of product marketing Mike Flouton said. The deal increases its number of clients from about 6,000 to 6,700.

SilverSky has raised about $100 million from investors including Goldman Sachs and Bessemer Ventures. The company, formerly known as Perimeter E-Security, acquired Denver-based USA.NET in 2007 and rebranded the two companies under the name SilverSky earlier this year.

The company already has employees in Denver and Colorado Springs, and its network operations center is in the state, Flouton said.

The companies would not discuss the terms of the deal, but Bhargava said their relationship didn’t end when the deal closed last Friday.

“One of the important points we like to make is we’ve become highly invested in the success of SilverSky,” Bhargava said.

While the SilverSky sale and product shift are big changes for StillSecure, the leadership transition is more about continuity, Bhargava said.

Brown, who was the chief technology officer and has been with StillSecure for 10 years, replaces Bhargava as president and CEO. Bhargava will remain with the company as an “active chairman” involved in strategy.

Bhargava has a solid track record in Colorado. He was a co-founder of Service Metrics along with Trada CEO Niel Robertson. Service Metrics was acquired by Exodus Communications in 1999 for $280 million. Bhargava has helped launch other startups, including MobileDay, which is based in Boulder and of which he is a board member, and Boston-based Yesware, which he co-founded.

StillSecure does not disclose details about its headcount, revenue, or number of clients. Bhargava said the 13-year-old company has raised $38 million, with the last funding taking place in 2006. Its investors include Mobius Venture Capital, the firm managed by Brad Feld prior to the Foundry Group. Feld is a StillSecure board member.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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