VC Blumberg Betting On Automation in Data Security

David Blumberg helped pioneering firewall company Check Point Software Technologies during its early days as a business in the 1990’s, and he has been observing the development of the cybersecurity industry as an investor since that time.

His take on data security today, after more than 25 years? “The state of security is abysmal,” Blumberg says. “Individuals are being hacked; governments are being hacked; national security secrets are being stolen; tech secrets are being stolen.”

It’s not for lack of trying by security companies and the businesses that spend billions of dollars every year on products such as firewalls and antivirus products. But new technologies are constantly creating new vulnerabilities that the old measures can’t fix, Blumberg says.

“The Internet of Things is an orders-of-magnitude bigger problem set than what’s gone before,” Blumberg told Xconomy as his San Francisco-based venture capital firm was preparing for the announcement of a new fund this month. Voice interactivity, personal mobile devices used at work, and the digital transformation of industrial processes are also posing new challenges, he says.

But the current “earthquake zone’’ of innovation is one that Blumberg intends to ride through eagerly. The early-stage venture capital firm he founded in 1991, Blumberg Capital, recently closed a $200 million fund—its fourth and largest—and it will invest in disruptive technologies such as the Internet of Things and artificial intelligence. The new fund will also invest in cybersecurity startups, which perennially benefit from the need for new solutions to the threats created by the kind of disruption Blumberg Capital and other investors help to finance.

Rather than curbing the adoption of new technology products due to fresh security concerns, innovators should develop automated security systems that allow people to use any product safely, Blumberg (pictured above) says.

Blumberg sees an edge for companies that build in security as a key design element of their technology products. And he’s interested in security companies that relieve consumers of the chores they’re now supposed to take on to keep their information safe, even as the number of devices in their orbit keeps multiplying. Buyers of connected home devices shouldn’t be left to pore over manuals to re-set privacy configurations, and businesses shouldn’t have to rely on nagging staffers to change their passwords and turn off personal devices that could leak company secrets, he says.

“Compliance is not going to be 100 percent,” Blumberg says. “It won’t work in the near term for the bulk of humans.”

One of Blumberg Capital’s portfolio companies, the cybersecurity startup SAM, aims to provide an automated, behind-the-scenes shield against hackers. The company, based in Tel Aviv, Israel, downloads software into a home router in an effort to protect any Web-connected devices. The system is on the alert for any device exhibiting abnormal online behavior that doesn’t meet its manufacturer’s specifications, Blumberg says. “If it’s not explicitly permitted, it’s blocked,” he says.

SAM sees its market both among technically unsophisticated consumers as well as among Internet service providers that want to offer security protection to their customers.

“Consumers shouldn’t have to do much,” Blumberg says. “The carrier should be taking the lead.” SAM is preparing to test its system with a telecommunications company, Blumberg says. (He couldn’t reveal the name.)

“It’s a case study to watch, to see how many attacks it discovers,” he says.

Photo courtesy of Blumberg Capital

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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