How are companies spying on each other these days? One of the surprising ways I’ve heard about recently is through the webcam in boardrooms.

That’s right, apparently it’s easy to hack into some companies’ video conference systems, because they lie outside typical security measures. Companies sometimes set up video conferences so they can be accessed directly on the Internet—leaving the door open for eavesdroppers to listen in on meetings, or even remotely monitor a conference room via the camera.

One local software company is helping organizations guard against this threat—and many others. Boston-based Rapid7 is one of the leaders in the growing cluster of IT security companies around town. Rapid7’s approach is complementary to firms like NitroSecurity (recently acquired by Intel/McAfee) and Q1 Labs (bought by IBM), which help organizations guard against security threats in their computer networks and systems.

What Rapid7 does is help organizations find security flaws throughout their IT infrastructure, and then test whether they’ve been corrected. To fuel its growth, the company raised a $50 million Series C round from Technology Crossover Ventures in November—one of the largest tech venture rounds in the Boston area lately. (Rapid7 has raised $59 million to date.)

“There’s a lot of cyber-espionage going on in business,” says Mike Tuchen, Rapid7’s CEO (see photo, left). The activity ranges from stealing sales plans, financial information, and intellectual property, to the aforementioned boardroom eavesdropping, he says. And, of course, it’s not just companies spying on each other; it’s governments and nation states as well, all trying to get their hands on everything from Citibank credit card numbers to the special sauce in Apple’s iPad design.

What’s a CEO to do? If you’re Mike Tuchen, you take a promising company and try to make it better. Tuchen joined Rapid7 as chief executive in 2008. (The company has been around since 2000.) Previously he worked at Microsoft as a group program manager and general manager of SQL server marketing. An engineer by training, he also worked at Sun Microsystems and co-founded Paramark, a dot-com-era online advertising startup.

When he arrived at Rapid7, brought in by Bain Capital Ventures (the firm’s original VC investor), Tuchen saw a company that had “a great engineering and sales team” but not much else. He says he didn’t have to tear up the company, just bring in some key additions: marketing, channel partners, new processes, and a broader product roadmap, including a more international market focus.

So far the effort seems to be paying off. The company has grown to about 240 employees (about half in Boston), and Tuchen says revenues … Next Page »

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War really is going out of style.

At least that’s what Joshua Goldstein, professor emeritus of international relations at American University, and Steven Pinker, a psychology professor at Harvard wrote in a New York Times op-ed piece last month.

Throughout the editorial, Goldstein and Pinker dissect the meaning of “war” today, its various categorizations, and the reasoning behind their sentiment that war has become passé. Among other rationales, the piece cites a lack of monetary gain as a key contributor, as the financial cost of war overshadows any acceptable gain:

“For centuries, wars reallocated huge territories, as empires were agglomerated or dismantled and states wiped off the map. But since shortly after World War II, virtually no borders have changed by force, and no member of the United Nations has disappeared through conquest.”

But is war really going out of style, or is the way it’s fought being changed?

As I wrote in a recent Threat Geek post, war is being redefined, not replaced. The battle for land in previous times has now translated into a fight over intellectual property, with nation states attempting to steal from each other using advanced, targeted cyber attacks. It’s not that war is passé, it’s that the landscape has changed. Land is no longer the primary motivator in global conflict, as the value of intellectual property has become, in many ways, priceless—just think of what China would pay for Pfizer’s next groundbreaking drug before it hits the open market.

Instead of bullets on battlefields, wars are being fought with keyboards over networks at a fraction of the price.

And it makes sense, doesn’t it? Why risk billions of dollars engaging in combat with a nation when you could steal their most valuable assets with the click of a mouse? Why thrust your country into global negative light, when you could be a faceless enemy attacking from thousands of miles away?

The perception that the United States has not been attacked by a foreign government since Pearl Harbor is false. Thousands of times each day, nation states like China and Russia are engaging in cyber warfare, trying to deploy advanced persistent threats (APTs) over American networks to gain access to our most crucial information. The United States has always been upfront in flexing its military muscle as a deterrent against potential threats, but when it comes to our capabilities in a cyber war, we have been secretive.

Maybe that’s about to change.

Recently, four-star General James Cartwright (a retired vice chairman of the Joint Chiefs of Staff) went on record as saying the United States needs to be more upfront about its cyber capabilities.

“You can’t have something that’s a secret be a deterrent. Because if you don’t know it’s there, it doesn’t scare you,” said General Cartwright.

It’s hard to argue with his logic of letting the world know of our offensive capabilities or employing a strong defense as a way to defeat cyber attacks. If a country is going to take a shot at U.S. interests, they are going to get hit back. Hard.

This is where Fidelis Security Systems and several other security companies can help to deal with these types of advanced persistent threats on a daily basis. In a way, network security companies are becoming the defense contractors of the future. What Raytheon and Lockheed-Martin were to the aerospace industry throughout the 1980s, has now been transferred to our shoulders. We can’t win the war for you, but we can equip you with the best weapons to help fight in the cyber war.

General Cartwright estimated that it could probably take hackers two to five years before they had access to disable a large percentage of the banking industry or the U.S. electrical grid. Even a smaller attack could undermine confidence in financial markets. It would appear to me that these threats are cyberspace’s version of the Cuban missile crisis.

Doesn’t sound like war is going anywhere, does it?

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Heading into the holiday weekend, I thought I’d pull out a few highlights from recent discussions I’ve had with some Boston-area tech companies that are generating buzz. None of them will be taking the holiday off, I’m guessing.

So here’s a snapshot of five companies in different fields, and at different stages (with some common themes of communication, security, and location tech):

ByteLight
This is a new Cambridge, MA-based startup that’s heading to New York this weekend for the big annual National Retail Federation expo. ByteLight, led by founders Aaron Ganick and Dan Ryan (both Boston University grads), is developing technology for indoor positioning based on the circuitry in LED bulbs, together with smartphone cameras, for applications in sales automation, targeted deals, museum tours, and so on. “We view this as the next frontier in location based services,” Ryan says.

HeyWire
This Cambridge-based mobile startup makes an app for free texting and social messaging. But HeyWire has much bigger ambitions around creating a unified platform for social communications. Don’t want to give too much away here, but as engineering and marketing VPs Bill Gianoukos and Glenn Kiladis told me recently, an upcoming release from the company was inspired by the question, “How do we get Bieber to text us?”

Rapid7
This security assessment software company, based in Boston, recently raised a big $50 million venture round and is growing fast—and looking to make acquisitions. Rapid7 has well over 200 employees, and CEO Mike Tuchen says he is looking to add 100 more this year. One security tidbit he passed along: Many companies’ video conferences are surprisingly easy to hack into, because they put them directly on the Internet without security.

The Tap Lab
This Cambridge-based mobile gaming startup is working on its much-anticipated next release, which is still under wraps (but looks like it’s trying to reinvent the concept of location-based gaming—no pressure). In the meantime, CEO Dave Bisceglia is also working on a project to “increase the frequency and quality of hackathons” in Boston, he says. Stay tuned for more on this.

Vivox
This voice and communication software firm, based in Natick, MA, has been making strides through partnerships with T-Mobile and Facebook. Vivox, best known for its voice chat software that lets gamers and virtual world inhabitants talk to each other, is now applying its technology to the broader markets of social networking and messaging (see T-Mobile’s recent Bobsled voice chat app). CEO Rob Seaver told me that his company’s platform is “very scalable and stable for large-scale social interactions.” What’s more, he says, the fields of gaming and communication are “not that separate.”

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San Diego’s MicroPower Technologies, founded in 2008 to develop ultra-low power wireless video surveillance products, said it has landed the first installment of a $6.5 million round of funding from Motorola Solutions Venture Capital and an undisclosed private fund.

The Series C funding represents MicroPower’s first institutional investment. Motorola Solutions Venture Capital is the investment arm of Schaumburg, IL-based Motorola Solutions, the company that retained Motorola’s mainstay radio, bar-code scanner, and RFID business in last year’s separation from Motorola’s mobile business.

MicroPower was initially funded by Southern California’s Tech Coast Angels, and was one of the first startups in San Diego to take advantage of the free EvoNexus incubator program established by CommNexus, a local nonprofit industry group.

The company says it plans to use the funding to step-up marketing of its wireless surveillance camera and related technology. The company’s flagship product, the Rugged-i wireless video camera, eliminates data and power cables and substantially cuts installation costs, such as the expense of pulling cable.

MicroPower has targeted commercial and government customers, including border protection, retail, education, and public utility markets. The company also says its wireless networking technology could be incorporated into wearable video cameras by law enforcement, paramedics, first responders, and military personnel.

Last year, MicroPower was named as a high tech award winner in the communications products and services category by the San Diego chapter of Tech America and as 2011 new product of the year by Security Products magazine.

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Since it was founded in 2000, San Diego-based Verimatrix has raised about $50 million in institutional venture funding and spent untold hours of software programming to address a relatively simple problem nagging the pay-TV industry for more than a decade. As Verimatrix CEO Tom Munro puts it, “We keep people from watching television without paying for it.”

These days, however, the security issues confronting Verimatrix and the pay-TV industry have only become more complex.

Munro estimates there are 110 million consumers in the United States who pay to watch television provided by cable, satellite, and other TV service providers (with an estimated market penetration of 90-plus percent). At the same time, the number of U.S. consumers who are watching TV online, using Netflix, iTunes, Hulu, and other Internet video services has exploded—with the fast-rising total estimated at somewhere between 40 million and 70 million, according to consultant Bill Rosenblatt of New York’s Giant Steps Media Technology Strategies.

Meanwhile, cable TV operators like Time Warner, Comcast, and Cox Communications are moving to offer their subscribers “Everywhere TV” that allows them to watch any digital video content on any device. And of course, electronic device-makers have been busy developing an estimated 1 million different types of gadgets that consumers can use to watch digital content anywhere.

Verimatrix fits into this industry maelstrom by developing encryption software and related security technologies for pay-TV networks. In some respects, Verimatrix’ task has gotten easier as ever-increasing bandwidth has enabled the industry to move increasingly to a “pure digital” format, and away from more specialized electronic devices, such as Blu-Ray players. Riding this trend, the company has been successful in creating piracy protection software for Internet-Protocol Television (IPTV), and today more than half of the company’s business is in so-called unmanaged networks, such as Netflix, which provides streaming video “Over the Top” (OTT) of a cable- or satellite-based broadband Internet platform.

“The nice thing about our solution is that it’s based on software, and not on a hardware, card-reader type of security technology,” Munro says. He describes Verimatrix as … Next Page »

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A lot has happened in the technology world in the past year. So let’s take a minute to reflect on the defining moments of 2011 and where we stand now, as a local tech community with increasingly global impact.

This is by no means comprehensive, or even a summary of the most important stories of the year. It’s just a select few of the biggest highlights and lowlights, organized in spaghetti western fashion (cliché alert).

The Good: Oracle Buys Endeca

Some might argue this wasn’t necessarily “good” for the local tech scene, but Oracle’s $1B+ purchase of Cambridge, MA-based Endeca, the enterprise search and business intelligence firm, was one of the biggest deals of the year, and was kept under wraps pretty well. It will be interesting to watch whether Endeca’s technology and talent give Oracle a leg up in its competition with IBM, SAP, Microsoft, and Google. Endeca, which started in 1999, stands as a testament to the notion that billion-dollar tech companies can be built—and are being built—in Massachusetts. (See Acme Packet, Progress Software, Wayfair, and others on their way.)

Honorable mention: Carbonite, TripAdvisor, and Zipcar each went public with successful IPOs in 2011. That’s three more publicly traded tech companies in Boston that seem to be thriving in a tough market. Who will join them in 2012?

The Bad: RSA Gets Hacked

No one would argue this isn’t bad—and not just for local companies. In March, RSA Security reported a data breach involving its authentication products, which are widely used by big companies and government agencies. The Bedford, MA-based division of data storage giant EMC said it had … Next Page »

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‘Tis the season to reflect on the past year and take a look at some of Xconomy Boston’s top stories.

As usual, these aren’t necessarily the highest-traffic stories (though in some cases they are). They are stories that exemplify what we are trying to deliver to our readers every day—narratives about the people, companies, and ideas that are shaping the future of technology, life sciences, and cleantech in our region, and across the country.

It was very hard to pick just 20 stories, like I usually do. I guess that’s a good thing. So I fudged it and actually picked slightly more—a dozen tech stories, and a dozen life sciences and cleantech stories.

In any case, our editor’s picks for 2011 span the fields of software, mobile, Internet, security, health IT, biotech, life sciences, energy, and hardware/materials.

They range in topic from people stories (Adriana Jenkins, Steve Jobs) to company strategies (Acme Packet, Vertex) to trends and analysis (big data, biotech risks); from universities (Harvard accelerator) to startups (MedicalRecords, Harvest Power) to big companies (IBM, Pfizer, Biogen Idec); from Q&As (Rob Day, Jim Baum) to company profiles (EnVivo, MC10) to news features (testing the nation’s first car collision-avoidance system); and from big community projects (Entrepreneur Walk of Fame) to cheeky area clusters (top 10 “boring” tech companies).

Here they are in their full glory, our top 20-ish stories of the year, sorted by sector:

Top 12 Tech Stories

Adriana Jenkins, Boston Biotech PR Maven, Dies from Breast Cancer at 41

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Strange name. Big money. Newton, MA-based Cyber-Ark Software said today it has raised $40 million in investment led by Goldman Sachs and Jerusalem Venture Partners. The deal includes the purchase of stock from existing shareholders as well as growth capital. Cyber-Ark had previously raised $25 million in venture and angel capital.

Cyber-Ark works in the field of information security and identity management software. Basically it helps businesses, banks, and other organizations manage user privileges, sensitive data, and applications security, while protecting against insider threats. Cyber-Ark has been profitable, with 37 percent revenue growth in 2010. The company, which started in 1999, has 170 employees worldwide. It also has the distinction of making my top 10 “boring companies that are actually interesting” list from earlier this year.

This has been a busy fall for New England security software companies. Back in October, IBM acquired Waltham, MA-based Q1 Labs the same Intel’s McAfee snapped up New Hampshire-based NitroSecurity. And last month, Boston-based Rapid7 said it raised a $50 million round on the same day as CounterTack said it had raised $9.5 million and was moving to the Boston area from Virginia.

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Holiday shopping season is a fun time of year for a company like Daily Grommet. The Lexington, MA-based Web startup finds unusual consumer products and tells a story about one such “grommet” each day through videos and text.

This week I touched base with founder and CEO Jules Pieri, who shared some info with me on the top-selling grommets of the season so far. As someone who hates holiday commercialism, but likes warm puppies and weird gadgets as much as the next guy, I found the range of items available on the site pretty enlightening.

So in case you’re looking for an unusual-yet-personal gift for that special someone, you might want to browse around the Daily Grommet site, which includes product categories like home, food & drink, health & wellness, and green & eco-living. Sounds pretty standard, but the products you’ll find there are anything but.

Here are some examples of bestsellers (and links to the story behind each item):

—Sugru, a kind of hacking putty for real-world stuff (“fastest Grommet out of the gate, in history,” Pieri says).

—Urban Cheesecraft, which sounds like slang or euphemism but is actually just a handy cheese-making kit.

—Soggy Doggy, a super-absorbent doormat/shammy for dogs.

—Picture Keeper, an elegant way to grab and store photo libraries from your computer.

—Ila Security, a small, portable security-alarm device, like a personal panic button (good for long board meetings).

—Drawer Décor, a custom drawer organizer for kitchen supplies and other goods (mundane but useful if you don’t like clutter).

Good luck with the shopping, readers. I’ll probably see you online.

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Anti-theft technology for mobile devices just got smarter. Boston-based Skyhook Wireless announced today that its location-finding software has been deployed by Mountain View, CA-based Symantec (NASDAQ: SYMC) in its new Norton Anti-Theft Web service. Financial details weren’t given, but the arrangement will put Skyhook’s software on more devices over a broader range of applications—namely, security.

The anti-theft Web service enables people to lock, locate, and, if all goes well, recover a lost or stolen laptop (Windows-based), smartphone (Android), or tablet (Android)—all from afar. Skyhook’s technology, which uses Wi-Fi, cellular, and GPS signals to locate a given device, is already used by tens of millions of devices and applications, the company says.

Skyhook has been embroiled in two lawsuits against Google (NASDAQ: GOOG) since last year. The suits allege that the search giant infringed on four of Skyhook’s patents and interfered with deals that Skyhook made with Motorola and Samsung. Those deals involved putting Skyhook’s location-finding software on Android devices.

Symantec’s deployment of Skyhook’s software is the latest example of how Skyhook has managed to maneuver its technology onto Android devices despite its feud with Google, which, like Apple, wants to own location technology for its devices itself.

Back in May, Skyhook CEO Ted Morgan talked about his company’s technology being deployed by MapQuest, Citysearch, Priceline, and other Web applications on Android (and other) devices. “We’ll get on every Android device, but it will be through the apps instead of device makers,” he said.

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If you’re a cyber security company, get your funding while it’s hot. On the same day security software firm CounterTack (fka NeuralIQ) said it is moving from DC to the Boston area and taking a venture round, Boston-based Rapid7, a security assessment software company, says it has raised a $50 million Series C round from new investor Technology Crossover Ventures, based in Silicon Valley.

Rapid7 says the new money will be used to hire talent, accelerate product innovation, expand internationally, and make strategic acquisitions (let’s keep an eye on this—clearly a plan to go big). The company previously raised $7 million from Bain Capital Ventures in 2008, as well as a $2 million follow-on round last year.

The idea behind Rapid7′s software is to scan an organization’s entire IT infrastructure—including routers, hubs, networks, operating systems, databases, and Web applications—to find security holes and patch them. It also checks whether a company’s systems are in compliance with accounting and privacy regulations.

Rapid7 started in 2000 and is led by CEO Mike Tuchen. The firm has raised $59 million to date and says it has more than 200 employees.

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For every tech company that leaves Boston, it seems, another one moves in. In this case, the local security software cluster just got stronger—and a new approach to combating cyber attacks has arrived.

CounterTack, a security company formerly known as NeuralIQ, has rebranded itself and moved its headquarters from Alexandria, VA, to Waltham, MA. The company has just raised $9.5 million in Series A financing led by Fairhaven Capital of Cambridge, MA, with other private investors also participating in the round.

As part of the deal, CounterTack has brought in new management. Neal Creighton, the former CEO and co-founder of GeoTrust (sold to VeriSign for $125 million in 2006), has been named CounterTack’s chief executive. Creighton, a data security and authentication expert based in the Boston area, most recently co-founded RatePoint and AffirmTrust. Other new members of the leadership team include John Adams, chief technology officer; Jim Harrison, chief financial officer; John Worrall, executive vice president of product management and marketing; and Robert Potter, senior vice president of sales. Meanwhile, founder and chief architect Alen Capalik and chairman William Fallon (a retired admiral in the U.S. Navy) are staying on with the company.

Part of what’s driving the new investment is the emerging trend around “advanced persistent threats.” Essentially, these are cyber attacks that target a corporation’s or institution’s software applications, data, employees, or end users. The goal is to steal sensitive information about finances, infrastructure, intellectual property, and so on. The attacks are tough to guard against with traditional perimeter defense techniques like firewalls or virus detection. Instead, they require an organization to look deep inside its own networks and applications and root out problems from within.

That’s where CounterTack, and a number of other security tech companies, come into play. CounterTack uses virtualization software to boost customers’ network intelligence and try to detect attacks that are currently in progress. Exactly how the technology works is a little vague (probably by design), but presumably network operators and administrators can respond to the cyber threats once they know about them.

CounterTack, which started in 2004, has fewer than 50 employees. The company says it plans to hire 12-15 new staff in Waltham over the next year. It is also keeping its Virginia office as a sales outpost.

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Take a former D.C. lobbyist who’s now the owner of a chain of liquor stores, mix him with some security software engineers and you get Cambridge, MA-based Tru.ly. The startup’s software enables users to verify that they are who in fact they say they are online.

Web users can apply for credentials via Tru.ly, with information like their full name, date of birth and zip code. Tru.ly pulls some of these basic credentials from a user’s Facebook account and matches it up against government records, offering a credential to the user if it’s accurate. (The verification works: some of my Facebook data doesn’t match up to my official government records, so I got denied clearance a few times before correcting it.) Once a user has gotten clearance with these particular credentials, no one else can get clearance with them. Check out the demo of how it works.

So if Internet users are already fighting for privacy in an age of big data, why exactly would they want to confirm their official identity online, you ask?

For one, it lends more credibility to the Internet users for services like online dating sites, says CEO and co-founder David Gordon. The Tru.ly verification shows that the potential dater is who they say they are (and how old they say they are). It’s the first release of Tru.ly technology on the market, and focuses largely on validating user’s name and date of birth. “We really want to go to the market with a lightweight age verification product,” says Gordon. And it is less intense than going through, say, a background check.

Tru.ly, founded last February, plans to keep the credential process free for Internet users, but will charge websites that wish to plug it into their interface for different use cases, and will create custom white label verification products depending on business needs, says Gordon.

Tru.ly’s first release also has applications for alcohol brands’ websites and gaming. That’s where founder and Gordon’s experience as a liquor store owner comes into play. Beer sites, for example, have required users to “verify” their identity simply by inputting an age into the dropdown menu. No other measures are taken to ensure that kids aren’t getting access to … Next Page »

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Another year, another MassChallenge class. The sophomore edition of the startup accelerator and $1 million business plan competition did not disappoint. Nor did the final event of the program. Tonight was the big awards gala, held at the Boston Convention & Exhibition Center in South Boston—a cavernous and sprawling, impersonal space—but it did the job.

I’ll have more on the ceremony tomorrow. But in the meantime, here’s the news from the evening:

Three of the MassChallenge finalist teams won $100,000 each. They are:

—Alkeus Pharmaceuticals, a biotech company working on new treatments for blindness

—Sanergy, a green tech company developing sanitation services for urban slums

—Tinfoil Security, a startup working on Web security software for small businesses

And 14 teams won $50,000 each:

—Artaic, a custom tile mosaic company

—ArtVenue, a marketplace that connects artists with local businesses

—Casa Couture, which makes shoes for pregnant women

—Cocomama Foods, a gluten-free food brand

—Drync, a wine search and ordering service

—EverTrue, a startup that connects schools and organizations with donors

—Her Campus Media, an online magazine and marketing firm targeting college women

—Invup, which makes a Web platform for managing volunteer and donation programs

—Lynx Sportswear, which makes better-fitting sports bras

—Resolute Marine Energy, a seawater desalination company

—SmarterShade, a window-darkening tech company

—SocMetrics, a Web startup that helps businesses engage key influencers

—Therapeutic Systems, a company developing a sensory vest for autistic kids

—UberSense, which makes video software to analyze sports techniques

Rounding out the field of 26 final startups:

—ARO Medical, which makes an implantable brace for back surgery patients

—Bioarray Therapeutics, a cancer diagnostics company

—Circumventive, a stealthy security tech startup

—Driveway, which connects drivers with auto insurance providers

—Finalta, a company specializing in software for institutional asset managers

—PK Clean, a plastic waste-to-energy company

—Privy, a Web marketing platform for local merchants

—Pintley, a beer website and app for brewers and consumers

—The Tap Lab, a mobile location-based game startup.

Congratulations to all the finalists and participants, whose journeys are really just beginning. All in all, this is becoming a pretty cool tradition for the Boston startup community. We’re looking forward to next year already…

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A Boston-area security tech company and the University of Michigan are involved in one of the most ambitious—and potentially controversial—transportation projects of our time. It could have major impact on federal legislation, and almost everyone you know.

Picture this: You’re driving in your car, approaching an intersection. Maybe you’re speeding a little, going 40 mph in a 35 zone, say. Unbeknownst to you, another driver is racing down the cross street and is about to run a red light (probably texting or something). This could spell disaster. But instead, your car picks up a wireless signal from the other vehicle. A beeping sound or flashing light on your dashboard alerts you to slow down, so you hit the brakes. Disaster averted.

Now let’s take it a step further. Maybe the alert is hooked into your car’s control system, so if you don’t put on the brakes, your car does it automatically. And maybe that’s fine with you. But you might be a little worried about giving up that kind of control in life-and-death situations. After all, computers get hacked and software crashes. Not to mention, you might not want your car broadcasting its speed and location out there for all to see (especially not the cops, since you were speeding).

This scenario isn’t the future. It’s happening already—at least the driver-alert part. In six cities around the U.S., trials of about 100 drivers each are underway to see how people react to in-car alerts (such as collision warnings, do not pass, and vehicle stopped ahead). But the next step is bigger. In Ann Arbor, MI, some 3,000 cars will be equipped with onboard wireless devices for communicating with each other and signaling to drivers when there’s an imminent hazard. This 12-month pilot study, which was announced recently and starts next August, is being led by the University of Michigan’s Transportation Research Institute (UMTRI) through a $14.9 million contract from the U.S. Department of Transportation. The state of Michigan has been heavily involved as well.

The goal of the federal initiative is, ultimately, to save lives. In the U.S., auto accidents are the leading cause of death for people aged 15 to 34; more than 30,000 people are killed on the nation’s roadways each year. The hope is that with new early-warning systems in place, a sizable fraction of would-be victims could be saved—some say 80 percent of non-alcohol-related cases—especially when high speed is involved.

The idea of wirelessly connected cars isn’t new, of course. The field of vehicle telematics has been around for years, with applications in fleet management, tracking, and safety. But advances in GPS location technologies, wireless communications, sensors, hardware, and algorithms are enabling smarter, better-connected vehicles to be tested on a bigger scale. And recent breakthroughs such as autonomous road-racing vehicles and Google’s self-driving car are starting to propel the technology into the mainstream.

Nevertheless, the Michigan study raises some serious real-world concerns. “This is a massive system with tremendous security and privacy implications,” says Ed Adams, the chief executive of Security Innovation in Wilmington, MA. And that’s exactly where his software security firm comes in.

Security Innovation developed the mobile software being used in the U-M study to … Next Page »

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It’s taken me a long time to figure out TRUSTe. I’ve been to their offices, which are in a swanky building on Second Street in San Francisco’s Financial District, about three times in the last 10 months. But my last story about the company was back in September 2010, when it introduced some new privacy certification services for makers of mobile apps. The oddity about TRUSTe—the thing I couldn’t get my head around, until recently—is that the organization is a for-profit business that’s paid by other companies to verify that their online privacy practices meet its standards. Most of the other bodies that do this kind of thing, like the International Organization for Standardization (ISO) or Underwriters’ Laboratories, are non-profits—as TRUSTe itself was until 2008. I couldn’t understand why anyone would trust TRUSTe, when its revenue comes from the very companies it monitors. In economics, after all, that’s called “regulatory capture.”

The tension I was sensing is real—and, in fact, TRUSTe has taken heat in the past for lax enforcement of its own privacy standards. But in the course of several conversations with TRUSTe CEO Chris Babel and president Fran Maier, I’ve come to realize that I was thinking about the company in the wrong way. It’s not really a regulatory or standards organization, and never was. It’s more akin to a Progressive Era industry association—sort of like the Better Business Bureau or the Good Housekeeping Institute—built to tackle an Internet-age problem. Its job is to dispense a virtual seal of approval, to help assure consumers that when they visit TRUSTe-certified sites, they aren’t putting their private information at risk. Once that trust is in place, the concept goes, everyone can get on with business.

It’s also wrong to think of TRUSTe as a detective bureau, full of people running around investigating consumer complaints. It does have staffers who do that, but increasingly, TRUSTe is a technology company. It’s got software that automatically generates privacy policies, software that crawls and scans websites for potential privacy holes, software that automates opt-out programs for behavioral advertising, software that can help your Web browser block tracking cookies. In fact, it’s only by automating such processes, Babel says, that TRUSTe can keep up with the Internet’s growth and make its services accessible to more companies.

TRUSTe CEO Chris Babel

“The most frustrating question I get is, ‘Oh, TRUSTe, I recognize that, you’re that non-profit that has people doing privacy certification, right?’” Babel says. “I love the fact that people have seen the seal, they know it and recognize it and trust it. But we as a company have not gotten the message out well that in terms of our technological underpinnings, we’re really more like a three-year-old startup.”

It was looking at Babel’s own professional background that finally helped me understand TRUSTe’s current mission as a for-profit company. He came to the company from VeriSign, where he managed the Secure Sockets Layer (SSL) business, selling the certificates that website owners use to encrypt communications with visitors’ browsers. That part of VeriSign has since been sold to Symantec, but under Babel’s leadership it hit the 500,000-customer mark—and he has similar ambitions for TRUSTe. “All of the same customers who were buying an SSL certificate should also have a privacy policy,” he argues.

TRUSTe has a long way to go to hit that level—it’s only got 4,500 paying customers, who represent just a sliver of the overall e-commerce market. But that’s still a big increase over the 1,800 clients that TRUSTe had when Babel came on board two years ago. With $22 million in venture funding from Accel Partners, Baseline Ventures, DAG Ventures, and Jafco Ventures, the company has been scaling up fast—it’s now got 95 employees, including 35 in sales (up from four when Babel arrived), 30 in engineering (also up from four), and 20 in support and operations. And in the last year, it has expanded way beyond its initial focus on website privacy certification, adding services in three burgeoning areas where privacy questions are gaining urgency: advertising, mobile apps and websites, and cloud computing.

“Our pitch is that you need the best privacy policy on the planet,” says Babel. “That’s as unsexy as it gets as a sales pitch. But when you place the seal on your site”—or app, or ad, or cloud service—”you tend to see your customers buying more.”

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TRUSTe exists because of the constant pressure that technology places on our personal boundaries. The truth is that the more personally identifiable information or “PII” that your favorite travel site, airline, wireless carrier, newspaper, or social networking site has about you, the more customized the services and content they can offer. It’s inevitable that … Next Page »

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[Updated 10/14/11. See below] And then there were 26. Startup teams competing for $1 million in cash prizes, that is. Welcome to the final stage of MassChallenge 2011.

MassChallenge, for anyone who doesn’t know, is a Boston-based startup accelerator program now in its second year. It may very well be the world’s largest incubator of its kind. The nonprofit program and business competition kicked off in May with an announcement of the 125 finalist teams (out of 700-plus entrants). After a three-month mentorship program, it is now down to 26 teams who are giving their final pitches this week. The whole competition culminates in an awards ceremony on October 24.

The goal of MassChallenge is to spur Boston-area innovation by attracting entrepreneurs and connecting them with peers, mentors, funding, and other resources. It’s one of several big efforts to rally the local startup community and make it more competitive as an innovation hub. “We are on the verge of a renaissance,” MassChallenge CEO John Harthorne told me earlier this year.

If this year’s crop of finalists is any indication, the program has become more effective at engaging founders, connecting them with mentors, structuring their mentorship, and generally managing and communicating the logistics of such a huge (and hugely ambitious) program. Startup founders I talked to in recent weeks said the program was “really well organized” and that there was “nice camaraderie” amongst the teams. That seems to have helped them with the difficult work of early-stage company building.

“Technically I’m pretty strong, but I’ve never run a startup before,” says Bruce Robie, the founder and CEO of ARO Medical, one of the final 26 teams, based in North Andover, MA. ARO has developed an implantable device to help stabilize the spine of back-surgery patients.

Robie credits MassChallenge with improving his pitching skills and introducing him to key advisors. “Working with our mentors was a really positive thing,” he says, and “each brought a different perspective”—whether it was how to talk with potential partners or how to brand the product. “I’m an engineer by training, so my ability to name stuff is not going to set the world on fire,” he says.

Roy Rodenstein, the co-founder of Cambridge, MA-based SocMetrics, another finalist, says, “I’ve been very impressed this year. Last year was pretty good, but it was the first year. It’s progressing well as far as the level of support.” Rodenstein, who served as a mentor in the 2010 program, adds that “the quality of companies is up a bit,” similar to the recent trend for other incubators like Y Combinator and TechStars.

Several other finalist teams say the program helped provide the foundation and … Next Page »

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Any question about the impact MIT is having on the field of mobile software design can be answered with two words: Modo Labs.

The Cambridge, MA-based startup grew out of the MIT Mobile Framework, an open source project that began in 2007 with the goal of helping developers build mobile websites for universities. The plan was specifically to focus on things that people do every day, like look up directories and campus maps on mobile devices. The commercial version of the software platform is called Kurogo, and it debuted earlier this year, in April.

The idea behind Kurogo (the name comes from the stagehands in Japanese theater) is to help colleges and other organizations get their information up and running online and make it available on any kind of device, from iPhones to iPads to feature phones—and do it all quickly using pre-built templates.

“Someone could configure this without knowing how to program at all,” says Andrew Yu, Modo Labs’ CEO.

Last month, Yu and Marshall Vale, Modo’s chief technology officer, walked me through a demo whereby the Kurogo software lets a developer grab information from different kinds of data sources—staff directories, schedules, videos, Google Maps, Facebook, Yammer, and so on. Then he or she can put these elements together to form a working site, or even a mobile app for Android or iPhone, in a few hours or less, Yu says.

So far, about 150 universities around the world have deployed Kurogo or are tinkering with it, Yu says. And lately Modo Labs has been pushing into the business sector, helping large hospitals and financial institutions set up enterprise-level intranets and mobile apps, including features like a staff directory that links to an indoor map showing where each employee sits in the building.

While plenty of companies and development shops are working on enterprise mobile apps and platforms, most of them (e.g., Blackboard Mobile, Pyxis Mobile, Apperian, Raizlabs) use proprietary code and/or are complementary to what Modo Labs offers. Modo sees open source as a key advantage, in that companies can try out the platform directly and tailor it to their needs. What’s more, many existing apps and platforms concern only specific corporate departments, such as field sales or inventory tracking, says Yu. “We’re taking the stance of something to be used for every single employee,” he says.

Lest you worry about the corporate and mobile security involved in such an undertaking, these guys have some background in that arena. Vale previously was a product manager at MIT working on Kerberos network security technology. (He was also director of software engineering at iRobot, where he worked for almost six years.) Yu, for his part, is on his third software startup and also spent about five years working at MIT as manager and architect of the mobile platform project.

Yu’s near-term goal is to “make sure we have the right people, and create a really strong culture that will be driven by excellence, respecting the open source heritage of the company,” he says.

With that in mind, Modo Labs is really looking to take a leadership position in the open source community around the Kurogo platform. According to the company, some reasonable role models for Modo Labs would include JBoss in open source middleware (bought by Red Hat for $420 million in 2006), and Acquia, around social publishing software Drupal. The startup’s ultimate goal is to “deliver great products that have worldwide reach,” Vale says.

Modo Labs currently has about 20 employees, and the company says its revenue has been growing “very rapidly in the past few months,” to the tune of 50 percent year-over-year growth. The firm raised $2 million in its first financing round last year and is in the process of raising additional funds, Vale says.

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New England area security, consumer Web, database, and medical device tech startups have been acquired by firms near and far at a feverish pace in the last week.

—CustomMade, a Cambridge, MA-based provider of an online marketplace for connecting consumers with artisans, raised $2 million in funding from an unnamed group of investors.

—A trio of area Web startups inked financing deals late last week. Cambridge-based education-focused startup BetterLesson nabbed a $1.6 million investment from Highland Capital Partners, General Catalyst Partners, New Markets Ventures, NewSchools Venture Fund, and angel investors. Wikets, a recommendation technology startup, took in $1.5 million in seed funding from from Andreessen Horowitz, Battery Ventures, and angel investors. And Newton, MA-based online video delivery startup PeerApp added $8 million in financing from a group of investors that included Summit Partners. Cedar Fund, Evergreen Partners, and Pilot House Ventures Group.

—This week we’ve seen a slew of acquisitions. Boston-based Localocracy (developer of community platforms) was picked up by AOL’s (NYSE: AOL) Huffington Post Media Group, for a price tag of less than $1 million, according to tech media reports. Hopkinton, MA-based EMC (NASDAQ: EMC) bought Concord, MA-based Zettapoint, a database management technology developer, for an undisclosed sum. In the medical devices space, Hudson, NH-based Atrium Medical will be acquired by Sweden-based Getinge Group.

—More on that: (NYSE: IBM) announced its acquisition of Waltham, MA-based security software developer Q1 Labs, marking Big Blue’s 19th acquisition of a Bay State company since 2003. Financial terms weren’t disclosed for the deal, which is expected to close this quarter. Q1 CEO Brendan Hannigan will lead IBM’s newly formed Security Systems Division, which includes Q1 and other security technology IBM has acquired in the last decade.

—And still more: Portsmouth, NH-based NitroSecurity will be acquired by Intel (NASDAQ: INTC) subsidiary McAfee for an undisclosed sum. Nitro makes technology enabling organizations to much more quickly protect their IT infrastructure from cyber threats and other intrusions.

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Lots of action in computer security, especially around New England.

On the same day IBM said it’s acquiring Q1 Labs of Waltham, MA, the security firm McAfee, a recent subsidiary of Santa Clara, CA-based Intel (NASDAQ: INTC), said it has agreed to buy NitroSecurity of Portsmouth, NH. Terms of the deal weren’t disclosed.

NitroSecurity specializes in what’s called security information and event management. Basically, its software helps organizations protect their network infrastructure and IT environments against increasing levels of cyber threats and intrusions—and Nitro claims to do it fast, in minutes rather than hours.

The company started in 1999 and is led by CEO Ken Levine. A year ago, NitroSecurity announced a $6 million Series B financing round from Brookline Venture Partners, First Analysis, and NewSpring Ventures. The firm also said then that it had acquired the security business of LogMatrix, a Marlborough, MA-based company focused on IT and network management. No word yet on whether NitroSecurity’s staff, which totals about 100, will be moving west or staying put.

Nitro’s software encompasses “network security devices, firewalls, operating system and application logs, vulnerability assessment scans, identity and access management systems and privacy systems,” says Levine in a statement. “It will complement the extensive McAfee security portfolio and help to meet the demanding compliance and protection needs of our joint customers.”

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