Mark Lowenstein has made some pretty bold statements about what’s going to happen in the wireless industry this year. More mergers and acquisitions among mobile operators. Same goes for the handset makers. Mobile payments won’t take off just yet. And enterprises may have jumped the gun on tablets.

Lowenstein, a Verizon Wireless veteran and now managing director of the Boston-area consultancy Mobile Ecosystem, dishes out insights like this via his regular e-mail newsletter on the mobile industry, but I wanted to dig in with him a bit more deeply on what these big changes mean for startups and other innovative companies working in Boston and beyond.

Plus, the Xconomy newsroom has been a bit buzzy with mobile news lately, after we just announced our fourth annual half-day forum on the subject, Mobile Madness 2012 on March 14.

Lowenstein, an Xconomist, pinpointed a couple of different facets of mobile technology that aren’t necessarily new, but that are maturing and hitting new stages. Read on for those, and some of the startups around the country that are driving these trends.

—Enterprise Mobility: Big companies have been scrambling to put a mobile face on their business, and startups have been sprouting up or changing their approach to support them. “It’s not just about mobile enabling what they’re already doing,” says Lowenstein. “It’s about how it can be an additional potential revenue stream for them.” In fact, just this morning Framingham, MA-based Staples, one of the world’s largest retailers, announced it would be setting up a new e-commerce innovation facility in Kendall Square, with mobile as a big focus.

Businesses that need to build consumer-facing, brand-specific applications will continue to turn to mobile strategy and consulting firms to do the heavy lifting.

And companies that have previously developed individual applications for enterprises are now starting to sell the tools that allow companies and brands themselves to move much of their activity to the mobile front. That includes Boston-area firms like Raizlabs, Apperian, Modo Labs, and most recently, Verivo Software (formerly known as Pyxis Mobile).

—The App Marketplace. Speaking of apps, enough is enough. It’s been about four years and around half a million apps since Apple introduced its iTunes app store. “It’s been terrific, but one gets the sense that it needs to get to the next and more mature stage,” says Lowenstein. Meaning, a majority of apps don’t have a company behind them, don’t get updated, and don’t really make money. “They’re a fad, a fly … Next Page »

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For almost two years, Pyxis Mobile has been restructuring its business to sell platforms for mobile app development, but was lacking the capital to make the switch official, says CEO Steven Levy. That’s over now, with Waltham, MA-based Pyxis announcing today that it has socked away $17 million in new funding and has rebranded as Verivo Software. The deal was led by new investor Commonwealth Capital and included previous Pyxis investors Ascent Venture Partners and Egan-Managed Capital.

Verivo is taking the mobile app-building platform from Pyxis, which previously created and sold apps to customers in the financial services industry. But around 2010 the company realized that the “platform had more value than the apps,” says Levy, who joined Pyxis in July 2010. Selling platforms for enterprise app development has become a popular business model for mobile startups in Boston and beyond.

“The new business is focused on entirely platform; we secured the capital to really go ahead and pursue this plan aggressively,” he says.

Verivo plans to sell its technology as tools to large and small companies, like grocery stores, that are looking to add a mobile component to their business. The platform is designed to help them build applications that will run on different mobile operating systems, and also address problems that are specifically related to enterprise-level applications, like syncing back-end data, meeting corporate IT requirements for security, and quickly adapting to changes in mobile devices and operating systems.

“We want to solve the problem of helping those businesses go from an idea they have in enterprise mobility to it impacting their bottom line as quickly and as easily as possible,” says Levy.

And what about the financial services companies that were using the apps Pyxis built for them? They always had access to the platform their apps were built on, but often couldn’t use its full line of features because their individual IT departments didn’t recognize it on the platform level. The Verivo rebrand allows its clients to tap into these more fully, says Levy.

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UTest, a Southborough, MA-based startup that crowdsources testing for software applications, said today that it has raised a $17 million Series D financing, at a company valuation that more than doubled since uTest’s last funding round 15 months ago.

Baltimore, MD-based QuestMark Partners led the investment, which also included all existing uTest investors: Scale Venture Partners, Longworth Venture Partners, Egan-Managed Capital, and Mesco. UTest declined to reveal the exact valuation the company raised its last two venture rounds at.

The company got its start offering quality assurance testing services to enterprise customers, and has since rolled out services for smaller software startups, as well as platforms for testing software security, usability, load, and localization. It’s seen a surge of customers using its service for mobile app testing, said uTest chief marketing officer Matt Johnston. “Mobile is growing the fastest, growing faster than desktop and Web,” he says. “It’s absolutely white hot. And it’s not just for startups.”

He says the uTest model works well for mobile applications because it “enables you to test across locations, jumping tower to tower.”

“Even big companies can’t do that in house,” he says.

The company plans to use the new cash to staff up in its Boston-area, Silicon Valley, and New York offices, as well as expand to other tech hubs, like Seattle, where it will open an office later this month. It is also creating a suite of tools that it hopes will help developers as they are building their applications, rather than testing them after the fact.

Johnston’s says uTest’s growth and ability to raise private money could make it a good candidate for an initial public offering down the line. But the company’s not worried about that just yet, he says. “We’re focused on serving customers—that’s ultimately the way you create delighted, evangelical customers that are telling the world about you.”

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We caught a fresh wave of tech startup financings, from companies working on improving e-mail, shopping, wellness, video surveillance, and enterprise computing. Here’s a quick rundown:

—Boston-based HelpScout, developers of software for managing group collaboration across a single e-mail address, announced the closing of its $435,000 equity round. The TechStars Boston graduate told me when we spoke this summer that it was in the process of closing a seed round, with funding from angels such as David Cancel, Dharmesh Shah, Joe Caruso, Chris Sheehan, and Brian Balfour.

—Ginger.io, another TechStars Boston alum, has amended an SEC filing to indicate it has raised $1.65 million of a targeted $1.7 million equity round, from 12 investors. The Cambridge, MA-based health and wellness tech company, which filed its regulatory papers under the company name Gingerd, presented in the startup Xpo at our XSITE conference in June.

—Boston-based fashion tech startup Snapette, a grad of the Mountain View, CA-based 500 Startups accelerator program, nabbed $1.1 million of a $1.275 million debt-based funding round, an SEC filing shows. Snapette, whose founder said last month that she had dropped out of Harvard’s MBA program to focus on the company, offers technology for enabling shoppers to share accessories available at local stores and for merchants to offer discounts.

—RemoteReality, a Westborough, MA-based developer of wide angle video camera systems for surveillance and navigation, has brought in $2 million of a potential $3.5 million equity-based financing round, coming from five investors, an SEC filing shows. The company’s website lists its previous investors as Chart Venture Partners and Connecticut Innovations.

—And Westborough-based Aternity, a maker of software for enterprise desktop monitoring, announced it had bagged $13 million in a Series D round led by Investor Growth Capital. The deal also included all of Aternity’s existing investors, Vertex Venture Capital, Genesis Partners, Intel Capital, and Clal Industries and Investments.

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Cambridge, MA-based Backupify, a provider of technology for backing up data stored in e-mail and social media applications, is announcing it has nabbed a $5 million Series B financing, led by existing investor Avalon Ventures. Return investors General Catalyst Partners and Lowercase Capital also participated in the deal, which brings Backupify’s total funding pot to $10.4 million. Avalon managing director Brady Bohrmann joins Avalon general partner Rich Levandov on the Backupify board.

The money will go to product development for Backupify’s software that helps companies using Google Apps back up, search, and restore their data. CEO Rob May says that many of those clients have requested that the Backupify technology be applied to other office productivity tools that store things like financial data or customer related information.

Backupify started in 2008, providing a free consumer-facing backup service, but introduced the Google Apps service last year to focus on gaining small- and medium-sized businesses as customers. The company says it has signed on more than 5,000 Google Apps domains and grown that portion of its business by 4,000 percent since raising its Series A round of funding last September.

Backupify formerly operated out of the Kendall Square building that also houses Xconomy’s headquarters, but has since moved to space in Central Square formerly occupied by Performable, a marketing automation startup acquired by HubSpot in June. May says Backupify has gone from the eight or nine employees it had when it raised its Series A funding to about 21 now. He expects the head count will grow another 40 percent or 50 percent next year, with the new hires split among sales and marketing staff.

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The West Coast might have all the big names in e-mail platforms, but Boston’s doing plenty when it comes to building technology on top of those existing foundations.

There are a number of established players that have been around and working on technology for things like managing e-mail outboxes (SMTP), bulk mailings (Constant Contact), and e-mail marketing and lead conversion (HubSpot).

But a new crop of companies has been developing technologies that aim to make life easier for businesses and consumers via the e-mail interface. So look out, Facebook and other social platforms: it looks like e-mail isn’t going away anytime soon. We’ve rounded up a mini cluster of e-mail app developers that have come out of Boston, so take a look. (Side note: a good chunk of them have TechStars roots.) Feel free to suggest any I missed.

—Yesware, working out of Cambridge, MA’s Dogpatch Labs, specializes in making sales people more efficient and effective. The company offers e-mail templates to help salespeople better approach, pitch to, and manage customers. It’s also looking to create a system for helping managers better understand their sales teams by observing e-mail communication with customers and its effectiveness. Yesware has $1 million in its funding pot from some notable names related to e-mail (none publicly named yet, though.)

—TechStars Boston 2011 graduate Help Scout is looking to aid businesses better use the inboxes run by multiple people, say, something like help@xconomy.com (not an actual e-mail address, but you get the picture). The big focus is on customer service applications for Web-based companies. Help Scout users can track customer e-mails, assign them a ticket number, and collaborate with other employees on the problem or question in a more organized fashion than shouting across the office. It runs in existing e-mail inboxes or through its own external app.

—Who’s got skills? Senexx wants to help organizations better understand who in their workforce is skilled at what, and connect them to the people who need help. As you might have guessed by now, they’re doing it through e-mail. The company came from Israel to TechStars Boston this year.

—U.K.-based Mimecast has a strong Boston presence. The company offers software for helping companies better keep track of where e-mails go and when. The idea is to help employees focus less on e-mail and more on their actual business, while making e-mail more efficient, manageable, and … Next Page »

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San Francisco-based Zendesk, a maker of Web-based customer support software, is a company I’ve been following for a few years now. That’s partly for geographical reasons—like me, the startup was based in Boston for a while, then moved west to San Francisco—and partly because they’re simply nice people who really walk the walk when it comes to making customers happy (the happy Buddha sculpture in their office isn’t just a knick-knack). So I wanted to get on the record with some big news from the company that I didn’t have time to cover last week.

Like many startups offering cloud-based services, Zendesk started out with a focus on small- to medium-sized businesses, which are often in the best position to adopt new technologies, since they’re not so locked into big, legacy, on-premises software systems. Indeed, the startup has signed up more than 10,000 SMBs as customers. But last week Zendesk announced that it has reworked its system to support large companies as well—and that it has already signed up some major users such as Adobe Systems, MSNBC, Rackspace, Sears, and Sony Music.

It’s a tricky transition to negotiate, since many of the features that large enterprises need—including high-level security and access controls—are almost antithetical to the open, collaborative, social-media-friendly spirit baked into many Web 2.0 services. But there’s a big incentive to cater to these larger customers, who can end up paying for 1,000 or more seats, compared to the handful that most smaller companies need.

Mikkel Svane

Zendesk CEO Mikkel Svane says he realized over the last year that Zendesk wouldn’t have to completely rebuild its platform—which helps companies track and respond to customer complaints via multiple channels, including e-mail, Web forums, and Twitter—to make it attractive to large companies. “We made it to almost 10,000 customers without an actual sales force,” Svane told me. “The minute we implemented a sales force we realized how many large companies were interested in adopting Zendesk if we could just cater for some of their needs related to security, administration and operating globally with multiple brands. From there if was just a question of building it.”

New features built into the enterprise version of Zendesk include the ability to build separate customer support portals for multiple brands, yet administer them centrally; the ability to restrict access to certain functions according to an employee’s role in the company; and archiving of all customer support interactions, for legal and compliance purposes.

Reflecting all these added features, the enterprise version of Zendesk comes at a higher price: $99 per user per month, compared to $24 per month for the “regular” service package and $49 per month for the “plus” package. But to make the service more accessible across a large organization, Zendesk has added a “light agent” option that lets occasional users such as supervisors access their agents’ support conversations without paying for more seats.

A big part of Zendesk’s pitch has always been about transparency, and the benefits of swiftly connecting customers with the person inside an organization who can answer their question or solve their problem. “We wanted to streamline help desk systems, move them to the cloud, and bring never-before-seen transparency and openness to the customer engagement process,” Svane writes of the company’s founding in 2007. But most large enterprises have concerns that conflict with that kind of openness. I asked Svane how the company plans to stay true to its mission, even when its tool is being used inside large enterprises bound by the need for rules, boundaries, and compliance.

Large organizations select Zendesk “because of our commitment to customer enlightenment and help desk bliss,” he answered. Some customers value transparency, he implied, while for others, Zendesk’s record of innovation is the real attraction. In February, for example, the company introduced an iPad version of its software that lets customer service agents monitor support conversations from; in April, it introduced a new satisfaction rating system that lets Zendesk clients survey their own customers about their support performance. “Customers feel confident in our ability to innovate and execute,” Svane says.

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Basho Technologies, a Cambridge, MA-based provider of data storage and management software for enterprise customers, announced today that it has hired a new CEO and sewed up some new funding.

The new chief executive, Donald Rippert, formerly chief technology officer of consulting and technology services firm Accenture, will start on July 1 at Basho, which provides an open source database technology called Riak for Web and cloud-based applications. Rippert replaces former CEO Earl Galleher, who will remain as chairman of the board.

“Don will build upon Basho’s growing customer base, which includes, among others, a number of major companies in the healthcare, cable, telecommunications and software industries,” said Galleher in the announcement of the deal.

Basho said it has completed a $7.5 million Series D financing, having announced the first $3.5 million of the funding round in February. The money came from private equity firm Georgetown Partners, and Trifork AS, a Danish systems integrator that is the European distributor of Riak.

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Black Duck Software CEO Tim Yeaton says his Waltham, MA-based company is fulfilling a mission that it set out on when he started two and a half years ago.

“We enable organizations that are building software products and applications to use open source components successfully in their development,” Yeaton says.

Black Duck was initially known for its technology that helped software developers comply with the licenses for different open source software components they used. Yeaton says the company’s product can also help others build software with open source elements from the ground up, rather than just policing themselves.

“When used early on in the development process as part of a suite of tools, it enables organizations to accelerate software development and reduce costs,” he says.

Black Duck says it already had the” world’s definitive database of open source projects and information” from its original business, and decided to focus on creating a community for individual open source software developers. Black Duck helped accelerate that with its acquisition of Ohloh.net last year from Geeknet (NASDAQ: GKNT). Ohloh offered a free public directory of open source software and a Web community of developers working with those components. Black Duck is working on integrating Ohloh with its own code search site, Koders.com, to create “a single integrated destination for developers, a wide-angle lens into the open source ecosystem,” Yeaton says.

The company still makes money from selling its technology to enterprise software makers using open source components but connecting with developers and building up that community on its free site supports the business, Yeaton says. “We think that actually better enables the entire software industry to more effectively use open source,” Yeaton says.

Last year, Black Duck also acquired SpikeSource, a maker of software and services for identifying application components and assessing compliance. Yeaton says that deal was entirely a technology acquisition, but that it will build those capabilities into its for-fee enterprise products, as well as its free website for developers. To round it all out, Black Duck also acquired the consultancy Olliance Group, which helps companies define and drive their open source strategies, this past January. “Our products work best when they’re automating a series of well defined policies and strategies,” Yeaton says.

Black Duck has added 24 jobs this year, largely in development and services roles. The company now has about 150 employees, and has had 40 percent year-over-year sales growth for the last three years, Yeaton says. It hasn’t raised outside venture funding since 2009, and has been able to finance its own recent acquisitions.

The firm has better branded itself as the open source enablement company in the past few years, Yeaton says, and it’s going to keep going on that mission. It’s all about “enabling other organizations to drive their own innovation,” Yeaton says.

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Just this February, Mountain View, CA-based Violin Memory raised $35 million in Series B funding to scale up manufacturing of its Flash memory arrays for data centers. Today the company announced that it has collected another $40 million. The group of unnamed Series C participants includes “several of the largest public companies in the computer industry” as well as “new cross-over public market investors,” the company said. Violin’s known backers including Toshiba America Electronic Components and Juniper Networks.

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Southborough, MA-based uTest hit the market with its crowdsourced quality assurance testing service in a slightly unconventional order. UTest first introduced its “full strength” software-as-a-service for more mature, enterprise-level Web companies in 2008, and has nabbed big customers like Google, Microsoft, Intuit, Myspace, and Thomson Reuters. Clients indicate the type of testing they want, uTest sends it to its network of roughly 40,000 freelance testers, who report back on what bugs, if any, they find.

It moved into the mobile sphere for bigger enterprise customers in 2009, says uTest chief marketing officer Matt Johnston. Then, this spring, the startup first offered its uTest Express product to younger startups working on mobile apps. Finally, two weeks ago, uTest introduced a version of Express tailored for Web-based applications built by young, small startups.

“It’s a frictionless model,” says Johnston. “We can serve the lower end of the market very well and very profitably.”

UTest found that the biggest pain point for early stage startups, which typically have some seed funding and somewhere between two and twenty people on staff, was testing for mobile apps, Johnston says. The company rolled out the Express software first as a soft beta launch late last year, and officially at CTIA Wireless in March, mainly for entrepreneurs who hadn’t sought much testing for their mobile product beyond their close family and friends, and who also didn’t have the budget for in-house quality assurance. “It’s really about lightweight testing and app validation and real world feedback for validation,” Johnston says.

The mobile sphere also provided a … Next Page »

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Burlington, MA-based software startup Ziptr has brought in $6.8 million in equity financing from 26 investors, an SEC filing shows. Ziptr’s website says that its software, which is in its beta version, is focused on privacy and compliance for businesses. Last October the company raised $1.5 million in a debt financing from 25 investors.

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Seattle-based Tier 3, a cloud-computing service for businesses, said Wednesday that it has raised $8.5 million from Ignition Capital and Madrona Venture Group.

This is the company’s first publicly announced round of financing. Tier 3 was founded in 2006 and counts Microsoft among its nearly 100 clients. In a release, Tier 3 said it plans to use the money to move more quickly into new markets.

Tier 3′s chief executive is Adam Wray, a veteran of Limelight Networks, PeerApp, and Amazon.

The company presently runs its “core operations” out of server farms in Seattle and Salt Lake City, with plans to expand to four more facilities, according to the company’s website.

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San Bruno, CA-based Dynamic Signal, a stealth-mode enterprise social media startup founded and led by former Adify CEO Russell Fradin, has raised $8 million in equity-based financing from a group of 30 investors, according to a regulatory filing. Trinity Ventures partner Ajay Chopra, comScore co-founder Gian Fulgoni, and Cox Enterprises vice president of business development Jamie Kennedy are listed as board directors for Dynamic Signal, which previously went by the name Influentials.net.

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At Xconomy we shy away from pure product-release stories, but there’s word today of a product from a San Francisco company I admire (Zendesk) on a platform I love (the Apple iPad). Starting today, employees at companies that use Zendesk’s online customer support management platform (which we profiled here last August) can download the new Zendesk iPad app at Apple’s iTunes App Store. “We built the most beautifully simple help desk application ever, so it’s a perfect fit for iPad,” said Zack Urlocker, Zendesk’s chief operating officer, in a statement. “Now support agents can work anywhere instead of being chained to a desk.” Zendesk says agents at companies like Griffin Technologies are already using the free app to view and respond to the help tickets assigned to them.

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Palo Alto, CA, startup Box.net, which we profiled in September, yesterday unveiled an extensive set of changes to its Web-based document sharing system for businesses. The new features—described in a blog post by director of product management David Lee—include a simplified user interface, real-time updates when colleagues modify documents, and an “app marketplace” collecting third-party software that interoperates with Box.net. The startup also says it revamped behind-the-scenes code to make it easier to roll out new improvements in the future. “With the new version of Box, we’ve removed all the clutter in both the implementation and design to give users an incredibly streamlined, intuitive experience,” engineering manager Kimber Lockhart said in a statement. “In doing so we’ve laid the groundwork to bring new innovations to market faster than ever before.”

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1) 4G. 4G services will become available on a near nationwide basis in 2011. At its best (and what is called “4G” gets murkier every day), 4G offers a true mobile broadband experience. In order to be successful, 4G operators must have a comprehensive go-to-market strategy, with compelling devices, exciting and differentiated applications, and innovative pricing models.

2) Re-Thinking the App Store. It’s great that there are 300,000 apps out there on iTunes, and 100,000 in the Android market. But with so many options out there — and not a lot of real businesses being built — there will be greater attention to search, discovery, context, and personalization to deliver a more effective and monetizable apps experience.

3) OS Consolidation. The new Windows Mobile 7 phones are pretty good. But can the market support another OS? Add to that the struggles of Symbian (Nokia) and WebOS (HP/Palm), and Blackberry’s declining share, and something is going to give. Look for something blockbuster involving Nokia, Microsoft, and possibly RIM.

4) Content Distribution Models. We are in the early innings of thinking about how print and broadcast content and programming are going to be effectively distributed digitally, and to our “multiple screens.” Next year will see the introduction of some innovative new business models, but also continued battles between content owners and emerging distribution networks.

5) Mobilization of the Enterprise. This is something that we have been talking about for years, and it has been happening in baby steps. But in 2011, we will see corporate IT make significant investments in mobile, driven by the availability of 4G, compelling new products such as smartphones and tablets, a more open and cost-effective application development framework, and a maturing ecosystem of companies to help firms mobilize.

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Just when you thought there couldn’t possibly be another massive inefficiency in the economy waiting to be fixed by Internet entrepreneurs, along comes Taulia. This San Francisco startup has figured out an easy way for suppliers of goods and services to get paid faster, and for the buyers of their goods and services—at least, those who use one popular brand of financial software—to pay less.

It sounds like such an obvious win-win that it makes you wonder why no one thought of it sooner. But only recently have enough big companies automated their invoice processing and accounts-payable systems to make administering such a process feasible, says Taulia CEO Bertram Meyer. And then it took some clever software engineering by Meyer and his colleagues to connect suppliers to their customers’ enterprise resource planning systems via the Web. (So far Taulia’s software connects only with ERP systems from the German software giant SAP.)

In essence, Taulia’s “invoicement” system allows suppliers to apply time-sensitive discounts to their bills, giving them more control over when they’ll get paid. The sooner a customer cuts a check, they larger the discount they get. “For suppliers, it’s a way to receive their funds earlier,” says Meyer. “And the buyer gets a discount at a rate that is interesting—usually in the low double digit range.”

Taulia thinks suppliers will like the dynamic discounting system because it will help smooth out their finances. If it’s the end of the month and a company needs cash to cover payroll, for example, it might be cheaper to offer a discount on a big payment owed to them—thereby triggering faster payment—than to borrow the money. (Of course, such a system could backfire if buyers used it to demand unreasonable discounts from cash-strapped suppliers. But Taulia argues that suppliers are happy to offer discounts to minimize the fuss and delay around collections.)

Taulia makes money by keeping a small percentage of the discount on each transaction. Given that a single large corporation could save tens of millions of dollars a year by taking advantage of the discounts Taulia enables, it’s no surprise that high-profile investors are interested in the startup. Taulia is announcing today that it has won $3.2 million in Series A funding from Waltham, MA-based Matrix Partners, Menlo Park, CA-based Trinity Ventures, and a band of individual investors in Silicon Valley called The Angels’ Forum.

Three things made Taulia’s business model appealing to Matrix, according to Josh Hannah, a general partner at the firm. The first is the way it rebalances cash flow in an economy that might best be called constipated—Fortune 500 companies are sitting on a collective $800 billion in cash right now.

“Once a payment is approved and flagged in SAP for payment, most companies just sit on it until day 60 for cash management reasons,” says Hannah. “But the 60-day terms on most invoices are an artifact of how long it used to take to process a paper invoices. It no longer takes 60 days—it’s more like 10 days. If the company that makes cardboard boxes for iPods has to wait 60 days to get paid by Apple, they are in effect loaning Apple money, which is ridiculous, because … Next Page »

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Yammer, the San Francisco-based maker of a Twitter-like messaging and microblogging service for enterprises, announced today that it has closed a $25 million Series C financing round. U.S. Venture Partners was in the lead, and existing investors Emergence Capital, Charles River Ventures, and Founders Fund also participated. Mamoon Hamid, a partner at U.S. Venture Partners, has joined Yammer’s board. The company says that the Yammer platform is now in use at 80 percent of Fortune 500 companies, and it plans to use the funds to triple the size of its engineering team and also build up its sales operation. The company has raised $40 million in venture cash altogether, including a $5 million round in March 2009 and a $10 million Series B round in February 2010.

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When I traveled to Michigan last month, my conversation with entrepreneur Dug Song left me with the impression that’s he very passionate about several things: startups, cyber security, and Ann Arbor.

I met with Song at Tech Brewery, the Dogpatch Labs-esque startup incubator space he founded in an old brewery building right in the University of Michigan’s hometown. He runs his stealthy new company, Scio Security, out of the shared co-working space, and is just shouting distance away from the dozens of other companies in the incubator that are plugging away at technology in the mobile, Web, and cleantech sectors. Before TechBrewery existed officially, Song worked out of the building as VP of engineering at Zattoo, an Internet TV service. He took the position shortly after leaving his previous startup, Arbor Networks, which was sold to Danaher (NYSE: DHR) subsidiary Tektronix this past summer, for a sum that was a “multiple” of its roughly $100 million in annual revenue, he says.

Arbor brings us to another aforementioned strength of Song’s: security—the Internet kind, that is. The firm boasts about 70 percent of the top tier Internet and telecom companies as customers. It’s become a standard in enterprise network security and is “the reason why the Internet has not melted down since 2002,” says Song, who started out as founding architect of the company and later held the role of chief security architect. The inspiration came from how easy it was for a teenage hacker—dubbed MafiaBoy—to launch massive online attacks that took down commercial websites from the likes of Yahoo! and eBay back in 2000, Song says.

Security isn’t the only thing that Arbor Networks and Scio Security have in common. Arbor started in 2000, in the wake of the tech crash. And since Scio launched in the past year, well, you get the picture.

“I like starting companies in recessions,” Song says. “It clears the playing field.”

Scio quietly kicked off in January, got its first customer in March, and will be a bit more vocal in the coming months about its cloud-based security technology, Song says. It’s a cousin of sorts to Arbor, doing for virtual security and small businesses what Arbor did for physical network infrastructure at large enterprises.

“Now the real threat is hackers going down market,” he says. “Attackers figured out there’s as much money to be had going after small businesses.”

With Scio, Song is looking to defend against the next wave of security threats—those at the user level. Hackers can get at smaller firms by going through their individual employees, via dangerous links sent through e-mails, he says. The startup—which is planning to change its name soon to Duo Security—is developing technology that aims to solve the problem of authentication for firms with remote workers, to ensure that the user logged in at a remote location is in fact the person who works for a given firm, and thereby prevent … Next Page »

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