A Veteran Entrepreneur Looks to Rescue St. Bernard Software

Like any entrepreneur, Lou Ryan has a job that’s roughly akin to kindling a blaze from a faint spark. In Ryan’s case, though, it might be more like trying to rebuild a fire that was started in 1995.

Ryan, 54, is the software industry veteran (and former venture partner at Menlo Park, CA-based Sand Hill Capital) who was named earlier this week as the CEO of San Diego’s St. Bernard Software (OTCBB: SBSW).

He has been expanding his influence at the company since joining St. Bernard’s board in 2006. He became chairman last June, and in December, he purchased 778,901 shares—acquiring a roughly 5.3 percent stake in the company, which provides network security through a line of hybrid hardware-software products. Ryan acknowledges the market is crowded with similar technologies clamoring for attention. “I wouldn’t exactly say it’s like soft drinks, but it is fully commoditized,” he told me.

So why is he moving in and taking over?

Ryan has a lot of experience in starting security software companies—and in selling them. He was a co-founder and senior executive at Delrina Corp., a public software company acquired by Symantec in 1995. He was the CEO at Entercept Security Technologies, a network intrusion-prevention technology company which sold to McAfee in 2003. And he was a founding investor at Foundstone, an internet-vulnerability assessment company, and helped arrange its sale to McAfee in 2004. He says it might be reasonable for someone who’s familiar with his career to conclude that his arrival at St. Bernard indicates he just plans to flip the company. But he says that’s not entirely right.

“I can tell you emphatically that I did not invest in this thing to make a quick profit,” Ryan says. He believes the market has grossly undervalued the company, and he wants to drive St. Bernard forward, despite the difficult economy. “You only get there one way, and that’s to build a company of recognized value.”

Still, that’s a tall order when the company’s business is focused on Internet security and its stock trades over-the-counter at 13 cents a share

“It’s an extremely competitive market, but I didn’t get into this business because I believed there was a green field opportunity here,” Ryan says. “We substantially have to improve both the product and our market.”

St. Bernard was founded in 1995 as a data security business with a flagship software product called Open File Manager, which the company sold in 2007. Today St. Bernard has more than 100 employees, and a market valuation of just less than $2 million.

Ryan wouldn’t provide much insight about his plans for St. Bernard, except to say his roadmap calls for a combination of both new technology development and an expanded business strategy for existing and new markets. Ryan says he’s found untapped technologies within the company, and he has numerous ideas about how to add interesting capabilities to St. Bernard’s iPrism, an Internet appliance that filters the packet flow in and out of a network.

“When I came here, I found a technology company with some ideas that were not being developed, a really smart group of people, 5,000 mostly happy customers, and a pretty good balance sheet,” Ryan says. “The way I look at it, I’ve got a well-funded startup with about $20 million a year in revenue.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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