Venture Partner Gets More Involved With Secure Methods
Washington Post, November 21, 2001
by Cynthia L. Webb
SecureMethods Inc., a McLean firm that develops software to help government agencies and companies conduct secure online transactions, is strengthening its management team, drawing on personal and professional connections, and changing its business model more than two years after its launch.
The company, which has received $600,000 since its start in July 1999 from Walker Ventures, this month hired as chief executive James J. Condon, the former chief executive of defunct online-payment company CyberCash Inc. Secure Methods also recently named Steve Walker of Walker Ventures board chairman.
The company's patented software combines encryption, authentication through digital signatures and auditing capabilities to help companies securely track electronic transactions, such as the transfer of documents, and identify anyone who sends or taps into the data through the Internet. Condon compares it to "a signed FedEx envelope as opposed to bulk mailing."
Condon's first task will be to help the 11-person company obtain funding for expansion. SecureMethods plans to increase its
sales and marketing team, which so far has been mostly run by founder Paul Clark. The team will sell SecureMethods products, but Walker and Condon also envision allowing Walker's other security-related portfolio companies as
well as outside
firms to use its sales and marketing staff, either through licensing deals or partnership arrangements. It's the first time Walker Ventures has tried the model.
Gina Dubbe, who will lead the SecureMethods sales and marketing effort on an interim basis, is a managing partner at Walker Ventures. She led sales for Walker's network security firm, Trusted Information Systems, which was sold in 1998 for $350 million. Condon and Dubbe already are on the boards of two Walker portfolio companies. It took about four months of negotiations with Condon and Clark, a former chief scientist for DynCorp and a computer security and cryptology professor, to solidify the plan. Condon started work Nov. 1 after wrapping up an interim job as head of a Utah technology firm.
"You've got to get the right people in there and you have to have the right conditions," Walker said.
SecureMethods has one ingredient that has proved helpful for many area technology firms: the right connections. SecureMethods has strong ties to Walker and TIS. Clark, now SecureMethods' chief technology officer and president, is a former employee, as are two others, including Walker's son Ken Walker.
Steve Walker's firm provided $250,000 in initial funding for SecureMethods. He said it became evident last summer that the company needed to tweak its business, especially as money started to run out. Some of the staff took pay cuts, while the team worked hard to get new contracts, Walker said. The company also supplemented revenue by doing security consulting work, Clark said. Adding customers and developing the sales model has helped.
In 2000, SecureMethods did $400,000 in sales and about $900,000 is expected this year, Condon said. The company has seven clients: the Defense Intelligence Agency, four other government customers and two commercial clients. The company turned a profit this quarter, Clark said.
"I think Paul came to the realization that he could have a very nice, small company with him doing everything," Condon said. "Or we had the potential to grow this company to be a very successful player in the security space."
Secure-transaction companies are in vogue since the Sept. 11 terrorist attacks, when companies started placing a higher premium
on securing information. But
analysts still say it has been a slow-growth area, mostly because of the dot-com meltdown.
"The interest went up, but the spending slowed down. So there isn't a bonanza," said John Pescatore, research director of Internet security for Gartner Research and a former employee of Entrust Technologies and Walker's TIS.
"It's very hard to convince companies that you've made it secure enough. Plus, every one of these solutions requires every company at each end of the transaction to use the [company's technology]," Pescatore said. Pescatore said security start-ups will have to focus on serving a few niche customers to "stay alive in the short term."
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