State a fer­tile field for cy­ber star­tups

Tal­ent from NSA, other agen­cies lures in­vestors and en­trepreneurs to Mary­land

Baltimore Sun Sunday - - NEWS - By Sarah Gantz

Zuly Gon­za­lez and Beau Ad­kins worked in the dig­i­tal trenches at the Na­tional Se­cu­rity Agency for more than a decade.

Gon­za­lez de­signed com­puter pro­tec­tion sys­tems and Ad­kins fig­ured out how to pen­e­trate such bar­ri­ers. Their light bulb mo­ment came when they de­cided to ap­ply their ex­per­tise to the com­mer­cial sec­tor and founded their com­pany, Light Point Se­cu­rity.

“We kind of melded both his of­fen­sive mind­set of hack­ing and at­tack­ing and my mind­set of defending. He knew how easy it was to hack and get into net­works,” Gon­za­lez said. “So we ba­si­cally thought about what would it take to re­ally stop Beau from get­ting into a com­puter.”

Nu­mer­ous busi­nesses in Mary­land’s grow­ing cybersecurity in­dus­try were founded by for­mer gov­ern­ment work­ers or gov­ern­ment con­trac­tors, and count such work­ers among their cur­rent and prospec­tive em­ploy­ees.

The state’s prox­im­ity to Washington and its con­cen­tra­tion of fed­eral work­ers, es­pe­cially those work­ing in in­tel­li­gence, se­cu­rity or de­fense roles, has cre­ated a valu­able pipeline for cybersecurity com­pa­nies.

In ad­di­tion to the NSA, which eaves­drops on com­mu­ni­ca­tions around the world, Mary­land is home to the mil­i­tary’s U.S. Cy­ber Com­mand, which, like the NSA, is at Fort Meade; the Na­tional In­sti­tute of Stan­dards and Tech­nol­ogy’s Na­tional Cybersecurity Cen­ter of Ex­cel­lence in Rockville; and Lock­heed Martin’s NexGen Cy­ber & In­no­va­tion Cen­ter in Gaithers­burg.

The state hosts about 11,280 in­for­ma­tion tech­nol­ogy busi­nesses and an in­dus­try work­force of nearly 116,570, ac­cord­ing to the state Com­merce De­part­ment.

As Mary­land strives to es­tab­lishes it­self as a hub for tech­nol­ogy com­pa­nies, these gov­ern­ment work­ers-turned-en­trepreneurs are key to build­ing up the state’s ranks of promis­ing startup com­pa­nies, strength­en­ing its rep­u­ta­tion in cybersecurity and at­tract­ing more ven­ture cap­i­tal fund­ing.

“It’s al­most harder to come up with a startup that isn’t led by some­one who has worked at Fort Meade or one of the other fed­eral agen­cies or the mil­i­tary,” said Ken McCreedy, di­rec­tor of cybersecurity and aero­space at the Mary­land De­part­ment of Com­merce. “The best and the bright­est in the world in cybersecurity are right here in Mary­land. For those of them that have an en­tre­pre­neur­ial spark, they find this a fer­tile area to grow their com­pany.”

But de­spite their tech­nol­ogy chops, most en­trepreneurs com­ing out of the gov­ern­ment sec­tor have never led, let alone launched, a busi­ness. To take full ad­van­tage of their po­ten­tial, Mary­land must be ready to meet their tech­ni­cal ex­per­tise with the re­sources re­quired to build a busi­ness out of an idea, said Bob Ack­er­man, a Sil­i­con Val­ley ven­ture cap­i­tal­ist who last year co-founded a startup stu­dio called DataTribe in Ful­ton ded­i­cated to com­mer­cial­iz­ing tech­nol­ogy de­vel­oped within the fed­eral gov­ern­ment.

“When you pull folks out of these labs, they’re ab­so­lutely the best and bright­est tech­ni­cally,” Ack­er­man said. “They’ve never built a busi­ness.”

Guy Filip­pelli had a clear idea of what he wanted to ac­com­plish with his new com­pany, RedOwl An­a­lyt­ics, a Bal­ti­more firm that spe­cial­izes in us­ing be­hav­ior an­a­lyt­ics for se­cu­rity.

As an Army in­tel­li­gence of­fi­cer fol­low­ing the Sept. 11 attacks, Filip­pelli ran soft­ware de­vel­op­ment teams for the mil­i­tary and de­vel­oped tools that al­lowed the mil­i­tary and the NSA to sift through all the in­for­ma­tion they were col­lect­ing in war zones to iden­tify threats. With RedOwl, Filip­pelli wanted to de­velop a way for com­mer­cial or­ga­ni­za­tions to sim­i­larly sift through the noise and find the threats.

But Filip­pelli quickly learned that his mil­i­tary train­ing was both a help and a hin­drance — driv­ing him through the tough spots of launch­ing a com­pany, while he spins his wheels at other times.

“In the mil­i­tary you’re taught to never quit, never turn back,” he said. “In re­al­ity, on the busi­ness side, some­times you have to make a de­ci­sion to not pur­sue that line of busi­ness or let that per­son go.”

And while Filip­pelli knew the tech­nol­ogy side of his busi­ness in­side and out, he was less com­fort­able with such cru­cial busi­ness tenets as mar­ket­ing and sales.

“To me the se­cret, if there is a se­cret, is be­ing able to bal­ance know­ing your strengths and ap­pre­ci­at­ing those gaps, hir­ing to fill those gaps,” he said.

In­vestors are catch­ing on to the op­por­tu­nity for cy­ber in­no­va­tion in Mary­land.

Ack­er­man put down roots in Mary­land, es­tab­lish­ing DataTribe af­ter not­ing that the area had a high con­cen­tra­tion of skilled se­cu­rity work­ers, less com­pe­ti­tion and a lower cost of liv­ing than Sil­i­con Val­ley, and few peo­ple in­vest­ing in the in­dus­try on a large scale.

“It’s a green field mar­ket, it’s a fron­tier,” Ack­er­man said. “That’s the op­por­tu­nity — to be on the ground floor of cre­at­ing this ecosys­tem.”

DataTribe is de­signed to draw out tech­nol­ogy and tal­ent from fed­eral agen­cies to cre­ate new cy­ber com­pa­nies.

En­trepreneurs ac­cepted into DataTribe’s pro­gram move into the or­ga­ni­za­tion’s Ful­ton of­fice, where over the next year they get help with ev­ery as­pect of build­ing a com­pany, from draft­ing a busi­ness plan to es­tab­lish­ing a mar­ket­ing strat­egy.

The goal is for the com­pa­nies to leave the pro­gram ready to go af­ter — and re­ceive — ven­ture cap­i­tal fund­ing, pos­si­bly from Ack­er­man’s firm Al­legis Cap­i­tal.

EN|VEIL, which de­vel­ops en­cryp­tion soft­ware, is among the first com­pa­nies to par­tic­i­pate in DataTribe.

The com­pany’s founder, El­li­son Anne Wil­liams, spent 12 years at the NSA and the Johns Hop­kins Univer­sity Ap­plied Physics Lab­o­ra­tory de­vel­op­ing al­go­rithms for largescale an­a­lyt­ics sys­tems.

She built EN|VEIL around a sin­gle al­go­rithm from a sys­tem she spent more than a year de­sign­ing for the fed­eral gov­ern­ment. The prod­uct en­crypts data across a sys­tem rather than build­ing a wall around it.

If Mary­land wants to reap the ben­e­fits of bright minds such as Wil­liams’, Ack­er­man said, it must step up to the plate, es­pe­cially when it comes to help­ing com­pa­nies land fund­ing.

McCreedy, of the Com­merce De­part­ment, agreed.

The de­part­ment pushed this year for a bill that would have changed the terms of the state’s cybersecurity in­vest­ment in­cen­tive tax credit, to en­cour­age more in­vest­ing in young com­pa­nies, but the leg­is­la­tion did not make it out of com­mit­tee.

The tax credit pro­gram, which is in place through June 2019, al­lows small Mary­land cy­ber com­pa­nies to ap­ply for a tax credit worth 33 per­cent of any in­vest­ment un­der $255,000 that they re­ceive. The up­date would have given the tax credit to in­vestors, in­stead of the star­tups.

McCreedy said he also wants the state to find ways to en­cour­age more pri­vate in­vest­ing by Mary­land’s wealth­i­est res­i­dents.

“If we could get that pop­u­la­tion to take an in­ter­est in the in­no­va­tion space and make in­vest­ments in these kinds of com­pa­nies, that would be a pow­er­ful thing,” McCreedy said.

Ron Gula now finds him­self on the other end of the pipeline. Gula, who served in the Air Force and worked as an an­a­lyst for the NSA, co-founded Ten­able Net­work Se­cu­rity in 2002 and helped grow it to a lead­ing cybersecurity firm that counts among its clients such ma­jor brands as MasterCard, Adi­das and Mi­crosoft.

Af­ter leav­ing the com­pany in 2016, Gula and his wife, Cyndi, set to work in­vest­ing in other star­tups in the Mid-At­lantic.

Ear­lier this year, the Gu­las gave their fund a name, Gula Tech Ad­ven­tures, in an ef­fort to draw at­ten­tion to the role suc­cess­ful en­trepreneurs can play in help­ing bring up oth­ers.

“We re­ally want to see more for­mer CEOs, ex­ec­u­tives, peo­ple who know how to do it, be proac­tive. There’s a large base of an­gels here, but it’s hard to find them,” Gula said. “We’re hop­ing to sort of be an ex­am­ple of what you can do in the re­gion once you’ve got­ten suc­cess­ful.”

ALGERINA PERNA/BAL­TI­MORE SUN

Zuly Gon­za­lez started cybersecurity com­pany Light Point Se­cu­rity with co-founder Beau Ad­kins af­ter work­ing for the Na­tional Se­cu­rity Agency.

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