San Antonio Express-News (Sunday)
More local jobs in cybersecurity lost to a takeover
Aflurry of out-of-state corporate takeovers is changing Cyber City,
USA.
Denim Group, one of San Antonio’s largest homegrown cybersecurity firms, announced June 1 it had been acquired by Colorado-based CoalFire. The businesses didn’t disclose the details, and it’s too early to tell what it means for Denim’s employees and facilities.
It was the third San Antonio cyber buyout since mid-2020.
Last July, Minnesota-based HelpSystems bought Globalscape and took the data exchange solutions company private in a roughly $219 million deal.
Then, in February, HelpSystems gobbled up Digital Defense, another of the city’s old guard cyber heavyweights, for an undisclosed amount. At the time, corporate executives said they had no plans to make cuts or move anyone from Texas.
In an interview that month, the execs were upbeat about the merger. Larry Hurtado, Digital Defense’s president and CEO, said he’d found a “great partner” in HelpSystems and the “integration discussions” were “super exciting.”
But under cover of COVID-19 and the fog of virus-induced remote working, things weren’t as they’d appeared.
Just a few weeks later, HelpSystems jettisoned Hurtado and 26 others from Digital Defense’s 125-person team. Globalscape’s new owners slashed its 106person staff by 20.
That’s at least 47 jobs lost, in both management and contributor roles, to mergers that industry insiders and community leaders marketed as good steps for the area’s cyber business environment.
“Downsizing and layoffs are always difficult and unfortunate and are not a new phenomenon through the course of a normal business cycle, much less from one as tumultuous as the one we just experienced,” Richard Pe
rez, president and CEO of the San Antonio Chamber of Commerce, said Tuesday. “However, the overall outlook for the cybersecurity industry in San Antonio is bright and poised to grow.”
As word of the sackings percolated into the community, rumors pingponged among locals in the industry who dubbed the deals “less than graceful exits,” “liquidations” or “fire sales.” They called the layoffs “bloodletting.”
Monday afternoon, just a few cars dotted the parking lot of the building housing Digital Defense headquarters. In true security business form, no large sign graces the single-story beige building at 9000 Tesoro Drive near San Antonio International Airport. Blinds veiled the windows.
At the front door, a small metal plaque offered the only sign of Digital Defense’s existence. Nobody answered the call button. Inside, the receptionist’s desk was empty and boxes sat on desks.
Framed certificates in the building lobby provide evidence of Digital Defense’s past successes and vibrant corporate culture: San Antonio’s Fittest Company, Top 25 Cyber Security Companies to Watch 2016, Top Cloud Service Providers 2017.
A slip of paper with a phone number for delivery drivers to call had been taped to the front door. It was answered a few rings in by a Digital Defense employee who said he couldn’t speak about the status of the company. He acknowledged Hurtado was gone and only a few people still worked in the building. He added, “Cybersecurity people are already paranoid, you know.”
Headed back to my car, I noticed big ’90s-era surveillance cameras peering down from the building’s corners, on watch for people who weren’t there.
Hurtado didn’t respond to multiple requests for comment, and Mike Devine, HelpSystems’ vice president of marketing, said the rumor mill is off track.
“It absolutely couldn’t be anything further from the truth,” he said, adding that Digital Defense exceeded its first quarter earnings target. “We’re excited about the business. My goodness, yeah.”
Regarding Hurtado, Devine said, “He did a fantastic job growing that company and helping customers.”
Mark Bell, Digital Defense’s former vice president of operations, now oversees the San Antonio outfit, according to Devine.
“We value every contribution that Larry made,” said Kate Bolseth, HelpSystems chief executive. “We had discussions, and it was the right time for him to move on to his next chapter, and we were very excited to have Mark Bell take over leadership for the overall business.”
She said the company didn’t “have any additional plans for layoffs, and we will actually invest in areas of growth for the business as well.”
As for the property, Bolseth said the lease was coming due so the company is vacating the building over the next two months. Then, the Digital Defense employees will work at the Globalscape facility at 4500 Lockhill Selma Road.
She said one of the reasons for the change is employees’ desire to continue remote working and using the offices as meeting places.
“Seventy percent want to continue to work from home as their primary location,” she said.
Despite the cuts and consolidation, Bolseth said HelpSystems’ cyber business is seeing “about 20 percent growth.” And, he said, “To fuel that growth,” the company “will invest in people for sure.”
For the 47 San Antonians laid off by HelpSystems, that’s probably a tough thing to hear.