By Jonathan Guthrie, Financial Times
Published 00:00 28 November 2009
ScanSafe, a virus-busting business started by two brothers, has caught the eye of US networking giant Cisco
London: Eldar Tuvey insists several times that "this is not the Eldar and Roy Show" during a conversation at the London headquarters of their virus-busting cloud computing business ScanSafe.
Really? Tuvey and his brother Roy set up ScanSafe in 2004. They recently agreed to sell it to Cisco Systems for $183 million (Dh671.6 million), a transaction estimated to make them each about £18 million better off.
The brothers set up Mailround, an e-mail marketing business, in 1999. Eldar, then 29, had been a corporate financier at Goldman Sachs. Roy, then 24, had worked at Merrill Lynch and Compass Partners, a private equity firm.
Chase Capital, which had put $5 million into Mailround, asked for its money back. The dispute that followed was resolved when the brothers bought Chase out for a percentage of its original outlay.
In 2004, the brothers had the brainwave of converting Mailround into an internet security company. Then, as now, most business customers bought anti-virus protection as software downloaded from the web or installed from a disc. Their insight was to see a big future for cloud computing, in which applications and data are run and stored on remote servers. They would offer security in the same way, under the banner ‘software as a service' (SaaS).
"We have been riding two big waves" Eldar says. "One was the web security wave, where the threat was moving from the inbox to the browser. The other, which we are still riding, is the move to cloud computing."
In the early days, customers were sometimes reluctant to switch to an online security service. What typically convinced them was the low cost and high convenience of SaaS.
Growth in customer numbers created "a virtuous circle", according to Roy, where "the more traffic that we saw, the better we got at stopping threats before anyone else".
Data company IDC estimates Scan-safe's revenues at $23 million in 2008, compared with $17 million in 2007. IDC believes that the business has about 30 per cent of the nascent market for SaaS web security. The market for IT security has been valued at $54 billion.
Cisco's acquisition of ScanSafe is intended to allow it to offer customers a better package when they move from workplace-based computing to the cloud, a shift that paranoia about data security can impede.
Intriguingly, the Tuveys plan to stay at Scansafe after it becomes a business unit of the US networking giant, which they say has a strong record in integrating acquisitions.