Mar 24, 2016

Lancope: From Alpharetta Startup to $452 Million Sale

by | Blogs

By: Bryson Payne, Ph.D., Director of the Center for Cyber Operations Education, University of North Georgia, Cottrell MBA Faculty

I was fortunate to be able to attend a very special March Speaker Series event with the Greater Alpharetta Tech Network on March 16 at Peak 10’s beautiful campus off Windward Parkway.

Every GATN event I’ve attended has been professionally presented and valuable, but I was especially looking forward to hearing Lancope’s former president and CEO Mike Potts speak about the Alpharetta network security firm’s fascinating journey from startup 15 years ago to a $452 million acquisition by Cisco late last year.

What I didn’t expect was that the story focused as much on the importance of ethics, transparency, and the cohesive team Lancope had built as it did on the vision and determination that led them on the path to a valuation of nearly half a billion dollars. In 2010, Lancope’s 48 employees were generating around $10 million in total revenue from all sales channels. By 2015, more than 325 employees were responsible for $100 million in revenue, an impressive feat in itself.

Perhaps more notable than such rapid growth is the fact that almost every one of those employees is still with the new company. The fate of rank-and-file employees is often left out of public discussion in the wake of mergers and acquisitions. But Potts was proud of Lancope’s, and new parent company Cisco’s, commitment both to its employees and the Alpharetta community. Every Lancope employee was offered a continuing job in the newly acquired division, and virtually all of them accepted.

It’s not just a feel-good part of the story that these high-tech employees kept their jobs. Potts foresees continued growth both in the industry and in the area and cites the shortage of trained cybersecurity professionals as an area of concern. (In the interest of full disclosure, as Director of the Center for Cyber Operations Education at the University of North Georgia, it’s my job to help grow the cyber workforce in the 30 counties of north Georgia served by UNG, so I and my colleagues in the cyber-education business were both grateful for the plug and sensitive to the fact that we’ve got a lot of work to do to prepare the next generation of cyber leaders to fill this need.)

Equally engaging was Pott’s plain-spoken way of explaining how Lancope’s Security 2.0 focus, detecting suspicious activity inside a network, differs from its Security 1.0 practice of just trying to keep hackers out at the firewall, as most firms approached security through the ’80s, ’90s and early 2000s. He likened old-fashioned firewall defenses to locking the door to your home and next generation technologies like Lancope’s to installing a motion detector inside the house.

Perimeter defense is not enough anymore, Potts explained. Essentially, he said, there are two types of companies: those that have been compromised and know it, and those that have been compromised and don’t know it.

More often than not, companies fall into the latter group. Potts cited research from 2015 suggesting that 70% of breaches are not discovered by the impacted organization itself, but by third parties. That was the case with the Target breach, where hackers stole 110 million customers’ data, including 40 million credit/debit cards and other financial records. Sony only found out about its estimated $1.25 billion dollar hack after the hackers posted red skulls on Sony computers announcing it.

Among major recent breaches, Anthem stands out for a couple of reasons. First, an Anthem employee discovered the breach when his login was used to pull information from a database, information he didn’t request. Second, 80 million customers’ health and financial data were involved. Potts also highlighted recent ransomware attacks like CryptoWall, in which hackers encrypt your data and require you to pay a ransom to be able to recover it. He noted that health data ransom could be a next wave in cybercrime. “Imagine a CEO of a publicly traded company has a health condition he doesn’t want made public,” Potts said. “Hackers could turn that information into a demand for ransom.”

The persistent threat of breaches like those highlighted the need for security companies like Lancope and others in the Alpharetta area, along with the technologies they produce. It also underscores the demand for cyber professionals and the task ahead of us as educational institutions.

There are many other success stories among the 900-plus technology companies that call the Greater Alpharetta area home, but only a few attain the level of success of Lancope’s team. Transparency, trust, teamwork, and an innovative product—those sound like the right combination for success. Add a strong focus on ethics and taking care of your employees, and Lancope’s story sounds like a winning formula we could all follow.

Special thanks to Peak 10 for hosting an engaging, inspiring, impactful evening out and to GATN for another excellent speaker series.


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