Wednesday, December 15, 2004
Interview with Richard L. Knapp, Founder of Avanton
Richard L. Knapp is the founder of Manhattan Beach-based Avanton (www.avanton.com), a developer of a security appliance targeted at small to medium businesses. The company is in the midst of rolling out its products and raising a round of funding.
BK: What is Avanton, and what does your product do?
RK: Avanton provides IT infrastructure and security management solutions to customers through its channel of value-added resellers (VAR's), system integrators, IT outsourcers, and other solution providers. Avanton leverages its appliance-based management technology and channel sales strategy to deliver comprehensive management solutions that provide network and systems management, Intrusion Detection, Vulnerability Scanning, and Performance/Bandwidth analysis that enable companies to take control of their networks and assist in complying with GLBA, HIPAA and Sarbanes Oxley. Avanton appliances are easy to sell and simple to install and available at an affordable price. Avanton is a privately held company headquartered in Manhattan Beach, California with channel partners nationwide. Avanton supports sales, and product development from its Raleigh, North Carolina facility.
ReadyARM provides a company with the ability to monitor their computer network for unauthorized intruders, vulnerabilities, and issues with network traffic and device downtime. In less than two hours, ReadyARM can be installed and ready to provide alerts and reports when problems arise.
BK: What are the major benefits of using your solution?
- Integrated security and network monitoring solutions
- Provides functionality necessary to achieve compliance by federal regulatory agencies
- Installs in less than two hours - a true Plug and Play appliance
- Simple to configure and use, yet with sophisticated monitoring and reporting capabilities typically found in much more expensive offerings
- Value priced
Governmental agencies have put regulations on specific industries, which have exponentially increased the complexity of running a company's computer network. These regulations include, California State Bill 1386. Gramm Leach Bliley Act - Financial industry, HIPAA - Healthcare industry, FTC. Sarbanes Oxley (SOX) SEC regulated entities. These regulations require companies have the ability to Monitor for intrusion, Scan periodically for vulnerabilities, Provide Asset Management, Collect and review firewall log files and provide report validation.
Compliance with these regulations is required for all sized companies. The hardest hit is the small to medium businesses. Non-compliance with these regulations results in heavy fines, loss of ratings (CAMeL), and loss of business. Regulatory requirements not only affect North American based entities but also affect the same industries in Europe and Asia. Further expanding Avanton's market opportunity.
BK: Why did you decide to found Avanton, and what opportunity did you see in the market?
RK: Many small to medium businesses do not have the budget to purchase pricey solutions that major security vendors are offering, even though they are faced with potential fines for non-compliance or loss of data and customer trust if their security is breached. The typical security offering required to satisfy regulations begins at $30,000. The level of complexity of these products also requires additional services, training and maintenance, making the total cost of ownership even greater. Less expensive solutions do exist, but they do not offer the full range of features required. Therefore, companies must purchase several of these less expensive products to provide what Avanton offers in a single appliance. The total cost of the multiple products is greater than Avanton's single appliance solution.
Avanton's ReadyARM appliance provides economical (MSRP $9,995) security analysis and monitoring of a company's computer network to ensure regulatory compliance. These results can be broadcast in real-time in the form of an email, a text page, an instant message, or can be bundled into a report for analysis and auditing. Avanton is the price-to-value leader in the security compliance space.
BK: What is your own background, and why did you decide on a startup in the security space?
RK: I got started in computers back when I was 14 years old, some 35 years ago. So I have seen a lot of changes in the industry, from the original PC's, to modems, to the Internet. I have a BS in Mechanical Engineering from Purdue University, where computers were the focus of our efforts. Then got an MBA from West Coast University in Los Angeles, in Management Information Systems. During my curriculum there, I got involved with EDP auditing (or "white hat" (good guy) hacking), and learned a lot about hackers and such.
I got heavily involved in Information Security some 7 or 8 years ago. The industry was initially focused on large Fortune 1000 companies, but has expended to the small-to-medium ones since. The problem was that the solutions out there, are far too complex and too expensive.
For example, Cisco Systems has a solution that starts at $30,000 and goes up in cost from there. Then they have the Linksys division for the home market. The problem is that very few alternatives exist in the gap between.
Over the past three years, many governmental regulations have come forth requiring that companies have these solutions. But the cost and complexity has been quite prohibitive, and thus why we are focusing on this niche.
BK: What's different about your security appliance, versus the many other security appliances on the market?
RK: A number of security appliances exist, but are typically complex to use, hard to integrate and expensive. Installations with competing solutions can take a number of hours, require additional services to accomplish, and be an ongoing process due to the complexity of "tuning" of the solutions. Training on these competing solutions are generally a week or more of training classes, requiring additional travel costs as well. And costs (from the major suppliers) start at $30,000, which is too high for the majority of small-to-medium businesses.
The ReadyARM appliance installs in less than 2 hours, training is done in one hour, and costs $9,995.
BK: Does Avanton develop its own or does is it using third party technology for your security appliances?
RK: The ReadyARM appliance has three open source programs in the core of the software. Open source security products have gained a lot of acceptance in the past couple of years, and provides an excellent base to build upon. We can take advantage of the worldwide community of developers, and also have contributed back a great deal to these programs.
Beyond the core, a lot of internal development is required to link these products together, provide the ability to correlate, and ultimately the user interface and reporting engines.
BK: How do your product go to market?
RK: Our business model utilizes a pure channel distribution model.
Small-to-medium businesses have grown in size over some period of time, and have relied on a particular reseller for their computers, networks, and peripherals. And as they grow, they stick with their "center of influence" they have grown to trust and respect. It is these resellers that we are targeting.
Avanton utilizes MMI Communications, on retainer, as an outside PR agency. They have a great deal of experience in marketing Information Security and high tech products. Avanton has and continues to release press releases in all the major technical periodicals, reseller publications, etc., thus gaining initial market exposure. Articles and white papers have been written for publication and Avanton representatives continue to target specific tradeshows. Several third-party tests are being conducted to offer an independent review of the Avanton ReadyARM product. The results will be used in a global marketing campaign to add (1) additional channel partners, and (2) provide end-user awareness.
BK: Where is the company in terms of funding stage and plans?
RK: Up to this point, we have bootstrapped and self funded the company. But are in discussions with a number of funding sources.
We are confident that we will complete our initial funding effort by early 2005, and the entire funding effort in Q1/2005.
BK: Is your solution available on the market, and have you been deployed at customer sites?
RK: The solution has been released, and we have deployed at 21 customer sites and with 23 partners at the present time.
BK: Finally, what are you planning to use the funds you would gain from outside funding?
RK: The use of proceeds will be:
- Sales, Sales, Sales…
- Adding Chief Sales Officer
- Addition of 4 Regional Channel Managers/ 2 Inside Sales
- Channel Support Marketing Programs developed and launched
- Sales Expenses - T&E
- Association memberships
- National and Regional Tradeshows
- Development and Support Staff
- Hiring of 5 programmers/support engineers and designers
- Hiring of 3 Support/Operations Staff
- Operating Capital
- Opening the Pacific Rim and further growth in Europe
For future generations, we will be moving towards a complete security event management solution (including asset and network management wrapped around providing a total security solution) and will need to bring on additional development resources. The quicker this can be accomplished, the larger our market share will be.
Overall, the goal is to accomplish a very large scale branding, market penetration, and ultimately market dominance of this sector.