SDBJ Article on CyberHive

Brian Wood Blog

Note: the CyberHive launch event takes place today (Wed, Feb 13) starting at 5:45 in downtown San Diego at 1855 First Ave.


Securing the Future

New Incubator Aims for Innovation in Cyber Security, Analytics

By Brad Graves, SDBJ

Cybersecurity is a business worth hundreds of millions of dollars to the region. ESET, Norman AS and Websense Inc. all make San Diego home. So do the many defense contractors working silently in the cyber realm such as BAE Systems, Booz Allen Hamilton, General Dynamics Information Technology, Lockheed Martin and SAIC.

A new initiative promises to add very young companies to this already rich ecosystem.

CyberHive San Diego , which officially launches on Feb. 13, may not bring in a great deal of revenue — at least not yet. But the nonprofit business incubator promises to grow the next generation of companies and talent.

Local executives say the project ought to do good things for the community.

“The incubator would foster shared intelligence among businesses and ongoing innovation in the San Diego region,” said Michael Newman, chief financial officer and executive vice president for Websense.

“This group could also attract top IT security talent to the region and possibly new business as well.”

Andrew Lee, CEO of ESET North America, agreed that the CyberHive has a potential to increase the region’s talent pool, and may one day produce small businesses that could be acquired.

The incubator couldn’t exist without the businesses already in San Diego.

Lin McClure described how the incubator will be built on the bedrock of San Diego’s cybersecurity industry, as well as its cousins, analytics and “big data.”

The common thread between cybersecurity and analytics? In McClure’s words, they are attempts to “get ahead of whatever’s out there.”

The retired businesswoman will serve as a mentor to companies in the CyberHive. McClure co-founded defense wireless company San Diego Research Center Inc. Virginia-based Argon ST Inc. bought SDRC in 2006. Boeing bought Argon ST in 2010.

McClure said CyberHive San Diego takes its inspiration from a similar incubator in Maryland — a center of government computing and analytics work, and home to the National Security Agency.

CyberHive’s backers say they have raised $60,000 against their goal of $200,000. Financial backers include businesses such as Norman, Manpower, American Internet Services, The Irving Group, Sony, Cox Communications, Accelerate IT and Cyber Risk Insurance.

Also collaborating with the project are institutions with an interest in creating jobs, such as Connect, the Downtown San Diego Partnership and the San Diego Regional Economic Development Corp. CyberHive has a collaborative agreement with the fledgling Cybersecurity Institute of San Diego.

Darin Andersen, North American general manager for Norman, is on the CyberHive board of advisers and is one of the project’s main proponents. He sees the potential of poring over huge amounts of data.

The emergence of massive parallel processing and other technology means analysts can take large amounts of unstructured data — Twitter feeds, Facebook posts, time of day, weather and many other variables — and detect patterns, Andersen said.

The CyberHive will be tailored to the needs of seed companies, said Andersen. Its facilities will include an electronic “sandbox,” or a place to test malicious code, he said.

CyberHive will be at 1855 First Ave. in downtown San Diego; Norman occupies space in the same building. Businesses using the space will find office and lab facilities, business development services and other structured incubation programs. In return for services, clients may be asked to provide CyberHive with equity in their young companies.

CyberHive plans to offer three levels of membership: a “jumpstart program,” a patent of!ce program, and an “assured program.” The latter would offer $50,000 to $200,000 in seed capital.

“We are dedicated to helping startup companies succeed, grow, and eventually become larger companies with thousands of employees here in San Diego,” McClure said.

Duane Roth, CEO of Connect, a San Diego-based nonprofit that promotes technology entrepreneurship, feels the time is right for such an incubator.

“San Diego and many other technology hubs around the country have an acute shortage of IT professionals, particularly software engineers and programmers,” said Roth, who is part of the CyberHive board. “Software San Diego lists the local open positions in IT at around 5,000. These are high-paying jobs and great careers for young people.

“Cyber Hive and other similar initiatives including Wintriss Technical Schools are critical to support our future economic competitiveness. I believe that it is more important today that students be taught computer language than a foreign language and Cyber Hive will help get us started to impact young people.”

Liz Fraumann, an ESET employee who serves as executive director of the Securing our eCity cybersecurity education initiative, takes the wide view.

Cybersecurity touches everything and everyone, she said, down to the dry cleaning clerk taking your credit card number.

As for solutions? There are likely products that can solve some of our cybersecurity challenges that no one has thought of yet, Fraumann said.

Over in the private sector, executives in cybersecurity report that their businesses are doing well — that there is still a need for cybersecurity and there is still plenty of money to be made in cybersecurity.

ESET’s Lee said his business experienced growth in 2012, and remains profitable. ESET has 140-150 employees in San Diego, and 180 in the United States.

“As businesses look to become increasingly connected and mobile, the vectors for attack increase,” said Newman, the Websense executive. “Further, if you have information that can be sold, you are a target.”

The recent security breach at The New York Times, allegedly by Chinese hackers, is instructive, Newman said.

“The New York Times hack tells us that anti-virus is no longer effective against today’s advanced threats,” he said. “Organizations that treat mobile threats, email threats, Web threats and other cyber threats separately are leaving themselves unprotected against highly sophisticated, blended attacks coordinated across multiple vectors. Real-time security defenses and shared intelligence is an organization’s best defense.”

Websense is the only publicly traded cybersecurity company in the region. It recently reported net income of $18.4 million on revenue of $361.5 million during 2012. That compares with net income of $31 million on revenue of $364.2 million during 2011.

Websense, by the way, recently announced that John McCormack had taken over the CEO’s job, succeeding Gene Hodges, who has retired.

CyberHive San Diego plans to take applications from prospective companies by email. The address is

Andersen said CyberHive may eventually serve as many as 20 companies. Many will work with the incubator “virtually,” he said.

“You’ve got to think big,” Andersen said.

People seeking more information on the project can also contact organizers through that email address.