New “Disruptive” Cloud Security Company Coming from Arbor Networks Co-Founder Dug Song

When I traveled to Michigan last month, my conversation with entrepreneur Dug Song left me with the impression that’s he very passionate about several things: startups, cyber security, and Ann Arbor.

I met with Song at Tech Brewery, the Dogpatch Labs-esque startup incubator space he founded in an old brewery building right in the University of Michigan’s hometown. He runs his stealthy new company, Scio Security, out of the shared co-working space, and is just shouting distance away from the dozens of other companies in the incubator that are plugging away at technology in the mobile, Web, and cleantech sectors. Before TechBrewery existed officially, Song worked out of the building as VP of engineering at Zattoo, an Internet TV service. He took the position shortly after leaving his previous startup, Arbor Networks, which was sold to Danaher (NYSE: DHR) subsidiary Tektronix this past summer, for a sum that was a “multiple” of its roughly $100 million in annual revenue, he says.

Arbor brings us to another aforementioned strength of Song’s: security—the Internet kind, that is. The firm boasts about 70 percent of the top tier Internet and telecom companies as customers. It’s become a standard in enterprise network security and is “the reason why the Internet has not melted down since 2002,” says Song, who started out as founding architect of the company and later held the role of chief security architect. The inspiration came from how easy it was for a teenage hacker—dubbed MafiaBoy—to launch massive online attacks that took down commercial websites from the likes of Yahoo! and eBay back in 2000, Song says.

Security isn’t the only thing that Arbor Networks and Scio Security have in common. Arbor started in 2000, in the wake of the tech crash. And since Scio launched in the past year, well, you get the picture.

“I like starting companies in recessions,” Song says. “It clears the playing field.”

Scio quietly kicked off in January, got its first customer in March, and will be a bit more vocal in the coming months about its cloud-based security technology, Song says. It’s a cousin of sorts to Arbor, doing for virtual security and small businesses what Arbor did for physical network infrastructure at large enterprises.

“Now the real threat is hackers going down market,” he says. “Attackers figured out there’s as much money to be had going after small businesses.”

With Scio, Song is looking to defend against the next wave of security threats—those at the user level. Hackers can get at smaller firms by going through their individual employees, via dangerous links sent through e-mails, he says. The startup—which is planning to change its name soon to Duo Security—is developing technology that aims to solve the problem of authentication for firms with remote workers, to ensure that the user logged in at a remote location is in fact the person who works for a given firm, and thereby prevent account takeovers and data theft. The technology even uses mobile phones as a source of authentication, which makes sense, given Song’s role as an advisor to area iPhone and iPad app developer Mobiata.

Ease of use is a big aim with Scio’s product, Song says, calling the technology a “set and forget” solution. The security problem is a big pain point at smaller companies, and Scio is looking to deliver its technology in a very price-sensitive way, a gap Song says the security space hasn’t successfully filled.

“We hope it’s very disruptive,” he says. And others have bet on that fact. The startup has raised about $1 million in outside funding, led by San Francisco-area firm True Ventures. The deal also included new Ann Arbor-based venture firm Resonant Venture Partners.

While he’s not plugging away at the next wave of cyber security defense, Song is working to make sure the startup culture in Ann Arbor is active and connected. He launched A2Geeks, a nonprofit powering meetups to regularly showcase new companies in the region. Song isn’t a fan of the government-forced creation of industries in the region and says an innovation culture needs to sprout up in a more grassroots way (insights of his you can read, among others, in this piece here).

“There’s a lot more to be said for building the social glue, the relationships between people,” than more formalized, bureaucratic organizations that aim to spur and connect new startups, he says. Overall, Song says he thinks a more organic culture of entrepreneurship is needed in the area, where startups know what their counterparts are up to and the whole system feeds on itself to encourage more startups. There’s far more of a fight to make this happen in southeast Michigan than in known tech hubs like San Francisco, but Song, a University of Michigan alum, is willing to stick it out in Ann Arbor, which he describes as a “cleaner, nicer Berkeley.”

We’re excited to keep our eyes on how the Ann Arbor startup culture grows as a result of his initiatives (and those of others). We’ll also be watching for what’s in store from Scio/Duo in the coming months. If you’re interested in seeing Song in person, and planning to be in Boston, check out our “5×5: Five Cities, Five Big Tech Ideas,” event on December 8th, where Song’s new and old companies will be featured.

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