Distil’s Are You a Human Acquisition Is Big Win for Tech Community
Detroit’s nascent tech community got a significant validation today as Silicon Valley cybersecurity company Distil Networks announced it has acquired homegrown, Dan Gilbert-backed startup Are You a Human. The specific terms and the monetary value of the deal were not disclosed, but Distil says it plans to open a new office in Detroit as a result.
As part of the announcement, Distil is today releasing a free Google Analytics tool called Distil Bot Discovery, which finds and filters a website’s bot traffic. The tool incorporates Are You a Human’s “real-time human detection technology and biometric interaction dataset,” according to Distil CEO and co-founder Rami Essaid.
Essaid first met the Are You a Human team when they were visiting the Bay Area two years ago.
“They were looking at doing a similar thing [as Distil]—identifying an advertiser’s legitimate and illegitimate traffic,” he recalls. “It’s hard enough in Silicon Valley to hire engineers, but to find 10 engineers working on the same problem in a different way—it’s like they have a college degree in our problem.”
Are You a Human co-founder Reid Tatoris echoes that sentiment. “Distil has done the same thing we’ve done, they’ve just done it in a slightly different way,” he says. “Now we get to combine the two and become experts on how real people act on the Web.”
Essaid admits he wasn’t aware of the Motor City’s efforts to build a tech startup ecosystem until he met Are You a Human, but he’s looking forward to getting to know it. “They love Detroit, so we’ll put a pin on the map,” he says. “The core Are You a Human team is starved for resources, and we want to unlock their tremendous potential to do more.”
The Are You a Human acquisition is especially rewarding for the local tech community because the startup was nurtured by a number of local accelerator programs and investors. The company was co-founded in 2010 by then-University of Michigan business student Tyler Paxton, who recruited a handful of classmates to create a cybersecurity tool that could improve on the CAPTCHA method of verifying human Web traffic. (Paxton is now the company’s chief technology officer.)
Are You a Human joined Ann Arbor’s TechArb accelerator in 2010, with support from the Ross School of Business’ Zell Lurie Institute and the College of Engineering’s Center for Entrepreneurship throughout that academic year. Along the way, it racked up a Dare to Dream grant and a second-place prize worth $154,000 in Rice University’s 2011 business plan competition.
In 2012, the company settled in downtown Detroit after Detroit Venture Partners (DVP) became an investor. Are You a Human was headquartered at the Madison Building, Gilbert’s downtown tech hub, for years before moving into its own space in the WeWork building in 2016. Through the years, the company has gotten support and capital from a host of local organizations and investors, including Ann Arbor SPARK, the Frankel Commercialization Fund, and the First Step Fund.
“DVP has been a really great partner for a long time,” Tatoris says. “Being in Detroit, we always felt like part of a larger community that cared about us, so to bring this win to the city is really exciting.”
Essaid doesn’t have immediate plans to pursue automotive clients now that Distil has a Detroit office, but he says Are You a Human has opened other doors to potential customers.
“We have a lot of e-commerce customers that are adjacent to the auto industry, but we don’t do much with manufacturers yet,” he says. “But the goal is to use that Detroit relationship, and this small [Are You a Human] team has already unlocked the doors to big enterprise companies like Quicken Loans and Fathead that we didn’t have.” (Fathead is a member of the Quicken Loans “family of companies” overseen by Gilbert.)
Are You a Human is arguably best known as the curator of the Verified Human Whitelist, a targetable database that lists millions of people who have passed the Turing Test and proven their humanity online. The company’s approach has always centered on human verification as opposed to bot detection, as well as adding humans to a whitelist instead of adding bots to a blacklist.
Essaid says roughly 25 percent of all Internet traffic is comprised of malicious bots. Thirty-five percent of Internet sites will at some point incur a bot-driven denial-of-service attack, he adds, and for those sites that have a log-in page, 95 percent are eventually attacked by bots. Even with ever-improving cybersecurity tools, he says the human fight against Internet bots will “be an arms race forever.”
“Bots are ubiquitous and continuing to rise in prevalence,” he says. “We’re not going to get rid of bad guys, whether that’s the current iteration of bots or something new. We’re seeing the volume of bots decrease, but their sophistication and the impact they have is increasing.”
Essaid points to the weekend’s WannaCry cyber attack as evidence that there’s a long way to go in terms of consumer education. “If you stand still, you’re going to be attacked,” he says. “Like this weekend, people stood still. A free software update could have prevented it, but people still didn’t do it.”
That ongoing challenge means Tatoris and the Are You a Human crew won’t have long to bask in their success before getting back to work. In a smaller city in the middle of the country, one startup acquisition can go a long way toward seeding the local ecosystem, creating wealth and experienced entrepreneurs who in turn support more local startups on their path to market.
Tatoris says that while the transition to Distil is occupying most of his time, he plans to get more involved in mentoring area entrepreneurs, sharing some of what he has learned from Are You a Human’s experience.
“We’re Techstars Mobility mentors now, and I want to do more of those things,” he adds. “Second-generation companies are really important to a startup scene. I hope we see more of that. Tyler and I will be around and, hopefully, as helpful as possible.”