Houston’s Alert Logic Thrives Bringing Security to the Cloud

Insecurity in the cloud is big business for Alert Logic.

The company, whose niche is “security-as-a-service,” had about a dozen employees and less than $2 million in annual revenue when it received its first venture funding in 2005. Today, Alert Logic dominates the U.S. cloud security market, taking in almost $50 million a year, and has plans to expand internationally next year.

“We are solving real problems particularly for customers who are responsible for running IT infrastructure,” says Gray Hall, Alert Logic’s chairman and CEO. “Security is a real pain point. We are taking that entire problem off their hands.”

In the last week, Alert Logic has signed on two major customers, including RigNet (Nasdaq:RNET), which manages voice and data networks at 1,100 remote sites in more than 30 countries around the globe, and Amazon Web Services (Nasdaq: AWS), a collection of remote computing services offered by e-retailing giant, Amazon.com.

While Alert Logic provides intrusion detection, vulnerability assessment, and log management services directly to mid-market clients, partnerships like the Amazon deal and the one with hosting provider Rackspace are the company’s killer app, so to speak. These agreements mean that Alert Logic’s security software essentially becomes the standard for thousands of its partners’ clients.

“Once you lock up a service provider partner, there are some real barriers to entry for others trying to come in,” says Blair Garrou, managing director at the Mercury Fund, one of Alert Logic’s first investors. “Gray Hall has fortified that relationship with service providers.”

Competitors such as Imperva and SourceFire, which was recently acquired by Cisco for $2.7 billion, don’t have those relationships, Garrou added.

Though Alert Logic had looked into doing an IPO, … Next Page »

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