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CEO Spotlight: Francis deSouza, IMlogic

By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search

The uncontrollable growth of instant messaging software in the enterprise turned out to be one of the biggest security threats to Fortune 1000 companies. The big winners have been companies like IMlogic, a startup that CIOs concerned about Instant Messaging problems have no choice but to look at. Angel Mehta, Managing Director of Sterling-Hoffman, sat down with Francis deSouza, CEO of IMlogic to chat about corporate instant messaging, the importance of values, and what he learned from the biggest company to ever succeed in holding on to its startup culture: Microsoft.

Angel Mehta: How did you get into the software industry?

Francis deSouza: In the early 80s, the beginning of the home PC market, my parents bought me a Commodore 64. My brothers and I wrote programs that we actually sold. That sparked an interest in computers, software and business itself. The most wonderful thing was that you could write a program and sell it multiple times for the full value. At 16, I moved from the United Arab Emirates to the United States to study Electrical Engineering and Computer Science at MIT. 

Angel Mehta: When you were 16? Wasn't that a little accelerated?

Francis deSouza: It was….but I was really excited to go to the U.S. and study at MIT. I had a chance to work with some wonderful people at the computer science lab and the Media Lab. I actually got an internship at IBM working on very large-scale parallel computers, register allocation and instruction scheduling algorithms. 

At the time, IBM was going through the turmoil of the late 80s and early 90s and there was a real opportunity in terms of technology management. 

When I graduated from MIT, I worked for a management consulting firm that focused on both large and small companies (including telecommunications and consumer electronics). I spent a few years with them working in the U.S., U.K., India and South Africa and I observed the challenges of developing technology and bringing it to market successfully. 

Angel Mehta: What was the first true startup you were ever involved in?

Francis deSouza: The first one was a bundled phone company providing local and long-distance communications, Internet access, and cable television to high-end apartment buildings. It was called One Point Communications and eventually got bought by Verizon.

In 1997, along with some friends from MIT, I started Flash Communications, which did enterprise instant messaging software. At MIT, we had a product called Zephyr, a LAN-based instant messaging product. It was amazing to see how quickly that went from being a niche application with only a few users to being a pervasive communications environment on campus. I thought there would also be a need in the corporate environment but using the Internet rather than just LAN. It got acquired by Microsoft in 1998. So for a few years, I worked at Microsoft and ran the enterprise real time collaborate group, instant messaging, net meeting, exchange conferencing server, and the exchange chats.

Angel Mehta: I'm interested in the first impressions a small company guy had going into a behemoth like Microsoft….what do you remember thinking?

Francis deSouza: I was really impressed with the way Microsoft was run. I wasn't sure I'd stay there long as I'm a small company guy. Microsoft is a high-energy environment and it's surprisingly entrepreneurial. I remember people I knew in the VC community were saying that once a company hits a billion dollars or hits a thousand people, the culture changes and you just have to accept that. It's a fact of life like death and taxes. At Microsoft that wasn't necessarily true as I saw that you could hold on to sort of an entrepreneurial high-energy culture that was very result-driven and still be a big company.

Angel Mehta: What are some of the things that you took away from Microsoft's management style that you would bring to every company that you manage?

Francis deSouza: A couple of things: First, I've seen big companies where the top leadership team doesn't actually get involved with the product. They don't try and set it up or play with it. Therefore, they don't get a good feel for the product. At that stage, in most companies, they're only interested in the big strategy pictures and in a lot of cases they've forgotten that it's about the product. At Microsoft, excitement about products continues all the way up to the top. The leadership team is still excited about the products and the software. So when you're showing your product or you're talking about the opportunity, they're still interested in software and they haven't forgotten that it's still a software company run by software people. There's a genuine interest at the top level of the company in shipping great software and that shows. It's really motivating to an entire company to feel like that even at the top there's an interest in their product.

Second, the company is generally broken up into much smaller teams so you very rarely feel like you're a part of a 3000-person team. The organization structure is broken up into teams of 100 or less and that's really the basic operating unit. That means you can get to decisions more quickly, you can move more quickly than you think for a company that large.

Angel Mehta: What are some of the things you found that Microsoft did NOT do well?

Francis deSouza: I think one of the challenges Microsoft and any company of that size will face is consciously focusing on keeping that culture. I think again in some areas they've continued the product-focus, and the product groups have continued to be very successful while some they have turned down. I know people there who are saying that it's no longer easy to drive decisions through. 

Angel Mehta: Let's talk about IMlogic. Tell me about the real business problem that is causing demand for security in the instant messaging world. How does IMlogic solve this problem?

Francis deSouza: As instant messaging increases in companies, IT departments are realizing that, just like e-mail and the Web, there are security risks associated with this communications medium. Although IM is very powerful and very enabling in terms of what it allows people to do, there are vulnerabilities that hackers can target. Companies are seeing viruses, worms and other types of mal-ware that are written specifically to take advantage of instant messaging networks. 

IMlogic provides the software that sits in the back end and helps protect your company from IM threats. We also allow you to apply policies around the instant messaging use in your company such as, who should be able to use your instant messaging networks? Do you want everybody to be able to use the external networks? Do you want everybody to be able to use all the features? Do you want people to be able to use file sharing, audio, and video on some of the consumer networks? Whose instant messaging traffic do you want to archive and for how long? We allow you to apply policies to instant messaging traffic in the same way today, that you apply policies around e-mail. 

Security, by the way, is not only protecting yourself from the bad stuff coming into your company, but also protecting yourself from good stuff leaving your company. We help protect intellectual properties from being sent out of your company as an attachment over instant messaging. As an example, a media company found that one of their blockbuster movies was actually sent out as an attachment over instant messaging before their release date. That's a very big loss for a company in the media business.

So we do security, compliance and archiving. We also do systems management which tells you how much traffic on your network is associated with instant messaging and which networks are being used. With collaboration management you decide who gets access to certain features and instant messaging networks.

Angel Mehta: Why wouldn't the other instant messenger providers do it themselves? Why is this not just an add-on to Microsoft or AOL products?

Francis deSouza: As a general trend, we've observed that for each communications medium there is a very clear separation between the providers of the medium infrastructure and the security and management. If you look at the Web world, for example, the big providers of the Web servers are IBM, Microsoft with IIS, but the providers of security are Websense and SurfControl. If you look at e-mail, you have Microsoft that provides the exchange server, you've had IBM that provides nodes, but the providers of security are Symantec, McAfee, and Trend. So it will probably not be any different in the IM world where the infrastructure players are Microsoft, IBM, AOL, MSN, and Yahoo but there's a hole in who provides the security. 

It's even more tricky in the instant messaging world than it is for e-mail and the Web because the security for instant messaging has to work across multiple proprietary networks. Companies wouldn't buy a different IM solution for each of the IM networks they have in their company. 

Angel Mehta: It defeats the purpose.

Francis deSouza: Exactly. You have 13 different IM networks that people are using in your company. You would need a separate security solution for Yahoo, MSN, and AOL. What you want is a single security solution that works across all the networks. That means companies like IBM and Microsoft are not going to be providing a security solution for AOL and Yahoo because it's not in their best interest. 

Angel Mehta: Tell me a little bit about IMlogic's sales approach and how it's evolved over the last four years. 

Francis deSouza: Over the last two years different elements of our product, IM Manager, have taken on more prominence. Initially, 2001 and 2002, we found a very strong demand for the compliance functionality. Financial services firms were dealing with some new SEC regulations and Sarbanes-Oxley. They needed to keep archives off their instant messaging traffic just like they did for e-mail. 

In the last year or two, there has been a bigger focus on the security elements as the number and scope of IM threats has increased. We have evolved from having our great compliance solution being top of mind to where today we talk about the fact that we provide a great security solution in addition to compliance.

Angel Mehta: What initial business assumptions have you been forced to revise since you have been CEO? Is there anything about the company after you came in that really took you by surprise?


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