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| Home - CEO Spotlight - Apr 03 Issue |
CEO Spotlight: Tom Noonan, Internet Security Systems
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Angel Mehta:
There’s a lot of analysts that imply over time that the best of breed players in the space are going to lose market share to the larger systems management guys like Tivoli or BMC or CA and I’m sure that’s a problem you’ve thought about – it’s not a new question… What’s the strategy for dealing with it?
Tom Noonan: Well, the strategy for dealing with it quite frankly is one word: ‘quality’. If I had to add another word it would be ‘depth’. Size is not a strategy. I mean, you know WorldCom and Tyco and many other companies should hopefully resoundingly tell the world that just getting big doesn’t necessarily mean that a smaller company can’t compete.
Our strategy is very very focused on the customer and on the quality of the protection that we are providing them and that goes FAR beyond technology. That goes into our expert research and development capabilities, our intelligence, our managed protection services. If you look at the larger companies, they have been unable to innovate. Companies like Cisco have acquired probably 50 security companies in the last 5 years…even companies like Symantec that are out there trying desperately to diversify outside of the consumer anti-virus business.
The other element of that comes down to personal choices of talented people. Most very high quality security experts don’t want to go work for a big conglomerate where security is a small part of the business. They want to go to a company that lives, dies and breathes by the sword and we do that. We’re willing to put our reputation and, quite frankly, our brand on the customer’s network and guarantee results. If security is a side business for you that’s not something you’re going to feel comfortable doing.
Angel Mehta: At $243 million in revenue, have you reached a point where you’re automatically on every short list for enterprise security projects - or is there still a need to brand-build per se to the point where market share is still more important than earnings?
Tom Noonan: You know I think it’s a multi-faceted discussion, but clearly market share drives earnings if you do it right. We’re focused on earnings but most importantly we’re focused on executing the long-term strategy of the company. If I was focused exclusively on earnings I would not be spending 18 percent of revenues on R&D. The security industry average is about 10 percent. Why are we spending 18 percent? Because we’re building the future.
Angel Mehta: One analyst I talked to a few months ago commented that ISS’ success has really been due to a lack of competitive offerings. Is that true?
Tom Noonan: No. There were absolutely competitive offerings throughout our history. In fact, in March of 1995 a freeware product called SATAN was released…it was directly competing with the ISS Internet scanner which was the only product we had back then. ....Cisco acquired our largest competitor in 1997… IBM acquired two or three of our other competitors…Network Associates acquired our other competitors…If I look back over the history of this company…when we lacked competition in any one area, we got stale. There has always been competition.
Angel Mehta: So if you could point to let’s say three things that allowed ISS to get out ahead in the early years…three things that you did right…what would they be?
Tom Noonan: First, it’s a philosophy that says get out on the end of the limb because
that is where the fruit is. We never had an abundance of capital to
spend. The company was built on a shoestring and a credit
card…multiple credit cards, and so that cultural idiom of getting out on the
end of the limb would have to be key.
A second point would have to be clarity of vision.
We never looked at ourselves as being in the Internet scanner business or in the intrusion detection business. We always operated at a higher level and we operated at a higher level because we knew what we wanted to be when we grew up which was a fully automated protection system that could detect and prevent known and unknown threats to our customers. It really was a visionary concept. We may never achieve that level of technology in my lifetime but we’re going to pursue it.
A third point…and it’s a greatly overused cliché…but I would say that ‘people’ would be the last key point. We had a management team in this company shortly after the founding that worked together better than anything I have seen in my life. It’s a group of people that believed in the vision, deeply cared for people, they were outrageously competitive and it showed in everything we did. We REALLY really looked for people who we thought could be passionate about what we were doing. It’s something that I believe in my own personal philosophy…you can’t compete with people who love what they do because they don’t view what they do as work. They will out run you, they’ll out play you…they’ll do whatever it takes if they truly love what they do. It’s difficult to compete with that, especially in those early years. It gets harder to enforce that as things grow up…but its still part of the underlying spirit and culture of this company.
Angel Mehta: I want to go back to 1994 for a second. You left a secure position with D&B and this was before the exodus of corporate executives to startups even began.
Tom Noonan: Yeah.
Angel Mehta: A couple of people have said to me recently that the best CEO’s have to put business ahead of family. What do you think?
Tom Noonan: It’s a huge problem. When Klaus and I hooked up, I had not even discussed it with my wife…I just resigned and came home and told my wife that in three weeks I would be home full-time but we wouldn’t have any insurance and we wouldn’t have any salary but that I would at least be in Atlanta. That was pretty shocking at first because I was not unlike any other person with three young kids…mortgages and car notes and all that other stuff that you have to deal with.
I can remember my wife in Christmas of 1995…we were beyond financially ruined at that time. I had a ton of credit cards and we spent all of our money…our employees hadn’t been paid for about a month and I had forged my wife’s 401K Plan (she was a Delta flight attendant out of college)…she had maybe $2,000 dollars in the thing. I used it to payoff a contractor who threatened to quit if he didn’t get some payment and he was writing our GUI which was critically important to get this damn thing to market. To save money, we had planned not to have Christmas at home because we just figured the kids were all so young they wouldn’t know the difference. Four or five days before Christmas, my wifesays to me, “I cannot live this way. I’m going to get that $2,000 dollars and we’re going to give the kids a real Christmas.”
And man… I went upstairs and thought, “How the hell do I tell her that I spent that money?” It seems like nothing today but that was a lot of money back then. I finally told her and I thought the house was going to come down.
Angel Mehta: I guess that’s what you call an entrepreneur’s Christmas…so what happened??
Tom Noonan: We finally got some money from people who had bought and were using the software but hadn’t paid in almost three months. It was only $20 000 but it let us pay everyone internally and keep the lights on until we could get venture funding. I could go on with these stories forever - I’m sure all entrepreneurs can. Those were wonderful days. A little frightening but wonderful.
Tom Noonan is Chief Executive Officer of Internet Security Systems. Prior to ISS, Tom held senior management positions at Dun & Bradstreet Software. He was Ernst and Young’s Entrepreneur of the Year in 1999, and was recently appointed by President Bush to the newly formed National Infrastructure Advisory Council (NIAC),For more information or to send feedback to Tom, email: sblack@iss.net
Angel Mehta is Managing Director at Sterling-Hoffman Management Consultants, a retained executive-search firm focused on conducting CEO, VP Sales, and VP Marketing searches for enterprise software companies. He can be reached via email at: amehta@sterlinghoffman.net
 
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