Guy Filippelli is the CEO of RedOwl Analytics, a insider risk management firm located in Baltimore, with offices in San Francisco, New York, and London. RedOwl differs from other security companies due to its emphasis on the human factor: human behaviors, attitudes, personas, and miscommunications that lead to breaches of sensitive data. The company’s platform combines industry-leading risk mitigation practices with regulatory surveillance and in-depth analytics to uncover patterns and stories about threats to the enterprise from within. Investors in RedOwl include Blackstone Group, Allegis Capital, Conversion Capital, Kevin Plank, TCP Venture Capital, and the Maryland Venture Fund.
EDWIN WARFIELD: You started your company right in the midst of some of the biggest data breaches in history, including the 2013 NSA leaks. How did your thesis—that employee behavior presented a risk to sensitive corporate data—play out for your client base and your firm?
GUY FILIPPELLI: Six months after we started talking about monitoring for risky employees inside the institution, there was a major incident in the government space with Edward Snowden. A lot of people said to us, “Well you’re clearly going to go focus on the government as your market for the insider threat.” We were very adamant that that was not where we wanted to start.
We really wanted to focus on the financial industry as a starting point for a couple of reasons. One is definitely to protect from the leakage of sensitive client information, intellectual property, trade secrets, and all that; but the second is there is also a wealth of requirements that these firms have to do. There was a bar that was being raised from a regulatory compliance perspective. The regulators were pushing for a higher level of employee oversight. We knew that there were essentially two unique buyers in that institution that for different reasons might need to use our software: one was the compliance officer and one was the information security officer.
We went down that path and we started talking to both. That actually turned out to be an incredibly good move for us. We started with hedge funds because they were sort of microcosms of the larger institution, so we could get our hands on small amounts of data and prove out what we wanted to prove. Then we started talking to some of the larger banks, private equity firms, and others. In 2014, we were able to open up our first set of relationships there. 2015, in many ways, was a year that we landed our first real production deployments. 2016 was a year where we took those deployments to scale. And now, 2017, is a year where we start to really broaden the customer base. That’s the mission this year. It’s been a long journey to get the product where it needs to be, but we’re really confident about where we are at now and what we are really seeing in the short term that we’ve really figured it out.
Q. Tell us about some of your investors.
A. There are some great individual investors here in the Baltimore area, including ones who are publicly prominent like Frank [Bonsal] and his partner, Jeffrey Schlesinger. There are people like Kevin [Plank], his family office, or Plank Industries; and of course the Marc Benioffs of the world—that was an introduction through a wonderful man and a very sophisticated angel investor out in the Valley called Igor Sill.
We frankly didn’t have a ton of relationships in the DC community. There’s another person that was critically important in this process: a fellow called Christian Lawless, who’s up in New York and who runs an early stage firm called Conversion Capital. He participated, but Christian further brought along a tremendous network of early investors to the table, and I’d say he has been one of the more helpful investors and has just become a close friend through the process. Brad Harrison from Scout Ventures, an early investor and West Point grad, is someone I respect immensely. And then of course the TEDCO and Propel Baltimore were great sources.
We were able to put together $5-plus million of early money from a great group of people. There are others by the way in that list, and I just don’t know if they want me talking about them. So, if they watch this and say, “Why wasn’t I talked about?” It’s out of respect rather than out of purposeful ignorance.