In the first 12 months of its existence, the tech startup ThetaRay went from zero to $30 million in funding, signed a partnership with GE, and graduated six months early from the incubator where it got its start. It also won numerous industry accolades and awards, including CRN’s “Top 10 Coolest Security Startups of 2014.”
It has been a remarkably fast rise in a challenging industry. But ThetaRay CEO Mark Gazit says the company is growing so quickly because it’s providing an innovative cybersecurity solution for industries that face potentially devastating threats.
Gazit is an Israeli tech entrepreneur who studied engineering and computer science at the Hebrew University and management at Harvard Business School, London Business School, and Tel Aviv University. He got into the data security field after serving in the Israeli Air Force, and held numerous leadership positions over a 20-year telecom tech career, including an 8-year stint as CEO & co-founder of SkyVision, a satellite equipment company, where he grew shareholder value from zero to $115 million and revenue from $1 million to $100 million.
A self-confessed high-growth company addict—“every day feels different, like watching a baby grow up fast”—Gazit set his sites on transitioning into the cybersecurity industry. He was looking for the right startup when he learned about a venture getting started at the Israeli tech incubator Jerusalem Venture Partner Cyber Labs. The company would leverage threat-detection technology developed by world-class mathematicians Amir Averbuch, a professor at Tel Aviv University and former IBM Watson Research Center researcher, and Ronald Coifman, a Yale professor and DARPA advisor.
An algorithm that the two jointly developed at the Watson Center enables a computer to detect unknown threats with something akin to a human’s gut feeling. Gazit explains: “If you think about it, a gut feeling is not just a gut feeling. Sometimes we feel we are in a dangerous place, our mind projects a lot of information and analyzes information really fast and we get out of that situation. But if I would put a camera there, I would see that the sun is setting, it’s getting darker, suspicious characters are lurking, and people are closing their front doors. Those are small, subtle signs that you might not pickup on consciously, but your mind analyzes very fast.”
The mathematicians’ algorithm enables a computer to detect suspicious anomalies in unfamiliar data. And Gazit says there’s a clear need for such capabilities in an Internet of Things world, where machines connected to one another are vulnerable to cyberattacks. “There are probably 25 billion devices speaking with each other today. There is a need for digital or machine-based police forces to catch those machines trying to do bad,” Gazit says.
Industrial operations, transportation, energy, and financial institutions are among the high-stakes sectors at most risk. “Critical infrastructure is one area where there were no solutions,” Gazit says, referring to what the U.S. Department of Homeland defines as “the assets, systems, and networks, whether physical or virtual, so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.”
“ThetaRay’s approach can drastically improve the way we detect and prevent the most destructive and complex cyber-attacks, and allows leaders to quickly identify cyber threats to avert significant damage,” Gazit says. “The proliferation of mobile, cloud, and virtualization technologies has created a haven for cyber hackers,” a ThetaRay promotional video notes. “Traditional technologies that try to protect the perimeter no longer cut it.”
Says Gazit, “When you know what to look for, that’s great. But sometimes you don’t even know what to look for. We are looking for a needle in a needle stack and we don’t know what the needle we’re looking for looks like.”
So, despite being a month-old startup with a handful of employees and no track record, Gazit made the decision to go after business with the world’s largest and best companies. “It’s another thing I like about building startups,” he says. “You know to challenge reality. The fact that nobody has done it before means it’s impossible or that it’s an opportunity.”
This time, it turned out to be the latter: ThetaRay’s technology was just what GE had been looking for. When GE joined JVP as an investor in ThetaRay, GE Software’s head of ventures and business development, Brett May, called the move “a crucial step in a long and determined series of security efforts to safeguard our products.” May said, “As the data proliferates, so will the opportunities to exploit it due to the interconnected nature of systems and machines. Theta Ray has a unique and innovative approach that can be used in the future to potentially help protect products and data.”
Among ThetaRay’s other early customers is an east coast U.S. power generation facility where ThetaRay proved its value by detecting in just 15 seconds every bad data point—and no false ones—in a test that the plant’s own data scientists had taken more than a month to pass.
Another customer is a mortgage bank where ThetaRay’s technology detected an anomaly in mountains of customer data: a teenage mortgage holder. “We’re not experts in mortgages, but we found a record that stood out among billions of records,” Gazit says. And ThetaRay says its technology trials for Citi and ING Group have detected fraud, anomalous business processes, and money laundering.
Now, after more than a year in business, Gazit says ThetaRay has close to 10 customers in the U.S., Europe, Asia, and Israel. The lesson for fellow startup leaders, he says, is that “for small businesses it’s definitely possible to work with and support larger organizations. If you have a solution they need, you can approach them and sometimes big things happen.”