WisBusiness: Madison start-up sees billion-dollar potential in document security

By Brian E. Clark

MADISON – Digital data thieves abound.

According to industry reports, more than 36 percent of all software – worth tens of billions of dollars – installed in computers is pirated by bad actors every year.

Prashanth Darba, who runs a start-up in Madison’s University Research Park called SmartSoftKey, is on a crusade to impede their devilry. His enterprise, started in 2003, won the Governor’s New Minority Business of the Year for 2004.

"Piracy in China, India and Russia is about 90 percent," he said. "Microsoft alone is losing billions in sales."

Darba’s effort is timely, said Tom Still, president of the Wisconsin Technology Council.

"As a society, we always have done things to safeguard tangible objects like gold and jewelry," Still said.

"But we are now in an era when intellectual property is a tangible asset and makes our society run," he said. "It only makes sense to secure that."

Still said Darba and SmartSoftKey are off to a "tremendous start."

"He has found a niche that is pretty wide open," Still said. "What he is doing is especially valuable to a state like Wisconsin because a major part of our new economy is based on intellectual property.

"I’m just hoping he can make his company grow and be successful here," he said.

With the move toward paperless offices in full swing, Still said keeping electronic documents and other proprietary media secure is a major concern for companies large and small.

Darba said his company’s products also fit in well with homeland security concerns about keeping classified information out of the wrong hands.

"I’d like to put Wisconsin on the global map for being the first state to have implemented a system for highly secure document exchange," he said.

For the private sector, new government privacy regulations – complete with hefty fines – are pushing insurance companies, hospitals, financial institutions and HMOs to keep their data secure from prying eyes.

"Keeping sensitive information confidential from competitors or even disgruntled employees isn’t a new concern, but it’s different now because it’s electronic and in many ways easier to steal," said Darba.

Darba is a PhD and a native of India. He is a former UW faculty member with more than 20 years of multidisciplinary research experience in the fields of computational chemistry, nuclear magnetic resonance spectroscopy and computer science.

Darba, who said he was bitten by the "entrepreneur bug," called Madison a good place to start SmartSoftKey and he lauded the university for its technology transfer efforts.

SmartSoftKey is his second start-up. Eight years ago, he founded Spectrum Research, which makes computer-aided drug design software. Spectrum has six employees.

"I’ve been here for 13 years and it’s a great place to live, so it’s not hard to attract fine employees," he said.

"The only trouble with Wisconsin is the difficulty with fund-raising and growing a company," he said. "We’ve had some successes, but we need better sources of seed money so we can products done and released.

"To raise more funds, we’ll probably need to go to the East and West coasts and talk to people there," explained Darba. He said SmartSoftKey has raised $1.2 million to date from angel investors. The company has eight full-time employees and three consultants on the payroll.

Darba said his company’s digital security systems are fully automated and – more important – easy to use. He declined to discuss sales figures, though he said several Madison CPA firms are now using SmartSoftKey products.

"Aside from hackers and corporate interlopers, even the potential of sending sensitive emails to an unintended recipient has increased the need for a technology capable of controlling access to confidential information," said Darba, who has a decade of executive business experience as an entrepreneur.

Darba came up with his multi-layered and encrypted security system a few years back to protect electronic information for his first company, Spectrum Research.

SmartSoftKey’s first product line – Advanced Software Protection (ASPLock) protects software publishers from unauthorized use of their products by embedding electronic security keys to control and monitor compliance with licensing terms.

He said the market by 2008 could be $32 billion for ASPlock. Because there is no dominant player in software security, he predicts his company can have sales of $300 million if it captures just 1 percent of the market.

The ASPlock technology uses a proprietary algorithm to produce a time-locked system that makes software operable only to users who have legally licensed the product for a specific computer or network.

In essence, Darba said, the company’s keys are the electronic equivalent of the unique characteristics of a key unlocking a specific door. The SmartSoftKey unlocks access to the vendor’s locked product.

If a copy of the locked product is illegally distributed it cannot be opened, he said, because the user does not possess the recognized key.

More recently, SmartSoftKey released the enterprise version of Advanced Media Protection (AMPlock) to provide document and media protection.

Darba described this as analogous to having a locking filing cabinet and giving keys to certain drawers to specific individuals to restrict access to the files.

The electronic locks use the same complex encryption algorithm ASPlock to protect the contents from being tampered with by hackers or other unauthorized personnel.

"This will enable organizations to go paperless and protect a wide variety of media," he said. "It will save them money, too."

AMPlock can be used for securing documents, images, spreadsheets and other materials that are sent as attachments via email, he said. It also can be used to protect and limit access to data within files located on servers.

Darba said AMPlock will keep data secure both inside a company’s network and outside its firewall.

"Authenticity of the intended recipient is verified instantaneously when the protected document is opened, leaving process completely transparent to the end-user," he said.

Under the old system, which Darba said his attorneys still use, electronic documents are sent out with a note at the bottom that says "this is confidential and if it is not intended for you, delete it."

"As far as I am concerned, that’s worthless because you’ve already seen the document by then," he said.

"AMPlock is like certified mail, only the approved recipient can get it," he said.

Darba said major companies might invest millions of dollars to set up the best firewalls they can buy to protect their intellectual property.

"When we talk to them, we ask: ‘What if someone penetrates your firewall?" he said.

"At that point the bad guys have access to your objects and they just walk out with them if you have no second line of defense," he said.

"If it is AMPlocked, however, it’s no good to the thieves because they can’t open the stuff," he said.

He also said the company is planning to scale down the enterprise version of AMPlock to create a low-cost consumer version of the product.

Thinking big, his vision is to see AMPlock installed on a on a worldwide basis on all PCs, including desktops, laptops and handhelds protecting personal emails and attachments.

In the U.S. alone, he said there are 185 million computers now in use. And that rate is growing at 20 percent a year.

"If we can get into only a small fraction of that household base, we’ll do well," he said.

"Initially, though, we want to focus on accounting firms, health care enterprises, financial institutions, accounting and law firms.

"But I think any company or small business could use it. Everyone is planning to go paperless and we are positioned to help them stay secure," he said.

He also said he foresees working with companies like Blockbuster to secure their movies and with record companies and bands to prevent illegal file sharing.

"There is a lot of opportunity out there for us," he said. "It’s pretty wide open. It’s a global market. We are talking to distributors and resellers in Asia and Europe."

His goal for 2005, he said, is to team with several large anchor clients who would not only be big customers but also validate SmartSoftKey’s products.

"We shall see," he said.