The National Security Agency’s digital snooping may have inflamed a national debate over privacy, but it has been a godsend for a tiny start-up in Cambridge.
The company, Sqrrl Data Inc., was founded by six former employees of the spy agency. They had helped build the massive database the NSA uses to store and analyze the billions of bits of information it gathers on Americans and people around the world. Sqrrl (pronounced “squirrel”) had planned to release a new commercial version of the NSA database, called Accumulo, in mid-June, timed to a prominent technology conference that would be full of potential customers.
But just before the launch, Edward Snowden dropped the bomb on the NSA.
The Sqrrl guys and their financial backers were swiftly besieged with calls from reporters asking if they were connected to the surveillance, and suddenly what had been a selling point of their business — their NSA pedigree — looked like a toxic association.
“It was an ‘Oh crap’ moment,” recalled Chris Lynch, the venture capitalist who helped the former NSA employees get Sqrrl going.
For the next few days, as one Snowden disclosure after another rocked the country, the Sqrrl founders went into lock-down, refusing to talk to the outside world while assessing whether the burgeoning scandal would doom their business.
“It was like walking on a razor’s edge,” said chief executive Mark Terenzoni.
In intense meetings and strategy sessions to deal with the NSA fallout, his team considered pulling out of the technology summit and delaying the software debut.
They were even worried how the scandal would affect friends and former colleagues at the NSA.
The Sqrrl team eventually decided to push ahead with the launch. They had several reasons for proceeding: First, the onetime NSA employees did not work directly on the snooping program called Prism that the agency used to collect e-mails and other online communications. They could reasonably argue they were several steps removed, working instead on database software to analyze all types of information the NSA collects.
But it turns out — much to their surprise — that there was little danger to their business. Quite the contrary. Far from being tainted by their NSA past, the Sqrrl team is benefiting from the exposure the scandal brought to the sophisticated technology that is used by the government — and that is now available to businesses.
In the days before the launch of its database product, which they called Sqrrl Enterprise, interest from potential customers began to soar. Traffic on Sqrrl’s website went from about 600 hits a day to more than 10,000.
“The website was melting down,” said Lynch, the venture investor who is also a company director. “As a start-up, we couldn’t have paid for that recognition on a global scale.”
Indeed, the surveillance controversy put a spotlight not just on the NSA’s practices, but on the agency’s ability to develop highly sophisticated tools to handle data from every corner of the Internet.
“The private sector is looking at this and saying, ‘Wow, we’d really love to have what you guys have over there,’ ” said Viktor Mayer-Schönberger, an Oxford professor and technology expert. “So many companies sit on huge data troves, and they are wondering if there is anything else they can do with it,” he said. The NSA “just showed the way forward.”
In the highly evolving, highly competitive world of Big Data, Sqrrl had what few other companies could offer: a military-grade program that could sift vast troves of data like no other, and, just as important, provide fortress-like protection from hackers and data thieves.
Merv Adrian, a research analyst at Gartner Inc., said security was a paramount concern in any technology the NSA used. “Requirement number one was that this stuff had to be secure,” he said. “They’re the NSA. That’s how they do things.”
Since June, Sqrrl has been on a fast ascent. It recently closed deals with several major health care providers and telecommunications companies, and it has a pipeline of more than 100 potential contracts, representing revenue in excess of $10 million. It’s hiring more engineers and sales people, moving into a larger office in Central Square, and just banked a $5.2 million investment from two of Boston’s leading venture capital firms.
In many ways, what the government does with data technology is the same thing private industry wants. Both are eager to use massive amounts of digital information being collected on people and glean new insights from it. The government wants to detect terrorist threats, while marketers, retailers, and Internet companies are looking for new customers or information on buying habits. These Big Data technologies are used by Netflix Inc. to recommend movies and Amazon.com Inc. to suggest books.
Another hot data analytics company that straddles the worlds of government and commerce: Palantir Technologies Inc., which was founded by engineers associated with Stanford University and PayPal. It offers software that government agencies and businesses use to collect and rapidly analyze data. It has generated lots of buzz in the technology world, no less because its investors include the venture capital wing of the Central Intelligence Agency, which is also a customer and has used it to help hunt for terrorists.
The other key thing federal agencies and companies want from these new data tools is security. While the government built Accumulo with security in mind, many of the commercially available Big Data tools did not have the same level of encryption and protection that Sqrrl’s product offers. And given that hackers have stolen sensitive customer information from many companies, businesses are keen for any product that would better safeguard their data.
So, far from being put off by the privacy implications of the NSA controversy, some big companies with digital warehouses full of information saw something in the Sqrrl version for themselves.
“A lot of customers believe it’s the right solution, since it came from the NSA,” said Will Gaskins, managing director of Efiia Group, a Washington computer consulting firm that vets commercial software products for companies and government agencies.
At least a dozen Efiia clients are considering using Sqrrl — many of them since the NSA revelations surfaced.
If anything, the privacy debate had a corollary benefit for Sqrrl because it served to showcase the high level of security its Accumulo product had because of its NSA pedigree.
“Customers aren’t really concerned about the privacy debates around the NSA leaks, they are concerned about what the technology can do,” said Ely Kahn, a Sqrrl cofounder who was director of cybersecurity at the National Security staff in the Obama White House.
Sqrrl is reluctant to talk about what its customers are using its technology for, or exactly what Accumulo was used for at the NSA. That information is still classified, said Khan, the company’s director of business development.
Moreover, the company pointedly says it has not tried to exploit the NSA scandal to promote its product.
Nonetheless, all the attention on Sqrrl has been validation for its executives — and the man who helped them raise $2 million to get started. Lynch, the funder from Atlas Venture, said he was initially ribbed by other members of the venture community after making his first stake in Sqrrl.
“They said you invested in a bunch of government guys who couldn’t do a start-up,” Lynch said. “Now they are chomping at the bit to get in.”
Michael B. Farrell
can be reached at email@example.com.
Correction: Because of a photographer’s error, an earlier photo caption with this story incorrectly described chief executive Mark Terenzoni’s history. He neither helped found the company nor worked for the National Security Agency.