A friendly hacking wager in college ultimately led Stuart McClure into cybersecurity.
He was a student working as a systems administrator at Colorado State University when the first known worm infiltrated internet-connected computers.
Some of the systems he managed were hit by the Morris Worm, released in November 1988 by Cornell University graduate student Robert Morris, who later became the first person tried under the Computer Fraud and Abuse Act.
A fellow student who ran computer mainframes and networks boasted that his systems were untouched by the worm, which caused computers to slow and buckle under unnecessary processing demands.
McClure, who was a sophomore at the time, bet that he could break into his friend’s system.
“Two days later,” working with sleep deprivation, a deep obsession and a wealth of newfound information about the Morris worm, “I had cracked his root password.”
“That was an adrenaline rush” when he handed his friend the password written on a piece of paper at the computer lab.
“I wanted to do this forever,” said McClure, one of the honorees at the Business Journal’s Second Annual Innovation Awards luncheon Sept. 22 at Hotel Irvine (see related coverage on pages 1, 4, 8, 9 and 10). “That’s where it all started.”
Irvine-based security software maker Cylance Inc., co-founded by McClure and Chief Scientist Ryan Permeh, was established four years ago and has grown into one of Orange County’s most-watched and fastest-growing companies. Sales topped $81.7 million in the 12 months through June, up a whopping 1,996% from two years earlier.
The percentage leap claimed the top spot among midsized companies—those between $10 million and $100 million in annual sales—on the Business Journal’s Fastest-Growing Private Companies list that published last month.
Cylance’s software fuses machine learning, artificial intelligence algorithms, and the cloud to thwart new and evolving threats and cyberattacks before they hit servers, desktops and virtual desktops.
Cyberattacks generally can be lumped into three primary categories: execution-based, in which the offender executes a disrupting application in the memory of a computer through an email link, compromised USB or as an employee imposter; authentication-based, in which a password, user name or other encrypted login is stolen; and denial of service, in which a breach destroys a targeted network or wipes out hardware.
Novel Approach
Permeh and his small development team spent 18 months designing Cylance’s core product before showing it to potential customers. It took Cylance several more months to convince them that the foundation was based on machine-learning algorithms, despite their applications for years in finance, insurance, medicine and other industries outside of security.
“People still didn’t believe it. We were called everything from snake oil salesmen to the security unicorn,” McClure said. “And I don’t fault them for this belief. It is a very, very different way to solve this problem.”
Its flagship offering, PROTECT, was released in June 2014.
The first few quarters were challenging, but Cylance was able to leverage positive feedback from a handful of early adopters into a bigger story of providing advanced threat prevention in a new way.
The message started to resonate with companies and investors.
The software within a year was implemented by more than 200 customers, including several government agencies. A $42 million Series C funding round in June of last year led by DFJ Growth in Menlo Park helped scale the company.
“That’s where we really started kicking and rolling,” McClure said.
A $100 million Series D round a year later that attracted several prior investors, including lead backer Blackstone Tactical Opportunities, put Cylance in rare company. The funding benchmark—among the highest in OC tech history—was first reached last year by Irvine-based security software maker CrowdStrike Inc. in a Series C round led by Google Capital.
The companies have more in common than funding rounds, sector and headquarters location.
McClure and CrowdStrike founder George Kurtz in 1999 established Mission Viejo-based Foundstone Inc.
The duo that same year penned a book on cybersecurity, “Hacking Exposed,” with industry veteran Joel Scambray. The book has sold more than 600,000 copies and now is in its seventh edition.
Foundstone, which specialized in detecting and managing software vulnerabilities, was sold in 2004 to McAfee Inc. in Santa Clara for $86 million in cash.
Cylance’s software prevents between 1,500 and 2,000 attacks every week and is now used by more than 1,000 customers. The company has added more than 500 employees in the past year or so to about 640 companywide, the vast majority at its expanding operations in Irvine.
