Interview with David Pulaski, CEO of IM-Age

IM-Age Software was started in 2002 and our job is to offer enterprise solutions to ensure security, compliance and productivity for Instant Messaging communications.

I have been in the software security space for quite a while and used to be the VP of Worldwide Sales at Bindview that was founded by my brother in 1990, and which I joined in 1993 as the first sales person. I was there for 8 years, and had the opportunity to take the company public, grew revenue to almost $100 Million, and I learned a lot about what it takes to be successful in the software security space. It was there that I learned how to be successful in business.

The key is to find problems that need to be solved. A lot of companies build technology based upon Market Research. IM-Age is different in that it identified a problem that customers were already having that wasn’t being solved. We actually built our product as part of a consulting project. Once we realized this company?s problem was shared by others we knew we were on to a viable business opportunity.

There are a whole bunch of security and compliance issues. Some of the key issues that companies are facing resolve around compliance, such as HIPAA, Sarbanes-Oxley, SEC or Nasdaq regulations. There are two areas that have to do with data, and they are the logging of data and the protection of data. A perfect example would be Insurance companies, which must log and protect your information as required by HIPAA.

The use of IM clients within the enterprise opens up companies to issues within the above, and other regulations. Employees could be sending sensitive information from one-another, and discussing company information that must be logged and protected in order to be in compliance. We even believe that companies that aren’t under the jurisdiction of these and other regulations have a use for our software to ensure that their internal information and policy guidelines are met.

One of our original clients was Enron. They wanted their trading organization to use Instant Messaging to get bids and actively perform their trading functions. The problem was that those trading communications were not being captured or logged and that is why they came to us. Unlike a number of our competitors who started out in the financial industry, our first two accounts were in the energy and energy trading business. We were local to Enron and a number of other Energy firms here in Houston and that led to our initially targeting the energy vertical.

Luckily, UBS Warburg had decided to purchase Enron’s trading division. UBS Warbug decided to purchase our product. The only difference was that instead of two firms buying our product, there was just one.

Certainly the financial industry was another high profile vertical that we are targeting. Right now, over 50% of our customers are NYSE regulated firms in New York. Because of some of the unique benefits that we offer, we found a nice niche with some of the smaller firms as well as signing up some Fortune 100 accounts.

We have really identified those customers that don’t have the IT resources to implement the types of controls and tracking that we provide. They have decided to go with us as an ASP where we actually manage and backup the data for them. We provide a turnkey solution which makes the SEC happy, and all at a very fair rate.

Companies build applications to perform a function. They don’t necessarily understand the ins and outs of security when they are building the applications. We don’t tamper with, modify, or change what the goal of the application is. We put in place safeguards so that companies can protect themselves from the risks associated with those applications. We built our product independent from the IM clients available. We didn’t want to marry ourselves at the hip to one provider over another. If we did, we wouldn’t be able to give our customers honest feedback as the specific risks associated with different IM providers. Down the road, we do want to have business relationships with the providers for marketing and development purposes.

We are self-funded. We have modeled ourselves after our previous experiences at Bindview, which was also boot strapped. It was built and self-funded by its’ founders, and never really raised money until right before going public. Our motto is that “You have to earn the right to spend money”.

We are in the market for financing, but it is very important to us that we use the money wisely and in a way that best allows us to continue to grow. It is very important for small companies to ensure managed growth. Many VCs today are looking to make 5 Million plus in investments and to be quite honest we think that doesn?t play into the managed growth plan that we have.

Things are a lot different than they were 5-6 years ago. If you found a hot space and a market that needed technology you could get a project manager to put specs together and build and people would virtually buy anything. Now people aren’t that irresponsible with money and budget dollars. You have to really validate your service or product to potential customers. The key to understanding a company?s opportunity is how many customers they have signed up in this market. We have signed up almost a 100 customers in a year and a half, and see that as a good start.

The market for Instant Messaging is growing very quickly as is the market for security and compliance tools. A perfect example of how IM has come a long way and is part of the overall internal operations of organizations how vital it is becoming to everyday communications, and is being integrated into different applications. Microsoft is imbedding IM into not only email, but also different business applications.

I believe so. I see it being imbedded into every single application that you can think of three to five years from now. As companies truly being to integrate this into their overall function, we see this as being a major driver for our long-term viability. We are not just a gateway technology we have a client component. Our system allows companies to integrate their backend technologies within the IM client interface, making business process much more efficient.

Most of the enterprise products have the bulk of the features we offer, which are logging and encryption. If you look at the AOL and Yahoo! enterprise clients, they have this functionality. The issue with this is that the individual on the other end has to agree to use the same client and software otherwise the system won’t work. This is simply due to the fact that AOL can’t talk to Yahoo! and Yahoo! can’t talk to MSN because there is no Instant Messaging standard that allows interoperability. Another problem is that the Enterprise solutions offered by the main providers to don’t deal with the risk associated with unauthorized IM clients used internally.