eEye CEO says company isn't for sale

With an ever-increasing number of security vendors getting acquired or merged into other companies, speculation over who's next has become an industry sport. In recent weeks some of that speculation has focused on Aliso Viejo, Calif.-based eEye Digital Security, amid rumors that the company is for sale and has gone through multiple rounds of layoffs. In this question-and-answer feature, eEye CEO Kamal Arafeh confirms the layoffs but insists the company is still thriving and not for sale.

At the Black Hat conference in Las Vegas earlier this month, rumors were flying that eEye is in trouble, with layoffs and such. Any truth to that?
Well, our customers include the largest bank in the world followed by the largest department of the government [Arafeh declined to name them], which has standardized on our product at a multi-million IP-level-type relationship. That reflects that we're very reliable and certainly one of the most secure security companies on Earth. An awful lot of due diligence takes place at a variety of agencies to make sure that this is the product they can depend on to discover vulnerabilities and stay a few steps ahead of the game. But in focusing on the larger enterprise clients, which can require substantial resources, we had been forced to take our eyes off the ball a little bit from the ability to keep focusing on the larger marketplace, be it medium-sized businesses or [smaller] organizations. So we had a little bit of struggle in being able to address the lion's share of opportunities out there and that deflated a little bit of the momentum. What I bring to the table [as CEO] is the ability to retool the sales organization and marketing focus to put the efforts back to where the money is. In a very short period of time we've been able to reconfigure ourselves to go after a much broader market. I've also been charged with reconfiguring the operation for better productivity, making sure the size of the organization is in line with our projections of profitability and growth.
eEye is not up for sale. We are not trying to get anyone's attention for M&A purposes. We have an amazing technology and our job is to bring it to the forefront.
Kamal Arafeh
CEOeEye Digital Security
How did you go about doing that?
We made some adjustments. For example, our sales organization was probably the smallest group in the company, which is not a good strategy if you want to grow. So we quadrupled that organization and went on a global expansion. We opened a satellite office in Dallas with well over 20 people and did it in less than 60 days. As a result, we've been able to put an awful lot of energy, focus and dedication on going after the SMB (small-to-medium businesses), which in the states is larger than 200 seats. It worked, and our revenue has gone up. We're going on our fourth quarter of substantial growth and decreased costs. This company is now 10 years old and is no longer a young puppy. We have several thousands of customers. So were layoffs necessary as part of this restructuring?
Yeah. I honestly don't like to use the word layoffs. It's a reconfiguration where we chose to put our focus on growth. Most people define a layoff as a person who no longer has a job.
My definition of layoff is sort of close to that, but we didn't lay people off because we were in trouble. We did it because the emphasis on some areas has lessened. Some products in our portfolio are no longer requiring any more attention. They're stable and companies love them, so we removed some of the support there and doubled down on other areas like Blink, which is our latest and greatest emphasis. How many layoffs were there?
About seven of them were from engineering, which is the largest organization in the company, and two from other departments. But we added two from overseas in another area. If another company came along, particularly one of the big IT infrastructure vendors, and they offered a lot of money to acquire eEye, would that be too much to pass up, or is the goal to keep eEye as an independent entity?
Like anybody, we would entertain it. But eEye is not up for sale. We are not trying to get anyone's attention for M&A purposes. We have an amazing technology and our job is to bring it to the forefront. The product was designed for the security expert and now we're trying to take it to the masses, so there's a little bit of work to be done to make the product easier to deploy and understand. It was reserved for the elite, the people who really know security. So we want to take the technology and make it more convenient for the SMB market and maybe even the consumer market. We are profitable, we are growing rapidly, we are very sound and have customers who live and die by our product every day. If someone knocked on our door tomorrow we would listen, but our goal is not to be acquired. So the goal for now is independence, but the acquisition option is not entirely off the table?
No one really sets out to distract their organization by going out there and seeing what they're worth and who might try to offer something. But we are in a consolidated market and it's something that's out there. But it's not our position of interest today. We talked about layoffs, but let's talk about people who are still there, like [CTO] Marc Maifrett. Can you tell me anything about who is coming or going?
Marc is the founder of this company. He eats, drinks and breathes eEye. I suspect we will be married to Marc for the rest of his life. He's gone on 10 years with the company and he may be considering a side idea or two. If that changes something for eEye I can't control that. But we're good friends and his bed is made here for a long time to come. At some point he may want to create the next big thing, and hopefully it'll be at eEye, but I don't want to speak for him.

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