Security-as-a-service startup with a Canadian connection looks to the channel to sell enterprise-grade security to small business

Today, security-as-a-service startup My Digital Shield is announcing general availability of the first version of its cloud-based solution for small businesses, offering enterprise-grade security at an inexpensive price.

There are many types of providers who sell security into this space, but My Digital Shield sees a major gap in the market, in that the offerings available typically are not enterprise grade, are not priced at a small business level, or both.

My Digital Shield (MDS) is based in Wilmington Delaware, but has a strong Canadian connection in its leadership team. Andrew Bagrin, the CEO and founder, was previously the Director of Service Provider Business Development at Fortinet and drew his understanding of the gaps in the small business market through his work with service providers.

“This actually dates way back, to when I was at Check Point, and worked with service providers and was tasked with helping them build out their security services, and go after markets they currently weren’t going after,” Bagrin said. “It was then that I started noticing the gap no one was addressing. When I went to Fortinet, I found the same thing, that the big gap was the small business segment. The majority of breaches affect small business, but these breaches don’t make national news, so they aren’t widely known, even though a breach is often enough to put a small business out of business.”

Bagrin said that the security services that were available for small business were feature-poor compared to enterprise offerings, and the prices were too high for the market.

“The need was to come up with an architecture that made a lot of sense for small business without having degraded service, and which would be easy to self-manage or managed by partners,” he said. “We talked about it with the big service providers, and they said the idea was amazing but they weren’t going to build it. They said if we build it they would sell it. Fortinet wasn’t interested either. No one wanted to address it.”

The MDS design uses enterprise unified threat management (UTM) technology in a cloud-based Central Defense System, which filters incoming and outgoing traffic. Users connect to the Central Defense System through MDS Cloud Link, a simple piece of equipment which plugs into an Internet router. Because threats and viruses are screened in the MDS Cloud off-premise, Internet speed is not degraded.

“We solved the problem by tunnelling everything into the cloud, where performance is unlimited,” Bagrin said.

In addition to providing broad enterprise grade cyber-security, Bagrin said the system is set up to specifically deal with small business issues.

“It really focuses on specific small business types and their needs,” he said. “It asks questions relevant to say, restaurants, as far as what POS systems and other devices are connected, rather than just technical talk. It’s very business-oriented.” Retail, restaurants, hospitality, and professional services all did well in the just-completed beta.

The actual security technology comes from Fortinet.

“We went with Fortinet for the protection technology, because we didn’t want to reinvent the wheel there,” Bagrin said. “The technology that puts it all together is our own.”

The sweet spot for the service is small businesses with fewer than 50 systems to protect. The price starts at $69 per month, with no start-up fee or long-term commitment.

Bagrin sees the large service providers who sell to this market more as targets for co-operation rather than competition, and indicated they are talking to one large provider in the U.S. about putting together a package for their small business customers.

“We would rather partner with them than compete against them,” he said. “They don’t have anything at this level of protection, so there’s definitely some interest to do that kind of stuff, as a service on top of their own.”

MDS wants to sell entirely through partners.

“We are really channel focused,” Bagrin said. “We will be selling it direct on our site, but you will pay more if you do that than if use a partner, because you can claim a partner discount on the website. We want you to use a partner, because no matter how simple we make it, it’s still a technical thing, which may need support.”

Bagrin sees a value proposition for two types of partners. One is for solution providers who sell things like POS systems to restaurants.

“It’s a straight resale, where you resell and move on, and get a recurring revenue from it,” he said. “The other option is for managed service partners where they install, manage and monitor, and charge for that, so that they make money from the management portion as well. Instead of 1 hit of 20 when you pitch a security solution, you can get 1 of 2 from these customers.”

MDS has defined the contours of a certified channel partnership program for partners, and is building it out.

“Right now, we have less than ten partners, and it’s very much a new area,” Bagrin said. “Once we feel, we have gotten things under control, we will build out our channel strategy fully. There are different tiers, from Bronze, which receive 20% of revenue, to Diamond at 50%.” Tier membership is based on the number of locations under that specific partner.