CEO: Richard Marko.
Revenue: $127.6 million in 2009; $111.4 million in 2008.
Net income: Undisclosed.
No. of local employees: 185.
Investors: The investor group includes founder Anton Zajac.
Year founded: 1992.
Company description: Provider of computer security software.
ESET LLC sales managers knew they were doing well — the San Diego-based anti-virus company saw its software consistently rank in the top 10s for both use and sales. But they did more than that, they were ranked number one in consumer market share growth by Gartner Inc. in March. Gartner, based in Connecticut, bills itself as the top information technology research and advisory firm.
“Given that two-thirds of our new sales come from customer referrals, we think that’s something to be proud of,” said Dan Clark, vice president of marketing. “It’s great that the user community sees what we’re doing is of value to our customers.”
ESET has been writing anti-virus, anti-malware software since 1992, and using the less common business model of not giving away its software, one that usually only works for the very big companies including McAfee Inc. and Symantec Corp., which markets its product under the name Norton.
A Consistent Performer
That they don’t offer a free version of their software may be what cost the company the number one spot in Consumer Reports’ rankings this month. The software ranked second on the not-free list.
The magazine reviewed ESET’s Smart Security 4, a bundle of anti-virus, anti-spam, anti-malware and firewall software, according to Consumers Union electronics editor Paul Reynolds.
“There are free programs that offer perfectly adequate protection for most people,” Reynolds said. “(ESET’s) was one of the more consistent at all the things we look for, a little lighter on the machine. It is, however, more expensive — but this is very good software.”
Although Consumer Reports isn’t widely circulated in Latin American or Asia, the software is selling very well there, Clark said. In March, international security analysis company Opswat Inc. ranked ESET fourth in the worldwide market, with a 10.3 percent share.
“We’ve had strong growth in North America, but even stronger in Latin America and Asia,” he said.
A Nose for Trouble
One of the most frequently praised capacities of the software, which sells at around $90 for the first year and then $62 for renewals, is the software’s ability to sniff threats of the future.
“We call it ThreatSense, our advanced heuristics,” Clark said. “Malware constantly evolves based on what’s already been done and what’s been done to stop it, so that totally new pieces of malware are rare.”
The evil authors of malware use a method called “runtime packing” where each time it’s shipped, the signals that got it caught by malware nets at the end of previous cycles are altered, he said.
“We focus on what the software is trying to do, rather than what it looks like, to find viruses and malware,” Clark said. “Most have something in common and we can easily identify it as something we’ve already seen.”
Reynolds said that the software’s agility at picking the bad without blocking the good was an area where ESET rated very highly.
“ESET is able to recognize very fresh viruses and malware that got by other software. It says, ‘This thing looks bad and it smells like 800 other things I don’t like,’ and blocks it,” Reynolds said. “It doesn’t block things that aren’t threats and it doesn’t slow a computer down the way some suites do.”
Security software is a huge industry, one where paying customers forked over $16.6 billion last year. While many individual users prefer free software — whether a computer download of a diluted program or heavily rebated boxes from Fry’s Electronics Inc., Staples Inc. and Costco Wholesale Corp., there are plenty of buyers.
Malware Runs Amok
The need won’t go away any time soon — hackers have progressed from basement hobbyists leaving calling cards to full blown criminal enterprises.
“The volume of malware that’s produced now is huge. We hear that monitors see 100,000 samples a day,” said professor Richard Ford of the Tallahassee Institute of Technology, who is considered an expert in hostile attacks. “In the 1980s and 1990s, hackers did it for glory. These days it’s organized crime.”
Eastern Europe (home to the Peggy customer service line), Asia and India are common sources.
“It’s criminals after money,” Ford said. “From African scams to Ukrainian hackers, malware is a criminal enterprise designed to separate computer users from their money and identities.”
There are direct steals — ransomware — where the unwitting user either by choice or to “cure a problem” gives their credit card information and installs rogue software on the computer. There are phishing attacks, where a seemingly innocent email from a bank, a known credit card or account like PayPal or insurance takes you straight to identity hell.
“There’s a variant called spear phishing, a very focused email attack to your computer to get credentials to break into a company’s network to gain information,” Clark said. “There are even instances where cyber criminals pretend to be legitimate companies and they call from phone centers to finish building your profile. Then they sell it to other criminals.”
There’s no cure, no end in sight and precious few criminal prosecutions of for-profit hacking. So consumers try to protect themselves.
“We’re not perfect,” Clark said. “We think we’ve got a very effective combination of reactive and proactive heuristics that isolate the bad things without slowing your computer down.
“We recognize the user didn’t buy the software to run security software and we aim to be quiet and non-invasive,” he added.
Marty Graham is a freelance writer for the San Diego Business Journal.