Sunday, May 30, 2010

Single Sign-on Startup Opportunity Has Passed

For as long as I can remember, computer users have been complaining about the array of names and passwords required to get work done – a different unique user identification name and password are required to start the computer, email, social networks, banking, read online news, connect to the office, or check your phone bill.

Computer jocks all fantasize about having one magic password or bionic finger that will eliminate the “sticky notes” that normally line the displays of avid computer users. So why hasn’t this problem been solved long ago by the many experts, startups, and “solutions” already out there?

Certainly this is a challenging technical problem, if you look at the problem in a macro sense:

  • Must accommodate existing applications with proprietary login functionality
  • Enterprises expect a solution across disparate old and new platforms
  • At least two authentication technologies are competing: Kerberos and digital certificates
  • Multiple levels of security required – sign in to instant message vs transfer funds
  • Passwords have to be changed often, and increasingly non-trivial to foil hackers and bots

But I suspect the real problem here is that the dream of a “one size fits all” solution simply doesn’t make sense. It’s sort of like the people who think all cars, or even all vehicles, should operate and drive the same. It won’t happen, for some very pragmatic reasons.

What will happen and should happen is that sign-on will get more automated, more intuitive, and better remembered across relevant access domains. The alternatives out there now have come a long way:

  • Early hardware solutions involved plugging in a USB “dongle” or security token which had a unique hardware id that could be automatically polled and associated with your unique sign-ons. Matrixlock, Senselock, and UniKey are among the popular vendors even today.
  • Later came a flood of software packages that stored an encrypted version of your userids and passwords on your hard file. These are essentially an automated and secure version of the post-it notes, and include names like KeePass and Mitto.
  • My laptop has a built-in fingerprint sensor that can be easily set up for a specific password when “swiped.” IBM invented this, but most others have it now also. Secure Services Corporation has a software implementation that uses biometrics.
  • There are numerous single sign-on products on the market, such as PassLogix, AccessMaster, Entrust/SignOn, MetaPass SSO, OneSign, and SecureLogin. These typically take some integration or special setup to work with existing applications.
  • The latest type of solution is called a “web profile aggregator” built as a portal to a group of similar applications or premium content which can be accessed through a common login. Examples include FindMeOn.com, Mugshot, and Naymz. A new one I have used is called iLogon.

As Web 2.0 takes over the consumer world, and Software as a Service (SaaS) finds a place in the enterprise, this problem gets easier. My goal is to get down to a half-dozen logons and passwords, or even just a single sticky, and with the tools above, I’m almost there. I’ve already eliminated the unencrypted text file of passwords on my laptop.

From my perspective, a half-dozen variations is about right, to match the different types of applications and security required. So let’s forget that fool's gold for startups to think that they can achieve "single sign-on" capabilities for their users. I think it’s time to add this one to my list of startup opportunities whose time has come and gone.

Marty Zwilling


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Wednesday, May 5, 2010

Stephanie Spong – Venture Capital Executive Interview

Last week at an angel investor forum I was privileged to meet Stephanie Spong, who is a Principal with EPIC Ventures, an increasingly rare early stage VC firm. Her experience includes helping startups for many years, and board positions on the Rocky Mountain and New Mexico Venture Capital Associations, New Mexico Angels, as well as several startups.

Her academic credentials include an MBA from Harvard Graduate School of Business Administration and a BA degree, cum laude, in Economics and Asian Studies from Brigham Young University. Stephanie also speaks Spanish and Japanese.

Marty: Welcome to Startup Professionals interviews. Tell us what you do.

Stephanie: I am a venture capitalist currently based out of Santa Fe, New Mexico, with EPIC Ventures. We invest in early stage IT startups and then oversee those portfolio companies through to exit.

Marty: What events led you to your commitment to venture capital investing?

Stephanie: I love building companies. I’ve run a $30m revenue operation with 150 employees and worked in finance and consulting, so I had a good broad business background with both line and strategic advisory roles which is a good fit for what we do in venture. When all goes well, it is a real partnership between the investors and the company management teams, figuring out the strategy, rolling with the punches you get from the economy and competition and working together to create a great company. This work uses everything I’ve learned, both about business and people, so it is a lot of fun.

Marty: What is different about being a woman in your role versus a man?

Stephanie: I haven’t thought about it really. I’ve been told by entrepreneurs that I smile and am warmer than the other venture capitalists they talk to, but that after they leave the meeting they realize they were thoroughly and deeply grilled by my questions. One in particular put it more colorfully, but not in terms suitable for family reading. Something about checking his trouser pockets to make sure he went home with everything he had come in with that day.

Marty: What’s the most challenging aspect of being an entrepreneur these days from your perspective?

Stephanie: The recent horrid economy has made it very tough for true early stage entrepreneurs to get funding. On the venture side, we are seeing so many great B and C stage companies, maybe still pre-revenue, but well past fundamental technology and development risk, with built-out management teams, that we can pick up at Series A prices. When the market is like that, it’s hard to justify the higher risk of a true Series A investment in two guys and a business plan. That will change, though, and I see it happening now with hot pricing in certain segments.

Marty: What are the key personal attributes you see in successful entrepreneurs?

Stephanie: The best have the full package: passion for their work, great business acumen, unbreakable persistence, excellent social skills and the ability to both lead their teams and manage an investor-heavy startup board, and ethics.

Marty: Any advice you would like to give to women entrepreneurs contemplating a startup?

Stephanie: I would give them the same advice I give to a man: make sure you are excited enough about the opportunity to commit a minimum of four or five years of your life to maturing the opportunity, go as far as you can to develop it on your own before seeking funding, pick an opportunity for which you are the perfect fit in terms of background and network and skill set and go for it!

I will tell a story, though, about one young woman who I very much hope continues on an entrepreneurial path. I came to know her when she was an undergraduate student working in the tech transfer office of a university. Every six months I would swing by and she would show me the latest and greatest technologies coming out of the university’s commercialization efforts. She was very good at the market assessment for them and quite articulate in pitching them to me.

I judge the business plan competition at that school, and so one day as we were packing up after her presentation, I casually asked her which of these she was going to write up and enter in the business plan competition. “Me? Oh, I couldn’t do that!” I gave her a pretty stern lecture on how well positioned she was with her knowledge of the tech transfer area, that vast herds of clueless but swaggering males got up and tried every year, and how I knew relative to presentations I had seen in past years that she could do as well or better, and that even if she failed to win, she would learn a lot along the way and get herself onto the entrepreneurial playing field.

Well, she did pull together a team and wound up taking 2nd place (and winning $10,000), beaten out only by a highly experienced executive MBA team in their 30s. Last I heard, she was working in a startup and plotting to do one on her own after gaining some work experience. I hope she will stay on a path to entrepreneurship some day, along with all the other young people, male and female, who dream about leading a startup.

First step is getting on the playing field.

Marty: Stephanie, thank you very much for your investing insights and your role-model leadership for all of us! You can find out more about Stephanie’s firm and investment activities through her business site Epic Ventures, or you can contact her directly via email.

Marty Zwilling


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