APR 29, 2014 @ 12:12 PM
In the past 18 months, the U.S. has experienced more than its fair share of digital security disasters. There were the Snowden disclosures and Heartbleed. Adobe recently saw 150 million accounts get compromised; Target TGT +3.64%, 120 million. It’s enough to send companies, consumers and investors running right into the warm hands of security startups.
TeleSign, a Los Angeles company founded in 2005, is one of those companies benefiting from the recent madness. TeleSign sells 2-step verification software and services to a star-studded array of the top websites in the world. Ever receive a text message from Google GOOG -0.17% or Facebook with instructions to plug in an attached time-sensitive code? That’s 2-step verification. The process makes it much, much harder for a hacker to gain access to user accounts. CEO Steve Jillings jokes that those who use 2-step can even publicly post their login credentials and stay safe.
The technique received a brief plug on Netflix NFLX +1.22%’ House of Cards last winter.
TeleSign is quickly emerging as the market leader of 2-step verification. Jillings says that the company’s 500 clients include 9 of the top 10 U.S. web properties, along with 19 of the top 25 global properties. He declined to cite exactly which ones are customers on record, but you can take a look at who they might be here and here. Evernote and oDesk are among those confirmed publicly.
Today the company announced that it’s raised $40 million in a Series B round led by Adams Street Partners with participation from March Capital Partners and Summit Partners. TeleSign did $25 million in sales in 2012, and $50 million in 2013. The company expects to double that figure again this year. Jillings says that he hopes to take the company public by the end of 2015.
Before then, he’s using the newly raised cash to ramp up the company’s global efforts. TeleSign already has a serious presence in Europe, following a 2013 acquisition of the UK-based SMS messaging company Routo, but Jillings says that he’ll be expanding more deeply into Asia and Latin America over the next year.
When joined TeleSign as CEO in 2010, the company had only 12 employees and a handful of clients. Today it has 200 employees in five offices.
The company sells its services on both a subscription and one-off transaction basis. In addition to charging for the management of all those 2-factor text messages, TeleSign also offers a product called PhoneID Score, which my colleague Kashmir Hill described at length last fall. PhoneID provides webs services with data on millions of phone numbers, including model number, carrier and whether a device operates on a pre-paid or post-paid billing plan.
All of those data are used to determine whether users are risky prospects to allow on to a web service. Why might, say, a social network want to block users from joining? “MySpace let literally everybody in and it just got destroyed,” quips Jillings. The goal is to prevent those spammy, abusive users from ruining an otherwise healthy system.
Reference: http://www.forbes.com/sites/jjcolao/2014/04/29/with-another-40-million-in-funding-telesign-looks-to-dominate-2-step-verification/#743f54be199f
