Last year Kerry Bailey was part of a U.S. private equity firm considering taking a big ownership in one of Canada’s biggest pure-play managed detection and response providers. Today he’s the company’s new CEO.
eSentire Inc., based in Cambridge, Ont., said Wednesday it has hired Bailey to lead the company Former CEO J.Paul Haynes becomes president and chief operating officer, remaining responsible for operations and the technical direction of the company.
eSentire, which has many customers in the U.S., has made Deloitte’s list of fastest-growing North American technology companies for the past three years. Its lead investor is private equity firm Warburg Pincus LLC of New York., which took a sizable chunk of eSentire in August 2017. According to news reports that investment was US$100 million.
“Kerry is a seasoned leader with extensive experience delivering high growth and creating value within the information security services industry,” Cary Davis, Warburg Pincus’ managing director, said in a statement. “We are confident in his ability to take eSentire to the next level at this important time in the company’s growth trajectory.”
In an interview, Bailey said eSentire is “well positioned for where enterprise workloads are going,” meaning cloud computing. “Our job is to keep up with the growth, continue to innovate our platform and continue the market leadership in MDR (managed detection and response). So most of my focus and leadership in the first six months will be scaling the business, continuing to innovate very fast with our roadmap and continue to lead the MDR category.”
That includes adding over 100 staffers, the bulk of whom will work at the Cambridge headquarters, where 80 per cent of the company’s employees are now. The company also has offices in New York City, London and Cork, Ireland.
About 28 per cent of the company’s business today comes through the channel, including value-added and managed service providers. “We recognize that it’s important to address security buying patterns within the channel,” Bailey said. “As a business, we’re putting more emphasis on becoming a ‘partner first’ company. Once we segment between larger enterprise and mid-market, we’ll augment our program to better serve super VARs who recognize the benefits of having a managed detection and response services partner available to support their customer base.”
Bailey is a former head of cloud services at Hewlett-Packard Enterprise who left at the end of 2016 to join the Chicago private equity firm of Madison Dearborn Partners. Last year it considered, then abandoned, investing in eSentire after sensing Warburg was determined to take it.
At the time Bailey was impressed with the Canadian company. It was growing at 60 per cent-plus a year, he said, had the highest customer satisfaction scores he’d seen for a service provider. In addition, he felt it is well positioned to deliver cloud-based threat hunting and managed security.
After the Warburg deal, eSentire board members who knew Bailey and his background in security, channel distribution and cloud services – he’d been senior vice-president of global services at CyberTrust, a security services firm bought by Verizon Business in 2007 – asked if he was interested in joining.
With Warburg behind eSentire and the resources “to take it to a billion-dollar company,” Bailey said he thought, “How can you not join?”
He’ll commute from the U.S. until his daughter finishes high school next year.
In this country eSentire competes against some of the biggest providers for managed security services, including IBM Canada, Deloitte Canada, Bell Canada and CGI. Other competitors include the Herjavec Group, Above Security, Scalar Decisions, SecureWorks, Trustwave, and Paladion. South of the border its competitors are more numerous and significantly bigger. However, sometimes eSentire partners with them.
Esentire offers managed threat detection and incident response as well as continuous behaviour-based network and endpoint monitoring on a company-built platform.
Last July it launched esLOG, a logging and event management platform that supports real-time threat detection and response across network, endpoint, and cloud services akin to a traditional SIEM solution. The company says esLOG enhances threat detection, improves forensic investigation and compliance reporting.
Until recently customers have tended to be mid-sized, but Bailey said it is increasingly adding what he calls higher-end mid-market to lower-end enterprise organizations. Many customers are in the financial and legal sectors.
Sector growing fast
IDC Canada analyst Kevin Lonergan, who co-authored a report last year on the Canadian managed security services sector, estimates revenues this year will be over $400 million (not including implementation spending and purchases of hardware/software), up 14 per cent over 2017. Organizations here tell the market research firm they are signing up for managed services because they can’t afford staff to watch the network 24×7, nor can they afford the best security technology. And it’s less expensive. “So there’s a race to have the right solutions and people at a budget that’s not growing as fast as the threat landscape,” Lonergan said.
Among the interesting things about eSentire, Lonergan said, is that it built it’s own monitoring platform and therefore has intellectual property.
In a report last May, Gartner noted that managed security service providers – whose offering start with device management and network/endpoint monitoring — are increasingly offering MDR capabilities. It counted 30 with MDR-like services, ranging from Cisco Systems and FireEye to startups.
That’s why, Bailey said, “we need to continue to innovate and run hard.” Scaling the company bigger is vital. However, he added, “I’m very confident of where we are.”