How malicious can a worm be? For Pankaj Parekh, co-founder and CTO of Fremont, CA-based iPolicy Networks, it was bad enough to make him sell his house and invest even those dollars back into his company, as he fought off a diving economy to re-build his startup back into a strong, security-enforcement product company. With the renowned Prabhu Goel taking over as the CEO and the second largest security investment of 2003 infusing fresh funds, iPolicy Networks is back on track. The company has developed an Intrusion Prevention Firewall that analyzes every incoming packet in depth in order to provide comprehensive security.

Parekh’s background includes leading the engineering team that developed the Itanium silicon validation server platform at Intel. Reflecting back to those days, Parekh says, “The race was on to develop ever faster processors. I found that most of the processing power was actually used up for one basic function —these processors were busy opening and closing TCP/IP connections. Whenever IT managers asked to upgrade their CPU, it was primarily because TCP/IP processing had exhausted the current CPU’s processing capability.” Parekh’s a-ha moment came was when he realized that the key lay in separating TCP/IP processing from other information processing, moving it onto another layer (think box), so that the CPU could do what it was designed to do—data and information processing. “And once you talk of TCP/IP, you also are talking application security,” he remarks.

Parekh left Intel to start Tunnelnet. He formed an R&D team in India to build a network product concept that could solve the performance constriction of the data center processor, and tested the concept with some initial service providers like Exodus. With another angel investor who brought in good security background, he merged Tunnelnet with Prabhu Goel’s Duet Technologies to form iPolicy Networks.

Parekh observed that service providers’ data centers had mostly deployed a series of point solutions providing limited security such as narrowly-focused firewalls and intrusion detection systems (IDS) “Moreover, most of the point solutions were managed as products, whereas the service providers really need to manage customers—this implies a different approach to business,” recalls the co-founder. Hence iPolicy took a different tack to solve the problem. “The new approach to the problem was to open and analyze the packet once, only once, and then perform all security inspections and enforce all security rules in one pass,” explains Parekh.

The startup’s approach paid off. “Our first product, the ipEnforcer 5000 could solve many problems at once—firewall, intrusion detection, intrusion prevention, virus scanning, and content filtering solutions,” recalls Parekh. One of the early wins was with one of the largest service providers in the world, where the iPolicy security appliance proved its superior security capabilities, ease of management and reliability against leading vendors in the market. “With iPolicy, the service provider could add a new customer in less than 30 minutes, whereas it took 48 hours or more using the solution from the closest competitor,” recalls Parekh. Service providers consider security a significant opportunity that provides them a much-needed differentiator in a market place where it is hard to differentiate oneself merely selling bandwidth. “As carrier CSOs outlined their vision, they single out quality of bandwidth as a key differentiator: the need to offer their clients a secure, reliable, and manageable service and not just raw bandwidth,” reminisces Parekh. And then, in 2001, Parekh found the service provide market started shrinking and almost disappearing. “We had revenues from service provider deployments, but it wasn’t enough,” Parekh recalls, which was when he sold his house to keep the company running.