Mike & Robb's Party

Trend Micro's Mike Haro and Horn Group's Robb Henshaw threw a great party on Thursday in San Francisco for IT security folks.

This is the second time they are doing this event and they drew a very interesting crowd of journalists, Wall Street analysts, IT security startup CEOs, Trend Micro senior management, and PR people.

A few interesting conversations from the party:

It was good to catch up with Dean Drako, CEO of Barracuda Networks, a company that makes anti-spam appliances. If you have driven on the 101, there's just no way you could have missed their big billboard.

Founded in 2002, Barracuda, has grown into a fierce security player.

Anti-spam is a fairly commoditized market but Barracuda is one of the few private companies that is doing well. They are killing everyone on price and I have had other private security startups complain to me about how aggressive Barracuda is and how willing they are to undercut rivals.

Still Barracuda is a niche player. It doesn't cover the entire IT security needs of an enterprise, or even a sizable portion of that.

The company has grown too big to be acquired by anyone but the truly big boys of IT security. Or Drako will have to take it public. But it may be tough selling Wall Street this story. Barracuda isn't diversified enough in its security offerings and is playing in a commoditized market.

Wall Street isn't happy with public IT security companies now. Many portfolio managers that I have spoken with suggest that despite the potential, IT security stocks don't offer aggressive growth. One fund manager suggested investors would be better off putting their money in a one-year CD instead of an IT security stock as they could get better returns.

I chatted with some of the equity analysts who came to the party about this. The market needs to see one of the existing players do something to surprise them and make them change their opinion.

Anyway, thanks to Robb and Mike for having me there. It was a great location, some good food and wine, and very interesting people.