Firebit: Gift-wrapped from Telrad

Company: Firebit.net

Objective: Next generation Internet network service platforms

It is apparently boring to be a nurtured employee of an established company, at least for Israelis bitten by the entrepreneurial bug. This is what happened to Alberto Shlisserman, chief engineer of Telrad’s public networks division, and Ilan Menachem, assistant marketing manager of the same division, who one day decided to sit down and plan a venture.

They started off on the right foot. Before drowning in bits and bytes, they looked for a market need and in the middle of last year, they decided to start looking for opportunities in broadband and next generation networks. After further thought and examination, they hit on an idea. Preferring not to fly too far away from the nest, they presented their brainwave to Telrad management, which loved it and put $5 million on the table in exchange for a major equity stake (over 80%). The two entrepreneurs started recruiting.

Firebit.net’s first general manager was Eldad Gefen, who left in mid July, on being appointed general manager of Be Connected (another Telrad subsidiary, which was involved in industrial action by employees). Gefen was replaced in July by Ilan Kander, a former Israeli air force navigator who founded Portalis.

What does Firebit.net do? It provides a platform for the new broadband communications network services. The company’s customers are service providers (Internet and telephony) and its target audience consists of home, medium and small business subscribers. Its initial service package is in the information security field. Kander says that this target audience currently needs to acquire expensive software independently and order experts to install it. Firewall, for example belongs only to organizations. Firebit.net’s technology will turn security into a regular consumer product.

The end user will purchase the service over the Internet from his provider, who will be pleased to augment his revenues in this way. What will the consumer receive in the Firebit.net security package? A Firewall, anti-virus (more comprehensive and updated than purchased static software), secure surfing (which prevents children from viewing certain sites), and so on. The customer will pay per use, i.e. depending on the package components. How will Firebit.net make money out of this? By selling the systems and distributing profit.

Kander says the platform is generic. In addition to security, it can also support all sorts of other pleasant things end users want: disk sharing, multimedia and games (this sounds very similar to existing ASP) and the system also contains a billing tool for the entire service.

”Globes”: We’re constantly hearing about new ASP services. What’s new about it?

Kander: “Normally, a specific service or application is offered. Here, we have a real-time, broadband platform.”

What does an ASP need a platform for? What’s wrong with purchasing the best of breed in each field?

“It costs much less when you purchase everything together. Moreover, it’s difficult to integrate different applications from various manufacturers. The service provider is a channel; it has no technological tools. Moreover, we offer the end user uniform, transparent interface.”

You talk of ASPs need for revenues as if it were something new. They’ve been talking about it for at least two years.

”They understood it a long time ago, but it’s still very much lacking, particularly in broadband. The product is currently being developed and the beta is planned for the end of next year.”

That is a very long time. Is the product based on such heavy technology?

”Many technological challenges are involved.”

Who is Firebit.net facing? Kander insists on repeating a most unprofessional reply: “I don’t want to talk about my competitors.” After further prompting, he says: “We’re not aware of any direct competition. Some companies provide a service if you have a hotmail account, in that they screen for anti-viruses before they give you the file.”

What about partial competition, for example in security?

”I don’t want to discuss it. Why is it so important?”

Check Point’s Firewall?

“I can’t talk about it. We don’t divulge names of companies we have no agreements or negotiations with. You can, if you wish, write security companies and Check Point.”

Haven’t entrepreneurs learned yet that competition is something to be used? Haven’t managers learned yet that it is part of the due diligence involved in transparent, sportive and sensible business? Do they not yet know that without mapping out the competition, you’ll get nowhere with investors?

Perhaps Telrad will teach its employees a thing or two. Firebit.net is Telrad’s first start-up. Overall, Telrad has six of them, mostly spin-offs with an idea either not tangential with its core product line, worthy of being a separate company, or initiated by employees whose views Telrad respects and vice versa. All these companies are in communications infrastructures: Galaxtel, Be Connected, Net Eye, Commatch, etc. We’ll probably hear more news in this direction by the end of 2000. With such a payoff (in Firebit.net’s case, 20% to the entrepreneurs and employees), it’s doubtful whether what Telrad defines as a start-up incubator will flourish as planned.

Published by Israel's Business Arena on 16 October, 2000