Postini Positioning for an IPO?

In September of 2000, an e-mail security outfit called Postini filed for a patent that puts an intermediary server between the ISP and the end user and filters e-mails before they find their way into corporate email boxes.

Now, nearly four years later and with Patent #6,650,890 in hand from the U.S. Patent & Trademark Office (USPTO), the company is getting ready to use the technology, as well as some key executive additions, as a stepping stone to take the Redwood City, Calif., company public later this year.

The patent “covers Postini’s preemptive e-mail security technology and managed services model for filtering email to block spam, viruses and other unwanted and malicious content before it reaches corporate networks,” a company statement said.

Scott Petry, Postini founder and vice president of products and engineering, said that while the Redwood City, Calif., company is not formally announcing any plans, they were encouraged by the filing and prospectus to the Securities & Exchange Commission (SEC) of rival Brightmail March 23.

“We’re certainly of the size and metrics to do it,” he told “[Our] intention was never to be a private company forever, or just flip our company to some other vendor; we’re building a sustainable entity and so I expect we’ll see some action on that sometime this year.”

Officials point to the company’s growth metrics as a sign Postini is ready for a public offering. Total customers have doubled to more than 2,600 since the first quarter of last year. It claims a 30 percent quarterly growth rate over the past twelve quarters. As for revenue growth, the company is a bit coy about those numbers, however.

Both Postini and Brightmail are key players in the e-mail security industry by providing spam and email filtering to thousands of businesses in the U.S. and around the world. Both have marketing deals with prominent antivirus vendors — Brightmail with Symantec and Postini with Trend Micro
— to deliver bundled security services.

Postini’s customer list includes Merrill Lynch, VeriSign, Glaxo and Campbells Soup.

E-mail security has become a hot commodity in a world that becomes more Internet-connected by the year. According to an IDC survey in September 2003, analysts expect to see a 10.5 percent compound annual growth rate (CAGR) in e-mail users in the next four
years. In 2006, they predict 1.1 billion email users around the world.

To guide Postini through any possible IPO move it makes, the company on Monday hired former Keynote Systems senior vice president and CFO John Flavio to manage its finances. Flavio managed Keynote Systems through its IPO in September 1999 and secondary offering January 2000.

Also brought on board Monday was security software veteran Steve Kahan, who held president and CEO positions at e-Security and was vice president at PentaSafe Technologies.

Postini intends to take its newly minted patent, “Value-added Electronic Messaging Services and Transparent Implementation Thereof Using Intermediate Server,” and using it as a “negotiating chip,” Petry said, for future endeavors involving intellectual property from other companies.

“The software IP world is a mine field and patents oftentimes become
bargaining chips or defensive tools that you can have in your quiver and it is really good for us to start accumulating some of this IP,” he said. “So
as we start broadening our scope into more secure encryption or into the
authentication space, or companies that might have intellectual property in
those spaces, we’re starting to collect our own negotiating chips.”

News Around the Web