Bruce Schneier -- Counterpane

ruce Schneier prides himself on meeting deadlines.

But while writing a book on digital security, the renowned cryptographer and founder and CTO of Counterpane had a disturbing epiphany that made him late to press.

He realized what he preached and practiced,cryptography,wasn't the silver bullet for information security. No matter how good the math, a system could be broken into because of bad programming, someone giving out a password or any number of variables.

"I was left with the horrible sinking feeling that all the work I'm doing isn't actually helping," says Schneier, 37. "That got me a little more than depressed."

He stopped writing and took a look at the real world. There he found that security is less about prevention through products and more about detection and response.

COMPANY: Counterpane AGE: 37 TITLE: Founder and CTO TIME WITH COMPANY: One year

"You'd never see a bank say, 'our safe is so good we don't need an alarm system,' " Schneier says.

His realization resulted in his latest book, "Secrets and Lies: Digital Security in a Networked World," and led to the rebirth of his consulting business, Counterpane Systems, as Counterpane Internet Security, a managed security monitoring firm.

In April, Counterpane launched its around-the-clock security monitoring service. The company already has more than three dozen customers, including Exodus Communications, Corio and Conxion, and has attracted $34 million in venture funding.

Giga Information Group analyst Steve Hunt predicts managed security monitoring will explode in the next three years. Some analysts peg Counterpane as a niche player, saying its minimum monthly fee of $12,000 is steep, but Hunt says the firm is well-positioned to capitalize on the market.

Schneier's reputation as a technologist helps attract talent to Counterpane, says company President and CEO Tom Rowley.

Over dinner one night, Rowley and Schneier formed the new Counterpane after coming up with the idea of ADT-style computer security. "He went home that night and wrote the business plan," Rowley recalls.

"Bruce is an extremely brilliant person, but he's also incredibly humble," Rowley says. "He's a very good collaborator."

Colleagues describe Schneier as energetic and adept at simplifying complex concepts.

"He has a knack for being able to take something that's very technical and parlay it into very common terminology," says the vice president of research and development at security services firm @stake, who goes by the pseudonym Mudge.

New York-bred Schneier describes himself as a math geek who enjoyed reading Hardy Boys mysteries as a youngster. After receiving his bachelor's degree in physics and his master's in computer science, he went to work for the U.S. Department of Defense.

He then worked for Bell Labs doing "assorted, random other things" before starting his security consulting business in the early 1990s.

With his long hair pulled back in a ponytail, Schneier isn't your average corporate executive. His office in San Jose, Calif., is spare, although a minimuseum in one corner showcases his prized collection of military crypto devices.

Schneier says Counterpane is on a roll. Its customer count is set to skyrocket, and some big-name solution providers such as PricewaterhouseCoopers have signed up to offer Counterpane's services.

"No matter what products you get, you can't be guaranteed security," he says. "With insurance, you're guaranteed security."