Q&A: Eugene Kaspersky Outlines His Plan To Conquer The World

During the Kaspersky Lab Americas Partner Conference, held in Punta Kana Dominican Republic in February, CRN's Stefanie Hoffman had an opportunity to sit down with CEO Eugene Kaspersky at his suite in the Moon Palace Resort.

Despite the festive surroundings, Kaspersky was steely-eyed with determination as he explained how the company is poised for explosive growth that will give it the necessary momentum for a significant enterprise push, and he outlined how the company will take over the No. 3 spot in endpoint security by the end of 2010.

Kaspersky has undergone some significant changes over the last few years. How has the company changed in the last 12 months?

We're number four in our industry. We're largest in Europe in antivirus. It's not really antivirus anymore; it’s a combination of anti-everything. In the last 12 months we almost have completed our plan for our global partner network development. We're still on the way but finally we're everywhere. And last year we opened offices in Australia, Dubai, Switzerland and Austria. We're in the final stage of our plans so far for building our global presence. It's like a skeleton, now we're putting muscles on the skeleton, but the skeleton is ready. Our product and services -- it's nothing really new. It's just new generations of our consumer products. New generations of our corporate endpoint systems.

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Any plans to go public? Are you any closer to going public now than you were a year ago?

We're very close to being public, because the financial system and audits are run in such a way that we behave like a public company. We don’t' disclose all the data, but we're ready for that. But the company's profitable. We have enough resources to invest in our projects. I'm not going to buy a football team. For what? And the (Moon Palace Resort) hotel is far from the cheapest here on the beach. I'm happy with that. But we're ready and if we needed, we can do [projects] easily.

In the next year?

If we needed, we can do it. Technically we're ready. Make a decision and within one year, we go. But now the financial world is a bit changed. Before it was New York or London. Now it's New York, Hong Kong, or London. Let's wait a bit.

Over the last year, Kaspersky has increased in market share from 4.2 to about 6 percent. Who are you taking market share from?

There are many reasons for our success. There are, of course, our technologies, the team of people. We are lucky to have R&D. The Russian education system works very well and if you see the [team members] ask their opinion about Russian software engineers.

Second, our partner network -- because we love our partners. They are part of the same team ... like a family. The company is loyal to our partners and our partners are loyal to the company. And this is a kind of community, because we have almost 2,000 people in the company, but how many thousand partners. So it's a very big army that likes what they do. Most of them, the majority of them, are companies of one brand.

Third: Branding, because we are unusual and we want to be an unusual company. And we do it in a different way. Of course, experts, you know, talking heads. (Kaspersky) has 30 experts that understand what's going on and are able to talk about that, explain it. We do some unusual events like the Jackie Chan concert, like South Pole expedition. Now we are looking for ideas. What's next?

Next: Beefing Up Branding Strategies

From speaking with partners, marketing and branding were maybe some of your weak spots. What are you going to put into your marketing effort?

I call it three ways for our overall success. We're talking about technologies: First, licensing our technologies. Then consumer. Then corporate. Then we're talking about other issues. It was our regional group, taking regions and developing their partner network.

Second is our product line. We are about to have a very strong product line in some elements. We are in some ways far from our competitors, but we want to have a complete set and now we're bringing it to market to build the global brand. And the target is to enter [BusinessWeek's] Top 100 brands in the world.

Do you have specific strategies on how you're going to execute that?

We have an understanding of what we're doing in the right way. There are many more unpredictable things on the way. Opportunities. Ideas. Sometimes they happen like that. [Kaspersky snaps his fingers.] And we decided to sponsor this (South Pole) expedition sometime in September.

There are many professional agencies we're working with. But it's also luck. It's unpredictable. It's fortune.

Kaspersky is at 6 percent market share, Trend Micro is at about 6.9. Do you see Kaspersky taking over that third place position?

Well yes. This year, we're going to be number three in endpoint security. And there are different competitors in different regions. In China, there are a couple of Chinese companies that are very strong on the market, and Symantec is not so strong. So we're taking market share from those companies. And there's some very, very serious fighting there, including a price war. There are different things happening around the globe. In Europe, mostly Trend Micro is losing there. In the United States, there are Trend Micro and others (losing market share). Symantec is a bit less. In Europe, its Symantec of course. And there're some local players, like Panda in Spain. Unfortunately, they're not doing so well as in the past. I'm sorry for them. In the business-to-business segment in the United States we're still not so visible because the market is so huge.

Last year, Kaspersky announced plans to target the enterprise space. How has that been going?

Still we're going for the small- and medium-sized segment. We're doing much better than in the past. Especially with our partner CDW. We're talking to enterprise. And (users are) aware of others. And in the past they thought there were just two companies. Now they have three. Because that takes years. We have this experience in Europe. It takes years to convert them. And we're okay with that

The reason it takes years is because companies are reluctant to rip out something and replace it with something else?

It's a question of trust -- to convert individuals to a product (users rely on). With enterprise level, the enterprise, especially when they talk about security, it's a question of trust. And to trust means we have to known each other for years.

This works not only for enterprise, but also for consumers. For example, you talk about American consumers, European consumers, Asian consumers. In Japan, as consumers, they're very conservative. So Japan is one of the countries that we don’t have visible success. We only have some marketshare.

Another country where we're not so successful is Korea. Because Koreans, they're very patriotic. They pursue only local stuff. On the streets there are only Korean cars. It's only Korean software, except Microsoft Windows. Only Korean mobile phones. So they are very, very patriotic. There are a couple of antivirus companies that are unknown outside of Korea.

Would you say you're trying to penetrate those markets?

Of course. Of course. This business trip I'm going to finish in Tokyo. Singapore, Rio de Janeiro, so Southeast Asia and Latin America are very far from each other. Barcelona. Paris. Rome. Milan. Munich. Hanover. London. Hong Kong. But people are waiting. We're successful. The brand development is going very well.

Next: Keeping The Small Company Feel As Kaspersky Gains Market Share

As Kaspersky gets bigger, how are you going to keep that small community feel?

That's a very good question. I don't know that. It's one of my main tasks -- to keep the same company spirit. And to keep the right relationship with our partners. What we're doing is (implementing) some special programs. So events. Special internal marketing to build a company and to keep it. It's also their conservative HR policy.

Last year we were growing too quick and there was 40 to 50 percent headcount growth. That's dangerous, very dangerous for the company. And I don’t' want to change the company 'smell.' So we're doing different things.

So we have this company philosophy, we're very conservative with that because we have to make sure the people there are "infected" with company spirit. We have a couple of corporate events (such as) a New Year's celebration. We have a special promotion within the company, but it's regional. We do our best to mix people from different countries. Like here at this event there's a team from the Moscow office from our Russian divisions. They're here. So, it's a really good question. But I do my best to keep the "green" spirit. And we collect people that have the same spirit. Sometimes we don’t' take another employee simply because he doesn’t' meet our spirit. And this is one of the reasons why we're conservative with our acquisitions.

Do you plan on being very acquisitive this year?

No. My experience is, well we had one acquisition, anti-spam, and the experience was not so positive. We were almost in the process of an acquisition of another company but we were lucky we canceled it. My opinion on this is, if you acquire the company, you spend years to adapt people and technologies to new culture. If you just find the right people and start from scratch, at the end, you'll have the same result within the same period of time, but the technologies will be developed in the right way, according to our standards. It's our people having the same spirit. But I don’t say 'no' if I see that there's a technology which we really need and the company has the right people. We're always open. It's not like we don't go there.

What technologies are you going to invest in this year?

We're still going to stay in IT security. We are not going to stray our business too far from our core expertise. It's not like Rachel Branson -- the model of different businesses. Different ways of product and services. So last year we invested, and we're still investing in the hosted security product. That's an example of the way we do things. We tried it once, but we were not satisfied with the success. So we changed the team. We tried it a second time. It was better. But still the result was not so good as was expected. Now we've got the best people from the industry thanks to some acquisitions. We've got some good people there. And now I am sure it works in the right way. So we tried it. We played with prototypes and now it's much better. Again it's about security as a service. I'm not going to explain the details, because it's still a prototype. There's development of a whitelist system. We had some offers from companies, a couple of companies. We played with those technologies and we decided that if we do it by ourselves it will be much…not better ... but exactly what we really need.

So would you prefer to develop that by yourself?

Yes, but still we have some technologies for license. Some technologies we license from other companies because they do it better. We are not going to develop it by ourselves. But the current technologies that are the foundation of our products, we do it by ourselves.

What kind of progress have you made on your services? What percentage of your business would you like that to be?

Cloud. Cloud technologies. That's a very good question. Still, I don’t have a right answer. I'm not sure about the numbers. But it will take a very visible part of the market. IT security is getting way more complicated. And people, small businesses simply don't have enough knowledge and resources.

Do you see that growing?

Of course. And for consumers, their security is provided by Internet provider. And now this business model is much more interesting. It's not new. But now it's on the rise. Internet providers reach out to the customers with Internet security, and not many of them do that but it seems like they're getting more interested to manage the security. And for small businesses it's hosted services. They still have endpoint, but their gateway protection is a service.

Why do you say it's a mistake?

Because the world is huge. And the economy, they're different with their small economies. But there are many more countries with small economies. Compared to the economy of the United States, the economies of Latin America, it's a very big difference. But sometimes the United States is really surprised by their reports. So it works. It works even in such a way that people--they see that we're present everywhere. That's the trust of the company. It works and it makes the brand stronger.

Next: Sizing Up New Services Models

What role would partners play in this? Would they help manage that or would this be just managed by the vendor?

We will see. We don't say 'no' to both of those things. So one of those ideas for partners, is they take their own services. Still we don’t have one, still we manage it ourselves. But in the future, we'll be open for the new business models.

At the Russian partner conference, there was a question about the future of distribution, because everything is going online, and sure that will change the distribution models. I said "ladies and gentlemen, 20 years back there was no Internet." So we're adjusting living in times of change. And companies that don't adapt themselves to the new era or new standards, they will follow newspapers, which were late with Internet. The newspapers that started the Web page in time, they feel okay. Right? Those that are on paper only -- dead. So please, keep your eyes open. Look for the new opportunities. If you don't do that, you're dead.

And speaking about opportunities, are your partners demanding more services?

Yes, of course. Not all of them but many of them. Most of them. They're very interested in our new services opportunities. And that's why we have many people on the continents. And that's why on the other side of the continent, they have their own ideas.

How's Kaspersky going to help transition them?

That depends on the service and on the business. What we usually do there is explain to them. We educate them. Sometimes we stimulate them to use it, to try it. Then it goes. Sometimes they come by themselves and say, "We want that, that, and that -- now."

What do you see as your biggest challenge in 2010?

Still there is times of financial crisis and there are still good opportunities. And the challenge is not just to survive but to build our most strong company and most strong partner network. The difference is that big companies, they're public, so they need to generate cash, especially in times of the crisis. We don't need to do so. So we can invest into the projects which promise to be profitable in some years. It's still about security but we have some ideas. So we are taking new people, new partners. We are enjoying benefits of the right strategy in the past -- to be a technological company. Not to move R&D to India because of education system. Not to be lazy and to build a global partner network. I don't understand companies. It's not just software companies. They don't want to go everywhere. They're interested in some key markets. That's a mistake.