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Romania a leader in fight against malware.

Byline: Peter Cohan


During a recent visit to Romania, I learned that one of the world's leading battlers against computer viruses and malware is based in its capital, Bucharest.

My June 13 conversation with the chief executive officer of Bucharest-based security software company Bitdefender, Florin Talpes, reveals that one of the most significant periods in Romania's history started when it became a communist country in 1957. According to Mr. Talpes, along with communism came a passion for centralized planning among government controlled companies.

Four trends combined to make Romania a player in the market for information security. First, Romania had a strong tradition of using computers in business. In the 1970s, Romanian companies were among the first in the world to run their planning and budgeting with computer systems. Another staple of communism in Romania was very strong university training in physics and mathematics.

Third, in the 1980s, communist dictator Nicolae Ceausescu decided that Romania should shed all its foreign debt, causing it to export most of what it produced and buy very little. In order for Romania to get those computers it needed, it would buy, say, one computer from IBM and then set its computer scientists to work reverse engineering the computer and building similar ones for internal use.

And finally, Romania's southern neighbor, Bulgaria, was much better than Romania at convincing people in their late teens and twenties that capitalism was responsible for Bulgaria's weak economy. By contrast, Mr. Ceausescu persuaded people in Romania that its citizens were responsible for their own destiny. Bulgarian youth combined their natural rebelliousness with a desire to strike back against capitalism, developing a very effective computer hacking industry, according to Mr. Talpes.

In 1990, he and his wife started a company that built computer systems for companies at much lower wages than similar U.S. outsourcers. That business plodded along, but was hurt by its proximity to Bulgaria. Those hackers figured out a way to insert computer viruses into the systems that Mr. Talpes built for its corporate customers. And his efforts to combat the invasion of these viruses, in order to protect its reputation, led Mr. Talpes to refocus his company, dubbed Bitdefender, on protecting enterprises from computer hackers in 2001.

And Mr. Talpes made it clear that hackers in countries like Bulgaria have become organized into large businesses exploiting very large market opportunities. The leader among those countries is Russia, which earned $4.5 billion in 2011 hacking revenues.

Cybercrime investigation group Group-IB argues that Russia is an ideal place for such hackers, as "the Russian cybercrime market is experiencing a period of dynamic transition from a quantitative state to a qualitative one, moving away from the chaotic model of the development of the cybercrime world." A Bitdefender employee I interviewed told me that Russia is the best place in the world to base a computer hacking business.

Hackers get most of their money from online banking and so-called phishing scams, that seek to get access to your passwords, credit card accounts and social security numbers. The computer hackers make their money by harvesting this information and selling it - say, $10 for a credit card number or social security number. Hackers also profit by secretly taking control of your computer and selling access to your computer to companies that use it to operate their businesses at a discount to legitimate so-called cloud services providers.

Bitdefender has become quite successful. Although it's privately held, Mr. Talpes told me that it employs more than 650 people. By comparing it to a publicly traded competitor, AVG - with $295 million in annual revenues and 870 employees, with $339,000 in revenues per employee and a net profit margin of 32 percent - I would estimate Bitdefender's revenues at about $220 million and its net income around $71 million.

In 2011, Mr. Talpes decided that it was time to rebrand Bitdefender in honor of its 10th anniversary. For that, he reached back into Romanian history. Before the Romans invaded, the native people there were known as Dacians. Mr. Talpes said that the Dacians used a half wolf-half dragon - The Dacian Wolf - as a battle flag to defend Dacia's territories in ancient times.

"The Dacian Wolf created fear in the opposition, and built confidence in those who carried it," Bitdefender's website says.

According to Mr. Talpes, "We are now the bearers of this symbol that transcends time. While the battlefield has changed, its spirit lives on. We are the defenders of the new digital world. We are AWAKE, always on guard - protecting more than 400 million users across the globe with our award-winning technologies."

Today Bitdefender combines elements of Romania's history with its top-notch technical staff to create a world leader for good in the endless struggle against online evil.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, teaches business strategy and is the author of 10 books. His column also runs Mondays and Wednesdays on His email address is
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Publication:Telegram & Gazette (Worcester, MA)
Date:Jun 24, 2012
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