In the earlier years of his career, Galitsky was a satellite engineer in charge of an entire battalion of employees and a multi-million-dollar budget in a state space program. However, the early 90s marked another milestone in Alexander Galitsky’s biography when he set sail for the world of business. With the best engineers and a $50,000 seed funding at his disposal, he created the Elvis+ company. In 1993, it attracted attention of Sun Microsystems Inc., which took a 10% stake in the encryption tech start-up.
Near the turn of the millennium, the former space engineer launched another company called TrustWorks Systems BV that was based in Amsterdam, Netherlands; by the end of the first year in business, the company was already planning to double the number of its employees. The goal of TrustWorks was to improve and optimize data security via virtual private networks. The start-up was to compete with such companies as V-One Corp, Net Screen, Axent Technologies Inc. and Check Point Software Technologies Ltd.
At the core of Alexander’s business plan was the idea of bringing together strong marketing and tech expertise to develop the best solution for the global network security problem.
Why VPN?
The reason Alexander Galitsky chose to target the virtual private network market was that the Internet was quickly developing, and it was essential for the companies to protect their data. VPNs were in high demand as they allowed to establish a secure connection within a network; they could protect data from acts of sabotage and limit the theft of trade secrets and employee fraud.
The late 90s saw a great increase in the attacks on corporate networks. According to the surveys conducted by U.S. agencies in 1998, about 57% of the firms polled reported that they had experienced numerous attacks on their data that resulted in $100 million losses in total. To compare, in 1995, this number was 37%.
So, at the time, the demand for VPN software and hardware was obviously on the rise. Each year global sales of security products would multiply by several times compared to the previous year. VPNs were well on their way to having as much of an impact on the companies around the world as fax machines, voice messages and e-mail did before them.
TrustWorks’ European headquarters
Since the U.S. government imposed restrictions on the export of strong encryption products, developers outside the U.S. had an edge in this competition, as buyers were more likely to choose from their products. TrustWorks did not develop encryption solutions as such, but its Security Suite was often bundled with the strong types of it. So, having European headquarters could be very beneficial to the company.
Alexander Galitsky knew that locating a network security company in the U.S. would be impractical because of their export policy. Being aware of the Netherlands’ liberal policy on import and export, he chose this country as the location for his TrustWorks project.
Alexander invited 28 members of his staff at Elvis+, many of whom had been his colleagues for years, to join him, and in April 1998, the company was established. Soon, the firm had almost 60 employees in Zelenograd, who mostly worked on design, engineering and technical support. The 13 employees located in Amsterdam were responsible for sales and marketing. Another two employees worked from the U.S.
Elvis+ continued to work with TrustWorks as a reseller. The two companies were separate legal entities, but the intellectual property of the former belonged to TrustWorks. Alexander Galitsky also retained his position as chairman at Elvis+.
Alexander Galitsky’s network security products
TrustWorks introduced their Security Suite in September 1998. The product was marketed as a so-called VPN infrastructure. VPNs were considered more affordable alternatives to frame relays and leased lines, but running on public networks, they were more vulnerable than the dedicated ones. In April 1999, the company released Security Suite 2.5.
The product had one feature that spiked the interest of the public in particular. The separate network and encryption allowed users to modify encryption algorithms to match the laws and security policies of different countries. Open CryptoAPI, TrustWorks’ application programming interface, made it possible for developers to create their own encryption modules for Security Suite. Companies that used the product were able to add any authentication and encryption they needed.
TrustWorks was facing many competitors, but this feature had a potential to be a very viable option for multinational corporations. Another competitive advantage of the firm was Alexander Galitsky’s team and their professional reputation. Moreover, in January 1999, TrustWorks’ technology was examined by Bruce Schneier, an American computer security specialist, who found the product to be rather impressive. He noted that it was rare for his company to find a security product they couldn’t break, which was the case with the TrustWorks’ solution.
In January 2000 at the World Economic Forum in Davos TrustWorks and Galitsky were awarded the Technology Innovation for New Millennium Award in the first Pioneers of Technology session on innovative technologies of the 21st century
Before long, the TrustWorks company was successfully selling their products to international corporations and state institutions. The company managed to attract about $30 million in three venture rounds during its fledging years, and in 2002, the board of directors made a decision to sell it to the UK’s Hansard Global, where it became known as Synatra.