Evolving Business Model of Shape Security

Shape Security has come a long way in a short period of time, recently raising $25M in Series D, fattening their war chest to $91M. Shape Security is an interesting startup, stacked with executives from government agencies and Internet giants such as Google, and backed by top venture capitalist. Right before Shape Security emerged from stealth mode, the pre-stealth buzz surrounding the company created an incredible amount curiosity in the marketplace, because many were billing  it as a total game changer in cybersecurity.

One of the thoughts that came to our mind during the pre-buzz phase was “a general purpose artificially intelligent cloud-based WAF”. And we’re not talking about half-baked artificial intelligence defined as a “narrow” program that “masters a particular task and not much else”. We’re talking about a “general purpose learning machine” that mimics the human brain: think of a combined DeepMind + Palo Alto Networks + Akamai entity.

However, our imagination got a little ahead of itself. Shape Security came out with a Bot Mitigation appliance called the Botwall, that was leveraging some cool polymorphism technology that stops automated attacks. For comparison purposes, there is another high-profile startup that does pretty much that same thing called Distil Networks.

The Shape Security business model has evolved, and their appliance product is now available in a cloud version. Also, they’re protecting mobile apps. And their value prop is more aligned with the Edge Security CDN segment, mentioning WAF and DDoS in their messaging. Shape Security is not a CDN, at least not as of yet, but make no mistake, they do compete directly with the Edge Security CDNs, because any startup targeting website security makes it a direct competitor to the likes of Akamai and Incapsula’s of the world.

According to Shape Security company profile on LinkedIn, they “protects 350M accounts on behalf of the Fortune 500”. Without knowing their definition of “accounts” its hard to say if their killing it sales-wise, or just growing at a healthy clip. However, we are going to take a stab in the dark and predict they are generating between $25M to $40M in annual revenue. We might be way off, or we might be right on the money, who knows.

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