Pakistani Brothers's PC Virus Launched Modern Security Software Industry

[Riaz Haq]

The year was 1986. Most personal computers used floppy disks to boot and to move files from one computer to another. Floppy disk was also the medium used by Amjad and Basit Alvi, two Pakistani brothers living in Lahore, to create and spread history's first known PC virus called "The Brain".  Here's how Mikko Hypponen, a software security expert, described it last year at DEF CON, world's largest hackers convention held in Las Vegas:

Creators of First PC Virus: Amjad Farooq and Basit Farooq Alvi

"It's surprisingly advanced, and it has surprising features, including a capability of hiding itself. So when your PC is infected by Brain, and you go and look at your floppies, you will not see Brain on the floppies. It's watching you watching it, and if you try to look at the copy of Brain, it fools you and gives you a clean image of a floppy instead. And we would call this a stealth virus, at the time....

These guys weren't evil at all. They weren't evil even then, 25 years ago, when they wrote the first PC virus. Their intention was never to cause harm to anybody, and they didn't, of course, realize that they made history when they wrote the first PC virus. But Brain was the only virus they ever wrote and they never meant to destroy any data or cause any harm for anyone".  

The Brain, also known as The Pakistani Brain, is the virus that challenged John McAfee to develop anti-virus software. Later, John McAfee launched his company that was acquired in 2010 by Intel for $7.7 billion.  McAfee is just one of several security software companies inspired by the Pakistani Brain virus. Gartner estimates that the security software industry revenue was about $20 billion in 2013.

Cloud security is the latest incarnation of the security software industry. Companies like Fire-eye founded by Pakistani-American Ashar Aziz are leading  cloud security revolution in Silicon Valley.

Here are some of the reasons for the success of Fire-eye as described by Business Insider:

1. The company's flagship product solves a really hard computer security problem. It is able to stop hack attacks that were previously almost impossible to stop.

2. FireEye bought another security firm, Mandiant, for $1 billion. Mandiant was famous for uncovering links between Chinese hackers and attacks on U.S. companies.

3. With Mandiant, FireEye launched a cloud computing security service that competes with SourceFire. SourceFire is the company Cisco bought last summer for $2.7 billion.

4. The company beat expectations on its fourth quarter with revenue of $57.3 million, a beat by $1.26 million, and EPS of $-0.35, a beat by $0.03.

5. Some Wall Street analysts have been really gung ho on the company. Wells Fargo started tracking it a month ago, saying it was "a once in a decade opportunity to invest in a truly disruptive technology."

The world has dramatically changed since the 1990s when Wintel ruled the roost. PC is no longer the dominant device. Smartphones and tablets have brought the era of mobile cloud computing where neither Intel nor Microsoft enjoy leadership position. Even developing countries like Pakistan are deploying cloud computing applications. A Google sponsored survey in Pakistan found that mobile computing is expected to overtake desktop computing this year. Several new and more innovative and powerful players have emerged to in this market.

As more and more enterprises embrace cloud-based computing, cloud security is becoming a hot area for many entrepreneurs. This shift means over $2 billion annual market for cloud security vendors like Fireeye and Elastica. Researchers at Gartner forecast the highest growth to occur in cloud-based tokenisation and encryption, security information and event management (SIEM), vulnerability assessment and web application firewalls.

Recently, a Silicon Valley cloud security start-up Ealstica was launched by Rehan Jalil, a Pakistani-American alumnus of NED University of Engineering, Karachi, Pakistan. Elastica received $6.3 million funding from Mayfield Ventures, a premier Silicon Valley Venture Capital firm.

Several analysts have recently upgraded Fireeye to buy with the target price above $100.

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[Riaz Haq]

Alvi brothers also intended to build a business as obvious from the text they embedded in the Brain virus: It said:

"Welcome to the Dungeon, 1986, Brain and Amjad. 730 Nizam Block Allama Iqbal Town, Lahore. Beware of this virus. Contact us for vaccination"

The brothers did develop anti-virus software which they called "vaccination".

Unfortunately, they didn't understand how to turn their talent into a big business which John McAfee did.

Even though McAfee was also a foreigner, the advantage he had was that he was in Silicon Valley where new business models such as shareware and freeware were being tested by entrepreneurs.

McAfee started offering his anti-virus as freeware or shareware and it took off. Then he converted all of his users into paying customers and the rest is history.

This is somewhat similar to the Google story. Google founders Brin and Page developed a powerful search technology but they didn't quite know how to monetize it until they met Omid Kordestani, an Iranian Kurd who has an electrical engineering undergrad degree from SJ State and an MBA degree from Stanford Business School.

Omid came up with the idea of charging for clicks for targeted text ads that came up every time a user used a keyword in their searches. Google did search terms auction which varied daily, even hourly, depending on how many people were searching for it.

I experienced this myself when I bought "Pakistan" as keyword on Google Advwords for 5c a click and then all of a sudden the minimum bid for "Pakistan" went to $1 per click the day Benazir Bhutto was murdered and the search volume for "Pakistan" skyrocketed.

Technical talent alone is not enough for entrepreneurial success. It takes an ecosystem like Silicon Valley's for tech entrepreneurs to succeed.

Here's an excerpt of New York Times story on how Kordestani helped developed the innovative Google business model that led to their business success:
Larry Page and Sergey Brin were exceedingly ambitious from the day they started Google, but the job of finding some source of revenue fell to Omid Kordestani, an amiable former Netscape sales executive who was brought to the company in 1999 by K. Ram Shriram, another Netscape alumnus and an early Google investor. Mr. Kordestani explored a range of ideas, including charging users for searches as well as selling Google's technology to corporations or to other Web sites - notably Yahoo - that were less shy about selling ads.
Eventually, in 2000, Google started to sell ads on its own site, but they were only a few lines of text placed above the search results. There were no graphics and no banners. At first, these ads - and later, a second form of text advertisement that ran down the right side of the page - were sold at fixed prices. But such an approach would not last long.
In early 2002, a Google employee, Salar Kamangar, now 28, convinced Mr. Schmidt and the founders to switch to an auction-based system like the one set up by Bill Gross, the head of IdeaLab. Mr. Gross had created Goto.com, a search engine made up entirely of ads, where advertisers paid only if their ad was clicked on, and the advertiser who bid the most per click was listed first. (Goto was later renamed Overture Services and then bought by Yahoo, an early Google backer that has become its fiercest rival.)
Mr. Kamangar, though, had an important improvement on the model. Rather than giving priority to the advertisers that bid the most per click, as Goto did, he realized that it was better to save the front of the line for ads that brought in the most money - a combination of the bid and the number of clicks on the ad. This was not only more profitable, but it also linked readers to ads that were more relevant to them. He also figured out that the system should use what is called a Vickrey auction - that is, to charge the winner only one cent more than the second-highest bidder. That gives advertisers an incentive to bid high, knowing that they will not be penalized if they are far higher than the rest of the market.
Mr. Page and Mr. Brin were suspicious of any system that put high-bidding advertisers at the top, Mr. Kamangar said. "They thought if someone was willing to pay more it was a negative," he recalled. But he was able to convince them that the site could be improved by incorporating how often users clicked on an ad.
Mr. Schmidt, who was still new as chief executive, was worried more that moving to an entirely auction-based system - amid a recession in online advertising - could be financially disastrous. "I said to Salar, 'Promise me the revenue won't go down,' " Mr. Schmidt said. "I was afraid people would realize these ads were worthless." In fact, revenue quickly increased tenfold.
As Google's audience took off, advertisers came running - many thousands of smaller ones at first, but soon large companies as well. Among Google's largest advertisers is eBay, which has long bought keywords for nearly every sort of merchandise it sells.
"The smartest thing that Google did was getting smaller advertisers to buy in," said Ellen Siminoff, the chief executive of Efficient Frontier, an agency that helps advertisers manage their campaigns on search engines. She estimates that Google has two to three times as many advertisers as Yahoo does, largely because Yahoo has a 10-cent minimum bid. This lets Google earn money on more obscure search terms for which rivals have no ads....
http://www.nytimes.com/2005/10/30/business/yourmoney/30google.html?...