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Anti-spam firm is among emerging ‘Baby Boeings’

Airplane giant is spinning off small ventures

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BELLEVUE, Wash. — Microsoft Corp. has long reigned as the undisputed software magnate in these parts. But don't count out Seattle's other 800-pound gorilla just yet.

Turns out that The Boeing Co., founded in Seattle 87 years ago and known more for its airplane engineering than software engineering, has done some high-tech research and development of its own.

Boeing in August spun off a new company, MessageGate, that sells Boeing's own home-grown technology for filtering out junk e-mail for corporate networks.

Not only does MessageGate aim to seize a share of the hot market for controlling junk messages, but it also represents a new — albeit modest — hope for the region as Boeing's commercial airplane business cools. The business is one of only three to be spun out of a Boeing initiative to promote entrepreneurship within its ranks.

But executives hope it's the beginning of a crop of Baby Boeings in a land of Baby Bills — the nickname for startups created by former Microsoft workers, in homage to Microsoft Chairman Bill Gates.

"There are a lot in the pipeline," said Miller Adams, vice president of Boeing Ventures, which falls under Boeing's chief technology officer. The division runs an entrepreneurship initiative that educates, trains and supports employees' ideas for possible new business opportunities.

MessageGate emerged from efforts by Boeing engineers who had developed the technology four years ago to control junk e-mail, or spam, that flooded the aerospace manufacturer's networks. Boeing gets about 10 million spam messages a month.

One research firm — The Radicati Group, based in Palo Alto, Calif. — estimates companies will spend $2.4 billion in revenues by 2007 on anti-spam products.

After realizing the potential market for a spam product, Boeing decided to pair with venture firm Polaris Venture Partners and Northwest Venture Associates, who vested MessageGate with more than $5 million in funding. Boeing continues to hold a minority stake in MessageGate.

The companies tapped David Weld — a former Microsoft executive who himself was one of the original crop of Baby Bill entrepreneurs — to head MessageGate, which now has about 20 employees.

It's not your typical startup, said Weld, a former president of Seattle-based Loudeye Technology and founder of two startups. "It's not five smart guys in a garage," he said. "This was built by Boeing, and that carries a lot of weight."

The technology evaluates the sender, content and context of the message to help determine its suitability, Weld said. It can be configured to be broad or narrow, depending on the company's policies and definitions of "spam," and any messages identified as junk can be quarantined for personal review.

The technology also allows network administrators to track and retain messages to meet various federal requirements regarding internal and external communications.

But analysts said they are most interested in its plans to roll out a product this year that works not just on e-mail, but instant-messaging services and text messaging over wireless devices as well.

"It's a pretty crowded space at this point," said Masha Khmartseva, senior analyst with The Radicati Group, noting vendors including Brightmail and SurfControl. But the instant-message and wireless messaging capabilities would be different, she said. "There's always room for that . . . It's a big plus."

The Boeing lineage will also be a powerful asset for MessageGate, said Robert Mahowald, research manager at research firm IDC.

"In the software market, word of mouth is the No. 1 reason people buy products," he said.

MessageGate is only the third spin-off out of Boeing Ventures, Adams said. The others are AVChem, a chemical management company in St. Charles, Mo.; and an underwater survey services venture with FuGro GeoServices Inc. and Oceaneering International, both in Houston.

But spin-offs — and spin-ins, in which a service used in one Boeing division is expanded to be used by other divisions — are only one purpose for Boeing Ventures, Adams said.

Boeing wants to provide employees with business training and skills which can help them return to their jobs with a more entrepreneurial sense of how to solve problems, he said.

"In this day and age, we need to be nimble," Adams said. "We need to be thinking out of the box."

For Boeing, the spin-offs aren't expected to boost the bottom line much. For a company that brings in on average $1 billion a week in revenue, Adams said: "It's pretty unlikely that one of these spinouts is going to move the needle here."