Robert Shaw, an early backer of ArcSight, had worked with Kleiner Perkins partner Ray Lane at Oracle and approached the firm about investing in the company. ArcSight had developed a threat management system to help companies collect and analyze large volumes of security data to identify which threats to prioritize. The software also helped organize and track incident responses and streamline audit and compliance activities. It was a much-needed product at the time. Cybersecurity incident rates had exploded with the rise of the networked economy and the vulnerability to cyberattacks that greater connectivity had created. At the same time, security infrastructure had grown increasingly complex, making the task of response prioritization harder and harder. In 2002, we invested in ArcSight, together with In-Q-Tel, the US Central Intelligence Agency’s venture-capital arm.
In the early 2000s, there were a handful of security information and event management (SIEM) companies, and ArcSight succeeded because it out-executed the competition. Hugh Njemanze, the company’s founding CTO, had built best-in-class technology. Robert Shaw had assembled a formidable sales team with a winning strategy to be the high-end solution targeting big accounts in vulnerable sectors such as retail and financial services. We worked with the company to build out the board and recruit key members of the management team, including Tom Reilly, who became CEO in 2008. The firm also assisted with introductions to major customers, such as Walmart, in support of the sales effort.
ArcSight filed to go public in 2007 and had its first day of trading on February 14, 2008 (Valentine’s Day). It was the only Silicon Valley company to be listed on NASDAQ in 2008, as the country reeled from the effects of the recession. In September 2010, Hewlett-Packard (HP) announced an agreement to acquire ArcSight for approximately $1.5 billion.