Bright Idea: Steal Trap

As the number of devices connected to the internet explodes analysts estimate there will be more than 30 billion within the next five years so open many more doors through which hackers can penetrate corporate networks.

The hackers who stole 40 million credit and debit card numbers from Target used information from a heating and cooling systems vendor to penetrate Targets point-of-sale system. While corporations usually have firewalls, they have often proved ineffective, leaving such critical devices as ATMs, electric power substations and city water pumps vulnerable to hackers.

Tempered Networks, a Seattle startup that began life in 2012 as Asguard Networks, offers modem-size devices, which, placed where a set of devices connects to the Internet, will prevent hackers who break into another part of a corporate network from accessing those devices. Today, each Tempered Networks device costs $1,000, but the firm plans to reduce the size and cost, and is talking with manufacturers about licensing the software so it can be built into future industrial systems.

Tempered Networks CEO Jeff Hussey says its software uses military-grade encryption to make devices invisible to hackers and could eventually find its way into every cell phone.

Historically, industrial systems ran on networks based on different standards, Hussey explains. For easier maintenance and monitoring, most networks have since moved to common internet standards. County libraries, transit systems, steel mills, water systems and sheriffs offices all use TCP-IP [internet protocol standards], he notes. That allows hackers to enter from any part of a corporate system and reach a vast network of devices. Hackers can cause sewage backups by shutting off pumps or steal trade secrets by accessing oil rigs.

Hussey says the product is particularly useful in protecting the many aging bank ATMs that run old operating systems like Windows XP that no longer receive security upgrades but might be too costly to replace. Hussey is a cofounder and former CEO of F5 Networks, and 20 of his 30 employees once worked at F5. Tempered Networks recently raised $15 million in venture financing from Ignition Partners and others.