The Washington PostDemocracy Dies in Darkness

Ron Gula, NSA hacker-turned-CEO, steps into the investment space

Ron Gula co-founded of Tenable Network Solutions with his wife, Cyndi. Now, they run an investment fund together. (Oliver Contreras for The Washington Post)

When Ron Gula joined the National Security Agency in the mid-1990s, the world was still storing information on floppy disks.

The agency hired him as a “penetration tester,” a white-hat hacker who looks for holes in computer networks so that they can be patched before the enemy finds them. He spent years breaking into government servers and putting together reports detailing potential weak spots, part of a skill set that would prove critical throughout his career.

“I tested the good guys; I did not break into the bad guys,” Gula said of his time at the NSA.

It wasn’t until after he met his wife, Cyndi, that he stepped into the business world. The two married in 1997 and co-founded two companies together, Ron Gula as a technologist and chief executive, Cyndi Gula handling company operations.

One of those companies, Tenable Network Security, became a prominent player among a new crop of Washington-area companies selling cybersecurity to private corporations, attracting $300 million in investments and eventually becoming a springboard for the Gulas to try something new.

The couple’s third act is an investment fund that they hope will enable younger technologists to follow in their footsteps. In doing so, the Gulas are part of a new generation of experienced technology executives filtering back into the Washington area’s business community after making a fortune growing and selling companies on their own.

Gula Tech Adventures has made small investments in at least 13 companies, most of which operate in the Mid-Atlantic region. The fund has officially been in operation only for a few weeks, though Gula started aggressively investing his own money throughout 2016.

“When Ron started Tenable, nobody quite understood the issues in cyber and how they were going to balloon, so he was really ahead of his time. Nobody questions the need for cyber-fixes today,” said Jim Hunt, a cybersecurity investor who teaches an investment course at Georgetown University. “If anybody can profess to be the region’s ‘cyber-czar,’ Ron’s got the résumé.”

Other cyber-executives are working to turn past successes into new ones.

Dave Merkel, the former chief technology officer of Mandiant, which was sold for $1 billion to West Coast cybersecurity giant FireEye, last year started a company in Herndon, Va., and immediately attracted $7.5 million from venture capitalists.

Numerous executives from Sourcefire, which grew up in Columbia, Md., before being acquired by Cisco for $2.7 billion, have started new companies in the past five years. Former Sourcefire chief executive Wayne Jackson now heads Sonatype, and former vice president John Czupak now heads detection firm ThreatQuotient, both Washington-area businesses.

Others, including Blu Venture, a consortium of former technology executives, are getting in on the angel investing game and focusing on area companies.

“This is how Silicon Valley really got its start, and why it’s so far ahead of every other region in the country. Out there, when entrepreneurs sell out, they go [start a new company], or they go become angel investors,” said Jonathan Aberman, a Virginia-based security investor.

The fact that people like the Gulas are investing locally “means that we’re starting to develop a more robust cybersecurity software product ecosystem,” Aberman said.

The Gulas’ fund has mainly made small investments so far, but the pair have lofty goals. Their plan is to show strong enough returns on the fund’s early investments to attract well-heeled co-investors, filling what he sees as a gap in the Washington-area technology community. Ron Gula says he wants to broaden the fund beyond his family office by 2018, and eventually make bigger investments alongside the country’s large venture funds.

“As I get more experience and more success, I want to do larger investments and help the companies that I’m working with grow,” he said. “I want to see 20 Tenables.”

If Gula pulls it off, he’ll be filling a void that has dogged the local business community in past decades. Cybersecurity researchers around the nation’s capital have come up with industry-shifting innovations in the security space, but an unfavorable investment climate has prevented the region from really capitalizing on all that talent.

The fastest-growing companies have tended to head west in search of operating capital. Entrepreneurs often say they have an easier time finding funding in Silicon Valley, picking up larger deals and getting more favorable investment terms compared with the Mid-Atlantic region. And the giant tech companies that buy up growing firms — the Googles, Microsofts and Oracles of the world — are mostly located on the West Coast, effectively poaching some of the region’s fastest-growing firms.

Cybersecurity is one of the only technology sectors where the funding gap appears to be getting smaller. Area cybersecurity companies are attracting funding at a time when other start-ups are having a hard time closing deals.

The annual number of cybersecurity venture deals doubled in the four years from 2011 to 2015, and the industry here already counts at least 1,000 companies in its ranks. Many of the larger deals have come from out-of-state venture funds or private equity firms acting in absence of a strong local investment ecosystem.

Some in the start-up community are hoping that Ron Gula’s former company could play the role of acquirer, buying up local firms and keeping them here.

The Gulas no longer work for Tenable Network Security, having been partially bought out as part of a big funding round. But the company recently hired Amit Yoran, the former chief executive of Dell RSA, to take Ron Gula’s place as chief executive, and Tenable bought San Francisco security company Flawcheck for a sum that wasn’t disclosed.

Ron Gula has not said exactly how much money he walked away with when he left Tenable, only saying that the fund he now runs with his wife is larger than a $5 million minimum set by regulators. He says he won’t make investments in start-ups that compete with Tenable because he still owns a portion of the company he founded.

He says he wants to keep the fund in the Washington area and help local entrepreneurs build businesses here.

“Nobody ever tapped me on the shoulder and said, ‘If you worked in Silicon Valley or New York or Tel Aviv you’d be more successful,’ ” he said. “It’s never occurred to me leave.”