- Shift5 is a 50-person, Washington, DC, startup that protects jets, trains, and tanks from hackers.
- The startup has raised $2.5 million in funding, but is hiring talent from big firms like Tanium.
- New execs and analysts say the little company has a wide-open opportunity in operational security.
- See more stories on Insider’s business page.
A 50-person cybersecurity startup with a grand total of $2.5 million in venture capital funding is luring executives away from big companies, adding retired US generals to its board, and landing government contracts. All because three Army buddies saw a wide-open opportunity that experts say could make Shift5 huge someday.
The Washington, DC, startup protects “planes, trains, and tanks” from hackers, which CEO Josh Lospinoso says represent “trillions of dollars of assets that are hemorrhaging data.” Lospinoso says that “everyone is focused on computers” in the world of cybersecurity, but hackers – including nation-state hackers from hostile countries see a US military jet as a very attractive target. “They ask themselves, ‘Can we turn that into a 70-ton paperweight, or kill crew members?'”
The company provides basic cybersecurity monitoring for hugely expensive – and highly mobile – vehicles, showing where jets, trains, and and tanks are in real-time, rounding up security alerts, and protecting data generated by the vehicles.
The strongest testimony that Shift5 is on to something big may be the executives it is luring from big companies, including $9 billion cybersecurity company Tanium and $2 billion cybersecurity startup Armis. “We’ve had an amazing recruiting year,” Lospinoso says. “A multi-billion company in the making, that’s what these folks are seeing at Shift5.”
“These folks” include new corporate president Joe Lea, former head of product at Armis and Tanium.
Six former Tanium employees now work at Shift5, according to LinkedIn. Four of them left Tanium this year, even as Tanium CEO Orion Hindawi told employees his company is exploring an IPO – and big windfall for employees – this year. Lea called Shift5’s market opportunity “incredibly compelling” when he joined last month.
Shift5 also brought on Tanium’s top executives in its federal business. E. Egon Rinderer, Tanium’s former global vice president of technology and federal CTO, left in May and also joined Shift5 in June as its CTO. “Shift5 is special,” Rinderer told Insider in a written comment. He believes the company will “attract the brightest minds in the industry as they grow.”
In addition to Lea and Rinderer, Tanium’s former vice president of federal Ralph Kahn left in April and joined Shift5 in June as its chief revenue officer. Shift5’s chief product officer Matt MacKinnon and Lea both joined in June and had also previously worked at Tanium, although they had left Tanium in 2018 and worked at Armis right before joining Shift5.
“Shift5 has the deep expertise and relevant experience necessary to properly secure railway vehicles from cyber threats. As analysts, we see domain expertise of this sort as a major cyber security market differentiator,” longtime cybersecurity analyst Ed Amoroso told Insider in a written comment.
Lospinoso says the company landed $8 million in military contracts last year, which is highly unusual for small companies, which often find military procurement processes frustratingly slow and bureaucratic. But Lospinoso and his cofounders have experience with military processes – all three were captains in the Army. Losposino says he, Michael Weigand, and James Correnti left the military in 2018 to protect the data in the jets and tanks they worked on when they realized: “No one is coming to save us.”
The startup has raised $2.5 million from investors Squadra Ventures, Nue Capital, among others. That’s one-quarter of 1% of the venture capital raised by Tanium ($983 million), where six of Shift5’s execs used to work. But Lospinoso said that is changing very soon, and new funding will add to the revenue the young company is bringing in, which he would not disclose.