Software firm struggles to break into the big leagues

KoniKaye Jeschke, who wears a wrist brace as painful evidence that she's been spending way too much time at the computer, is the lowest-paid programmer at Prevari, a Golden Valley vendor of IT security software.

She hasn't collected a paycheck in the past two years.

But you do what you have to when you're the boss and the company you founded is struggling to establish itself in a competitive market with a product that goes well beyond conventional boundaries.

Prevari offers proprietary software called Technology Risk Manager (TRM) that Jeschke developed not only to measure known IT security risks, but also to identify potential threats. In addition, TRM automates the time-consuming process of complying with federal security regulations designed to assure the privacy of a company's clients.

Trouble is, it's exceedingly difficult for a new company with a new product and shaky financials to penetrate the major commercial markets, which is why Prevari grew to a mere $400,000 by 2009, well below Jeschke's expectations.

"It's been very stressful; I expected to do a lot better," said Jeschke, 54, who built an IT process-improvement consulting business to nearly $3 million in annual revenue before developing the Prevari software. "I think I've aged 10 years in the last five."

But there's light at the end of the distribution channel: One of her early commercial customers was McAfee Software, a major IT security software company, which purchased Prevari's software for its internal use -- a powerful endorsement in itself. Better yet, late in 2008 the California company signed on to distribute the TRM software.

Meanwhile, frustrated by the difficulty of luring large commercial clients, Jeschke turned her attention to the federal government -- and scored!

First came a sale to the National Oceanic and Atmospheric Administration. Then she sold a proof-of-concept version of TRM to the U.S. Navy and a full-blown version to the Missile Defense Agency.

The upshot: With large federal contracts at or near final agreement, and with McAfee marketing the Prevari software, Jeschke expects her gross to quintuple in 2010.

What's the attraction? The way Jeschke explained it to this feckless Luddite, TRM goes beyond the conventional process of assessing vulnerabilities based on known weaknesses to explore a lengthy list of software system characteristics to anticipate potential risks.

Included on the list of 22 inherent risk characteristics: the number of lines of code, existing security controls, user authentication, complexity of the software and how often a system is maintained and updated. Not to mention a passel of other engineering minutiae.

In addition, the TRM software gathers data required for compliance with federal security regulations in less than a half-hour, a process that otherwise can take several days and involve a lot of staff.

TRM has earned praise from its clients.

"I have used Prevari's TRM product in three different financial services firms, and each time it has delivered on the promise of ensuring robust information security and information compliance," said David Grandstrand, a veteran Twin Cities banker and turnaround specialist. He has held executive positions at Excel Bank and BankFirst and was chief risk officer at Piper Jaffray & Co.

Added a Defense Department official, who asked not to be named: "Prevari's solution showed risks to our IT environment which we would never have found using traditional methods."

Impending success hasn't come without a struggle. To finance the business, Jeschke emptied her savings and retirement accounts, refinanced her six-bedroom Golden Valley home twice before selling it in 2006 and moving into a small, 50-year-old fixer-upper badly in need of expensive repairs. Investments from friends and family kept Prevari going.

In the three years it took to get TRM to market, Upstream fell to just nine employees who spent their days on the consulting business and their evenings helping Jeschke with the software development.

Since then, employees also have chosen to relinquish salary and benefits for a time before Jeschke could find the cash to repay them. But now the business appears to be on the threshold of actual prosperity. Jeschke has a verbal agreement with the U.S. Air Force for a $3 million sale that is awaiting a funding appropriation. And negotiations with the Navy for a nearly $2 million contract are nearly done.

Even after they're funded, however, the TRM installations will take two to three years, Jeschke said. Nonetheless, because of the growing government business and the prospects with McAfee's involvement, she expects 2010 revenue to reach $2 million.

Which means a whole lot less stress -- and maybe even a regular paycheck.