Ottawa’s Pythian spins out software platform Tehama

Ottawa information-technology-services provider Pythian Group Inc. has split into two parts in a transaction that will see founder and chief executive officer Paul Vallée leave to lead a separate software startup incubated within the 22-year-old company.

As part of the deal, New York private-equity firm Mill Point Capital has bought control of Pythian’s services business from an investor group led by Mr. Vallée.

Terms were not disclosed but it’s believed Pythian, with 350 employees and more than 250 customers globally, is valued in the tens of millions of dollars. Mill Point specializes in buying control stakes in middle-market North American IT-services businesses through a US$450-million fund.

“This transaction enables Pythian to narrow its focus on what matters most – delivering top-notch service to its clients,” Mill Point managing partner Michael Duran said in a statement.”

Mr. Vallée is being replaced by chief revenue officer Keith Millar, a 10-year Pythian veteran.

Meanwhile, Mr. Vallée, who co-founded Pythian at the dawn of the internet age in 1997, is departing to lead Tehama, a 40-person software operation created within Pythian and funded with more than $10-million in support by the services company and its backers.

His goal is to raise US$10-million to US$15-million in venture capital by next spring to fund the Tehama business, which he said increased revenue by 60 per cent in the most recent quarter over the previous quarter and is tracking at more than US$1-million in annualized sales from 150 corporate clients.

“It’s not a bad start,” Mr. Vallée said. “We’re growing fast and we’d like to attract external capital because we have a world to change.”

Tehama grew out of Pythian’s attempt to provide better cybersecurity and compliance measures to its enterprise customers globally at a time of increasing concerns about data breaches rising from well-publicized thefts of sensitive corporate information and personal data of tens of millions of customers from many large enterprises. More than half of Pythian’s global work force in 150 cities work from home, and the company wanted to ensure its customers were protected from data breaches as Pythian employees, freelancers and service providers located away from client premises accessed sensitive data.

Tehama’s subscription platform, offered over the internet, limits remote workers to accessing its customers’ sensitive commercial information through virtual “rooms,” or secure portals accessible on their laptops which Mr. Vallée likened to an “airlock for data.”

The data can’t be cut and pasted out of the virtual rooms onto a user’s desktop, e-mailed outside the portal or downloaded to files or USB keys plugged into their computers. “You can’t directly get data out; you can only use it to do your job” within the virtual rooms, he said. “There’s no easy way to ex-filtrate data.”

He said the company would target medium and large enterprises and counts Upwork, a freelance marketplace provider that recently went public, as one of its largest customers. Pythian will also continue to be a Tehama customer, he said.

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