From the Austin Business Journal, July 27, 2001
By Ann Hatchitt, special to the Austin Business Journal
One Austin high tech company is truly getting to the source.
By independently administering "source escrow" agreements, Austin-based Guard-IT Corp. becomes a trusted third party, helping software developers and their licensees protect source code and intellectual property.
"The service we provide at Guard-IT is proactive," company founder and CEO Jim Ford says.
"I know we are solving problems and heading off potential problems. Many companies have been burned in the past when they paid top dollar for software, and then the developer went out of business, for example. Establishing source escrow agreements is becoming a more common practice in the industry today."
George Meyer, an attorney with Gray Cary Ware & Freidenrich LLP in Austin, says: "There are many scenarios which could leave the licensee vulnerable, especially in the case of mission-critical software. Events called `triggering conditions' include the licensor going out of business, filing for bankruptcy or not continuing to support the version of the software.
"Disputes about software can be costly when, for example, a plant that produces $3 million of product a day sits idle. ... Jim and I get together and exchange war stories about different challenges we've seen in the intellectual property arena when there are no source escrow agreements in place."
How did the company get started?
With a journalism degree from Southwest Texas State University in San Marcos, Ford started his career in legal publishing. In the early 1990s, he began setting up dial-up databases at the Austin Daily Record. He moved to Web-based communication as legal information services manager at the Austin American-Statesman.
His background in legal information and technology came in handy when he answered a telephone call from an attorney friend in Bryan.
Linda McLain, a partner at Rodgers Miller & McLain PC in Bryan, asked Ford what he knew about source escrow agreements. McLain simply needed some help. Now, McLain and another of Ford's friends, Austin attorney Terry Belt, are officers of Guard-IT.
When was the company founded?
The company was founded in March 1999. Ford says the company spent the first few months hammering out the details of source escrow agreements. Today, Ford handles the business and marketing, and McLain and Belt handle the legal issues.
What is the company's revenue performance?
Growth for the first six months of 2001 is up 500 percent over all of last year combined, Ford says.
"We got started in the good times and needed no outside funding. Even today, we are going against the flow of the economic downturn. Companies realize they need our services," Ford says.
Does the company plan to go public?
Ford says going public isn't an option right now. A buyout by a larger source escrow company would be the more logical scenario, but he wants nothing to do with it.
"We are fending off potential buyers. They see the big market that I see. It validates what we are doing," he says.
Who are Guard-IT's competitors?
Norcross, Ga.-based DSI Technology Escrow Services, a subsidiary of Boston-based Iron Mountain Inc., recently acquired two of Guard-IT's largest competitors, Fort Knox Escrow Services of Atlanta and Sourcefile LLC of Oakland, Calif.
The two acquisitions bring DSI's client base to more than 40,000 customers in 72 countries. Although Guard-IT's client base is significantly smaller, Ford says he thinks the company's potential market is huge. He says being located in the Silicon Hills will be an advantage in the long run.
What is the company's mission or purpose?
"It takes a company with integrity to negotiate source escrow agreements, and Guard-IT offers that to our clients. I like being the facilitator and making all the parties feel comfortable," Ford says.
Guard-ITs escrow services are used when two are more parties are negotiating a license for technology, such as software or other types of proprietary information. If the licensee of that technology is concerned the vendor will no longer provide support sometime in the future, then the licensee will request the technology or source code by placed in an escrow account.
Who are the company's clients?
Among the Guard-IT's big-name customers are America Online Inc., Best Buy Co. Inc. and Pitney Bowes Management Services. Its Austin clients include InfoGlide Software Corp. and QuickArrow Inc.
Ann Hatchitt is an Austin-based freelance writer.
Article text copyright 2001, American City Business Journals Inc.