Bruce Hansen reminded me of the great startup circle of life when I met him recently at the San Diego headquarters of ID Analytics. We met just a couple of weeks after Tempe, AZ-based LifeLock closed its buyout of ID Analytics in a deal estimated by one industry observer at roughly $120 million.
As I walked into the conference room, Hansen handed me a yellowed copy of the Union-Tribune business section from almost nine years ago. Prominently displayed was a story I’d written about ID Analytics in 2003, when the company was a 15-month-old startup. At that time, identity theft was a relatively new and fast-growing fraud (which many police investigators had never encountered), and ID Analytics was just beginning to market its technology to help detect bogus consumer credit applications.
Nowadays identity theft is considered one of the fastest-growing financial crimes in the U.S., with millions of reported cases each year spurring the growth of a substantial industry that offers identity theft protection and credit account monitoring services. And in the decade since ID Analytics was founded, the company has likewise become a substantial business, raising a total of $45 million in venture capital and growing to more than 130 employees. Hansen says LifeLock plans to keep the company in San Diego, where it will continue to operate as an independent subsidiary of LifeLock.
At the beginning, “We came at it from the perspective that there’s a lot of money being lost by enterprises, because they too were the victims of identity theft, along with consumers,” says Hansen, who was ID Analytics’ founding CEO and longtime chairman. Fraudulent purchases under assumed identities were forcing big financial institutions to write off huge losses on phony credit card purchases, loans, and other credit-based transactions.
“We felt we could bring our heavy duty analytics, à la HNC Software, in conjunction with some innovations around the business model and create a new class of analytic screening tools for that problem,” Hansen says. San Diego’s HNC Software had pioneered the use of data analytics and decision-management software to provide real-time analysis of point-of-sale credit purchases. Hansen was president at HNC (reporting to CEO John Mutch) before FICO (NYSE: [[ticker:FICO]]), which was then known as Fair Isaacs, acquired the San Diego company in an $810 million deal in April 2002.
Hansen and a handful of others from HNC and elsewhere founded ID Analytics that same year. Their idea was to establish an “ID Network” to pool credit application information from many financial institutions, and provide real-time data analysis as a customer service. “They would contribute their proprietary information to this network, feed it in real time,” he says. “We would embed analytics within this network that would
