Gabriel Moynagh's new challenge is winning the generation game
Gabriel Moynagh authored one of the few success stories to emerge from recession-era Ireland. He spoke to Donal Lynch about turning his company into a global player
Published 12/04/2015 | 02:30
There are some days you know your life will change forever and for Gabriel Moynagh, today is one such day.
The visibly nervous young entrepreneur is sitting opposite me in the Davenport Hotel off Merrion Square, eyeing his phone like a hawk. He's staying at the hotel so as to remain in a state of readiness for the birth of his first child, which is due any minute now - his wife, Amy, is two weeks overdue, and is currently holed up at The National Maternity Hospital in Holles Street.
"She's thrown off my whole schedule, it's very inconsiderate of her," he smiles. There's a sense of optimism in the air.
"It looks like it's definitely going to be today. Definitely. I'm very excited of course. It seems like it's going to mean a lot of responsibility.
"I think I am going to have to do a lot of growing up myself. I'm sure I'll handle the restless nights. I'll finally have to get my act together."
The acute sleep deprivation, endless responsibility and fierce sense of protectiveness that are part and parcel of new fatherhood might equally be applied to the life of entrepreneur.
And Moynagh is being modest, since his act has long since been gotten together.
The 33-year-old spent the best part of the last decade nurturing his other baby - Sysnet - from its humble beginnings in IT support into becoming one of the global big boys in cyber security.
The Irish company builds and supports mutually-beneficial relationships between SMEs and financial institutions through the provision of technological solutions. It helps businesses of all sizes to protect their valuable company information from cyber security threats and currently has clients globally in 200 countries.
More than 800,000 merchants use its proprietary compliance management solution.
In the UK and Ireland, Sysnet works with the top seven financial organisations including Barclays and Lloyds. In the US, Sysnet's clients include WorldPay and US Bank, and the firm's consultancy and software development arms have blossomed as well.
The company also provides consulting services to numerous retail behemoths including Walmart, Nationwide Building Society, and ABSA bank.
Headquartered in Dublin, the firm also has offices in Atlanta, Salt Lake City, London, Cape Town, Kiev and Hyderabad. It employs more than 160 people, most of them based in Dublin.
It's an amazing story. Sysnet has grown from about €1m in revenue six years ago to over €20m in revenue this financial year. In the process Moynagh has twice been nominated for an 'Entrepreneur of the Year' award in the international category and the company has also won a slew of industry awards.
He's modest enough to admit however that "the heaviest lifting is done off the ground" - and that initial push came from his father, Tom, who started Sysnet in 1989.
"He moved to New York in the early 1970s, went to college there and came back to Ireland in 1981. He was one of the first working in the whole IT sector in Ireland.
"He worked in virtual reality for a while and silicon graphics. The main business was IT support and service. So they'd go into high street retailers and sell them hardware and then sell them the support contract to go with the hardware.
"Their own customers were asking them more and more about internet security and so they started dabbling in that. There was also another side to the business - Computer Aided Design (CAD) and they worked that for a while. We began focussing on information security."
Moynagh was, by his own account, not very academic as a youngster - he went to St Columba's College in Rathfarnham - and studied zoology in UCD, which hardly boded well for a future in business. However, he started working in the company for his father and gradually climbed the ladder through various roles until becoming CEO four years ago. He presents the dynamic within Sysnet as a push-pull between him and his father.
"We would have had a lot of arguments. Now I look back and think we actually needed that. It gave us a balance. I was trying to do too much too fast.
"We had various roles in the company but there wasn't really a hierarchy. It was everyone else and then my Dad. I may have pulled the son card once or twice but I don't remember."
In 2007, he and his father were advised by Brian Caulfield at Trinity that developing their own software would greatly enhance their chances of securing investment.
"We began development and subsequently won a tender with a UK bank to deliver our new software to 35,000 small businesses. This deal helped us secure funding with a US private equity firm called GTX."
The software was designed to tackle the emergence of increasingly high profile security breaches in the credit card industry.
"The main one that stands out was CardSystems in the US in 2005. Millions of people's data was stolen," he recalls. "Those card numbers end up online for sale. Hackers go for the most valuable thing they can find - and in the right hands, card numbers are practically the equivalent of cash." (Visa and American Express would go on to drop CardSystems as a credit card processing company.)
Sysnet only contracts with the acquirer and the relationship between it and its stable of merchants remains unchanged. Perhaps most importantly they don't at any point take ownership of the merchant data they gather during the process. It belongs to the acquirer and they use it however they see fit.
"The way it works is that the credit card giants have a network of vast institutions called the acquiring bank," he explains. "These acquiring banks have a relationship with the merchant. The acquiring bank is responsible for these merchants - and when a rule is established it's up to them to implement it.
"Visa and Mastercard, for example, don't have a direct relationship with the merchant - they go through the acquiring bank.
"And they said to us: these high profile breaches are happening and we need to restore consumer confidence and make sure systems were secure. They were also trying to show that they are self regulating. They were also trying to create an industry standard."
That industry standard that emerged was called PCI DSS (Moynagh admits his industry has "an acronym at every turn") and Sysnet's ability to implement it placed it suddenly at the vanguard.
"One of the turning points for us was when I was in the office upstairs in Churchtown and we got a call from Conor McGovern at Realex Payments asking about this standard and whether we provided PCI," he recalls.
"At the time there were only two or three companies that actually had the credentials from Visa or Mastercard to go into a large financial institution and audit them. We went through a lot of hoops to become a certified security assessor.
"Once we got that badge we went from where we weren't winning tenders to all of a sudden winning them. We were the first in Ireland and the fourth in Europe, so we began getting government tenders.
"Moving outside Ireland was a big psychological barrier, but we knew we had to do it to grow."
Their first big software deal came with Bank of Scotland Merchant Services, which was due to triple the size of the company but it almost didn't get off the ground.
"Toward the eleventh hour it still wasn't working. And I clearly remember thinking: 'That was it, we had our chance and now it's gone.' We had people working until after midnight every night to get it over the line."
The deal made Sysnet a software company and gave them a platform to grow into a global business.
"The temptation was to only go after the Tescos, the Ryanairs and the Aer Linguses of the world - but the acquiring banks were under pressure not to forget about the higher risk portfolio.
"Hotels and hospitality are at a high risk of data compromise. Ecommerce merchants are also very vulnerable. They had to look like they were doing something about it. From 2005 they were also coming under pressure from regulators."
While the increased emphasis on security within the credit card industry and the need for self regulation played into Moynagh's hands, there were also a few serendipitous coincidences that smoothed his company's path to success.
"My whole family are big into Irish music," he explains. "But most of them are better at it than I am. I play the fiddle.
"In 2009, my sister Lindsay was a musician in a traditional Irish music show that had received funding from a US investor after he attended the first performance while holidaying in Galway.
"Anyway, he turned out to be the former CEO of an American and European payments company which - through pure luck - was Sysnet's second largest client. He subsequently funded Sysnet and it really was an incredible coincidence. We had at that time been trying to raise money in the company.
"Lindsay - who also worked in the company for a while - still lords it over me to this day because of that."
So what does the future hold for him and Sysnet?
"We have a huge portfolio of small businesses that rely on us to get them through the PCI process. Our challenge now is to develop software that will help them with that process."
Will they be acquiring other companies?
"In the future the company will be looking to invest in acquiring companies that are developing security systems which are aimed at PCI compliance. We took a 25pc stake in a company called iScan which does just that. We want to prove that the distribution requirement is there. I'd rather prove that the distribution works before buying a company."
Although the security industry isn't as vulnerable as some to fluctuations in the economy led by flip-flopping consumer sentiment, Gabriel believes the future has begun looking brighter lately and another jobs announcement is imminent.
"We'll be working with over a million merchants through a handful of financial institutions. There will be another job announcement pretty soon. We are finalising our financial year this month.
"We've gone through a really deep strategic process and once we're through that we'll know more. We're still playing with what holes we need to fill. We've got to a point where it's not enough to be just entrepreneurial."
And with that it's back to the hospital. I've taken enough time already. And Moynagh has another long day of waiting ahead of him.
'I've stood up my Dad tons of times'
If I could look back to myself when I was starting out I'd tell myself… "I wish I'd gotten started earlier. I feel more confident now that I've made a lot of mistakes. When we were growing quickly I made hiring choices based on need. We now hire for strength as opposed to lack of weakness."
The brokest I've ever been was… "there were a couple of times with the company when we were close to not being able to pay wages. In terms of me personally, probably when I was in college although I always worked in bars and restaurants so I made tips there."
Outside the company my favourite investments are… "it's part of my contract that I don't invest. There are some of the companies we work with that I'd love to invest in."
I've had to stand up to my Dad… "tons of times! All along when cash-flow was tight, it was always me trying to speed up and him trying to slow down. I would never have admitted he was right at the time because I thought everything I was trying to do was genius."
Sunday Indo Business