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Entrepreneurs
Business Observer Friday, Jul. 9, 2010 12 years ago

Protection Niche

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A Gulf Coast entrepreneur has turned his fear of an intrusive government into a successful business.
by: Mark Gordon Managing Editor

REVIEW SUMMARY
Business. ID Stronghold, Englewood
Industry. Technology, security
Key. Company found a niche in its products, which protects credit card and employee ID data from identity theft.
By the Numbers. Click here for revenue data.

Walt Augustinowicz lives in a time machine.


On the one hand, most of his company's challenges and successes are a relic of the long gone boom times. Revenues are up nearly 300% since 2008, he's having trouble keeping up with product demand and he might need more employees and office space by the end of 2010.


Yet his company's core products are a futuristic attempt to protect people from having their personal data stolen. The company, Englewood-based Identity Stronghold, makes and sells ID badge holders, wallets and credit card sleeves that create a secure buffer on anything from driver's licenses and passports to credit cards and employee office entrance cards.


The concept is based on federal laws and security guidelines that require many forms of ID and plastic payment to be coded with Radio Frequency Identification (RFID) technology — tiny chips that allow data to be read instantaneously by a scanner.


The problem is that potential thieves can also use their own scanner to get the same data, which is where Identity Stronghold's patented technology comes into use.


A person who uses an Identity Stronghold product can take the card out to wave it in front of a scanner and immediately put it back into its protected slot.


Most of the sleeves cost $5 a piece, while the badge holders cost $6. The customer base is just about evenly split between individual consumers who buy the products online and state and federal government agencies that buy in bulk.


“We found a niche that needed to be filled and we filled it,” says Augustinowicz. “People really need this protection.”


Indeed, Augustinowicz is clearly on to something. Revenues at Identity Stronghold, which he founded in 2005 off money from savings, maxed out credit cards and taking out a second mortgage, will likely surpass $4 million in 2010. That's 100% growth over the $2 million in 2009 revenues and 300% more than the $1 million in 2008 revenues. The company has 4 full-time employees.


Identity Stronghold outsources its manufacturing and design work to Robrady, a Sarasota-based product design firm. “Walt's vision was far head of anyone else on this,” says Robrady CEO and founder Rob Brady.


Brady met with Augustinowicz four years ago, when Identity Stronghold was in its early stages. Brady liked the company's potential so much he not only took on the work, he became a minority owner in the firm.



Tech squad


The back-story to Identity Stronghold, meanwhile, is wrapped in a rich irony.


Augustinowicz is an avowed libertarian with a healthy skepticism of government's penchant to reach too far into private citizen's lives. He was even a publicly active spokesman earlier this year on an unsuccessful effort to vote down the continuation of a tax for Sarasota County public schools that takes $1 for every $1,000 of taxable property value.


“I just don't like Big Brother,” says Augustinowicz. “I don't think the government should be overreaching into anyone's life.”


But here is the irony: Identity Stronghold's reason for existence can be traced back directly to the government. In fact, the firm's marketing literature and Web site cites federal mandate HSPD-12, which will eventually require every U.S. government agency and department to switch to ID cards that use Radio Frequency Identification technology.


More irony: Dozens of government agencies are already customers, from NASA to the USDA to the Forest Service. Employees in the White House and at Mount Rushmore also use Identity Stronghold badge holders.


“It's a strange place for me,” says Augustinowicz. “I'm a tax fighter and government agencies are buying from me.”


What isn't strange is that Augustinowicz has built a business based on technology. This is the same person, after all, who developed his own software for a TRS-80 computer while he was in the seventh grade.


Augustinowicz recalls that his dad bought him the computer from Radio Shack when the family lived in New Hampshire in the 1970s. A curious Augustinowicz read a book on programming and four days later he wrote new software code for the machine.


Later into his teen years, Augustinowicz would hang out so often at his local Radio Shack that customers thought he worked there. He would help out people with computer issues during breaks from his real job at a nearby Kmart.


The family relocated to Florida in the 1980s and Augustinowicz continued to follow his technology passion into jobs. He worked in IT for several Gulf Coast companies, including 1st Guard, a Venice-based truck insurance firm.



'So simple'


It was in 2005, while at 1st Guard, that Augustinowicz read about government plans to use Radio Frequency Identification technology in ID badges. He shuttered at the implications of governmental intrusion.


Internet research on the issue led Augustinowicz to a woman in Illinois who held a dormant patent on technology that could protect data from scanners. Augustinowicz met with that inventor and later bought her patent for a small ownership stake in the future company.


Augustinowicz spent the next 18 months fine-tuning the technology to make it actually work. “You look at [the products] now and say it seems so simple,” says Augustinowicz. “But it's not.”


It took at least $500,000 to get the company going, money Augustinowicz cobbled together from a variety of sources, most notably those credit cards and the second mortgage. He has invested another $500,000 of his own money into the business since those early days.


Augustinowicz initially kept his day job while he worked on his new venture on nights and weekends. Eventually, however, he quit 1st Guard to focus on Identity Stronghold. He launched the company from his home and quickly after he moved it into a 2,500-sqaure-foot leased office in an Englewood corporate park, about 15 miles south of Venice.


Says Augustinowicz: “It was a little like jumping out of an airplane without a parachute.”


But the landing was soft. Plus, in addition to the growth in sales and space, Identity Stronghold has picked up something else many small businesses covet: Buzz.


For starters, over the past year the company has been featured on at least a dozen local news networks nationwide, including channels in Sarasota, Dallas, Cincinnati and Los Angeles. Univision, the popular Spanish network, has also run a segment on the company.


Augustinowicz' first foray into the world of local TV news happened late last year, when a reporter from KTLA in Los Angeles contacted him. He flew out to California and taped an interview for the segment, which focused on the alarming ease that data could be stolen without having some type of protection in place.


Other calls from reporters followed. Now the company has its own channel on YouTube to show the segments (www.youtube.com/WaltAugust.)



More challenges


Despite all the press, Identity Stronghold isn't without its challenges.


To start with Augustinowicz had several welcome-to-Sarasota-County moments when he launched the company five years ago, from complicated permit delays to unforeseen fees. “It should be easier to start a business,” says Augustinowicz.


More recently, the staff has struggled to keep up with the demand, especially for the company's foil credit card sleeves and badge holders. Some shipments come in from Robrady and are inspected on the truck and turned around in hours without even being unloaded.


Cash flow is also a pressing issue, mostly because government agencies don't normally pay up front. Since the government makes up half the business, that sometimes leaves a gap Augustinowicz has to work though.


It all means Augustinowicz won't rest easy simply because he's had a few years of growth that runs counter to the economic downturn.


“Even to this day it can be stressful,” says Augustinowicz. “There is still a lot of risk.”


School's Out

Walt Augustinowicz had been active in Libertarian Party politics in Sarasota County for several years before he founded his own company in 2005. He served in leadership roles in the Florida Libertarian Party and he ran an unsuccessful campaign for state Legislature in 2004 as a Libertarian.


But through 2009 he shifted most of his focus to his business, Englewood-based Identity Stronghold. Then he saw an issue that he just couldn't watch unfold from the sidelines. The issue: a voter ballot initiative to continue a tax for Sarasota County public schools that takes $1 for every $1,000 of taxable property value.


Augustinowicz saw the tax as yet another way government takes people's money with little or no accountability. He joined groups that were against the continuation of the tax and spoke at dozens of debates and meetings.


“I knew I was on the right side of it, although I also knew how it was going to go,” says Augustinowicz. “But you can't not try.”


The initiative passed by a wide margin in a March 17 vote. Augustinowicz, now an active member of the Sarasota County Republican Party, says he was disappointed in the results, but not in the process. “If I had more time I would consider running for school board,” he says. “Probably some day I'll get back into it.”

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