Blue Coat Systems

» see bluecoat.com as it lived, on the wayback machine

~ the eulogy ~

Nobody chose Blue Coat. It was chosen for you, by an employer or a school or a government, and the only part of it you ever saw was a page telling you the thing you asked for was not available. That is a category of product i have been on the receiving end of without ever thinking about the company behind it, which is what these boxes were designed for.

The beginning was the opposite of that. In March 1996 a Waterloo computer scientist named Michael Malcolm started CacheFlow Inc. in Redmond, Washington with two co-founders, and the pitch was pure late-nineties infrastructure: bolt an appliance onto an internet provider's network, keep copies of the pages everyone was asking for, serve them locally instead of dragging them across an expensive backbone. Benchmark Capital bought a quarter of the company that October for $2.8 million. Brian NeSmith, fresh off selling Ipsilon Networks to Nokia, came in as chief executive in 1999.

The IPO on 19 November 1999 was one of the loud ones. The stock closed up 427 percent on the first day, a fivefold jump, on a company that was losing money and said so in the filing. Then the market turned. Between October 2000 and March 2001 the company lost ninety seven percent of its value, and it kept losing money after that. In February 2002 it closed the Redmond office and cut about sixty jobs there.

What saved it was a change of business. Caching had become a commodity and several competitors were dying of it, so the company pivoted to security appliances that sat behind corporate firewalls and inspected traffic on the way through. In August 2002 it renamed itself Blue Coat Systems, and the name was chosen deliberately to make you think of a police uniform. The products controlled and monitored what employees could do with a company connection. The losses got smaller and then stopped.

~ the dossier ~

~ the unraveling ~

A machine that inspects everything passing through it does not care whose network it is on. In October 2011 the hacktivist group Telecomix published 54GB of log data it said had been pulled off Blue Coat appliances running inside Syria, showing the specific search terms being blocked in the country during the uprising. The BBC and the Washington Post ran it. Blue Coat denied selling to Syria.

The company later acknowledged that its equipment was in the country and said it had gone through intermediaries without authorization. The awkward detail was that the appliances sent regular heartbeat pings back to Blue Coat, and the company's position was that it did not look at where those pings were coming from. In April 2013 the Bureau of Industry and Security announced a $2.8 million civil settlement with Computerlinks FZCO, the Dubai distributor that had moved the boxes. By then Citizen Lab had published three reports finding the devices in countries with a censorship record.

~ what it became ~

The last five years were a passing-around. Thoma Bravo took it private for $1.3 billion in December 2011. Bain Capital bought it from them for $2.4 billion in March 2015, with revenues up fifty percent over 2011 and an IPO clearly in mind. Blue Coat filed to go public on 2 June 2016 and abandoned the filing eleven days later.

On 12 June 2016 Symantec announced it was buying the company for $4.65 billion instead, and the deal closed on 1 August. Greg Clark, who had been running Blue Coat, became chief executive of Symantec. That is the actual death: not a shutdown, but a name being folded into a larger name and then stopping. In 2019 the enterprise security business that had absorbed it was sold again, to Broadcom, and the sequence from a caching startup in Redmond to a line item on a chipmaker's balance sheet was complete.

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