Stories of Technology, Innovation, & Entrepreneurship in the Southeast

(EDITOR’S NOTE: This is the second article in a three-part series spotlighting one of the Co-Founders of Knoxville’s well-kept secrets – Sword & Shield Enterprise Security, Inc.)

By Tom Ballard, Chief Alliance Officer, Pershing Yoakley & Associates, P.C.

The stereotype for a start-up is to begin operations in someone’s garage. In the case of Sword & Shield Enterprise Security, Inc., this was a truism.

“We moved into James Goldston’s two-story garage when I joined the company six months after he founded it,” John McNeely, the current President and Chief Executive Officer (CEO), said. The date was July, 1997. Initially, it was just Goldston and McNeely. They added Will Henderson a year later after his exit from U.S. Internet.

“Will Henderson was instrumental in the success of the start-up,” McNeely said. “He brought a great deal of business experience and wisdom to the table.”

“In the mid-1990s, we knew network security would be a key issue going forward,” McNeely said. However, like many start-up entrepreneurs, the source of their initial business was not exactly what they expected.

“We thought it would be establishing information security programs, policies and procedures,” he explained. Instead, the early requests were focused on firewalls, Virtual Private Networks (VPNs), and security testing.

Sword & Shield experienced moderate growth in the early years, propelled in part by an initial project with the Federal Bureau of Investigation, a customer of McNeely’s in a previous life. The one-time contract led to long-term work.

“We went through the typical start-up challenges,” McNeely says, citing three – finding customers, securing adequate capital, and managing cash flow.

“We had the passion and vision, we just needed the time to make it work,” he adds.

In the early years, Sword & Shield also made sure it did not rely on a single major client. Instead, it established services in both the commercial and federal sectors. That decision was one that would provide dividends in the future as, in McNeely’s words, it “rode out a lot of things.”

There was the September 11, 2001 multi-site terrorist attack that adversely impacted security companies too reliant on federal contracts. The dual focus on both government and commercial work helped Sword & Shield weather the decline in federal funding.

Conversely, when the dot com bubble hit, the company’s federal business helped.

“At that time, compliance was not as big a driver as it is today,” McNeely explains. “We pushed through both, pressed forward, and built a good reputation.”

In August 2006, Sword & Shield Co-Founder and President James Goldston died. McNeely stepped into the role.

Then, there was the Great Recession that began in the late 2000s.

“We were hit, but maintained good profitability during those years,” McNeely says. “It was a tough time, but we’ve come out stronger. People need to applaud small businesses that survive these challenges.”

It also helps to win some good contracts, and Sword & Shield has been successful in that regard. Perhaps the biggest one was first won in 2003 from the National Aeronautics and Space Administration (NASA). It is named the Solutions for Enterprise-Wide Procurement (SEWP).

NEXT: SEWP III leads to SEWP IV, SEWP V, and NIH.

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