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Upstarts

A company founded by two LSA alumni and headquartered in Ann Arbor recently sold for $2.35 billion. (Yes, billion.) What did they do right?
by Elizabeth Wason

This is an article from the spring 2019 issue of LSA MagazineRead more stories from the magazine.


Enter the offices of Duo Security in downtown Ann Arbor, and you could be fooled into thinking you’re at a tech startup in Silicon Valley. In the company’s green-tinted space, refrigerators are stocked with drinks. Filled fruit baskets crowd the kitchen counters. Vanity throw pillows themed with Star Wars and vintage gaming consoles scatter across mismatched furniture. Skateboard decks with Duo logos dangle from a few of the walls. Board games lean on shelves along with books like the Wu-Tang Manual. People with headphones look up as you pass their standing desks, and huddle rooms line the halls, filled with furrowed brows and grins.

These casual Duo digs disguise the unicorn hidden inside.

Because a unicorn earns its nickname as a privately held company worth more than $1 billion, this cybersecurity company counts as a double unicorn: Duo sold late last year for $2.35 billion. That’s billion with a “b,” for a business built in Michigan by two LSA alumni. Duo is a unicorn made even more magical for having emerged out of the Midwest, its main hub in a small-ish town of 120,000 people, one of fewer than 150 unicorns in the entire United States.

Duo specializes in making digital security effective and easy, offering convenient methods to securely log into networks on and through computers and mobile devices. Duo mediates half a billion logins per month for about 14,000 customers, including Facebook, Yelp, Paramount Pictures, Twitter, and U-M. After logging you in, Duo gets out of the way so you can do your work. “Our business fundamentally builds trust, so people can do what they’re supposed to do,” co-founder Dug Song (B.S. 1997) says. 

Duo became an incredibly successful security company in part by adhering to values besides the bottom line, such as inclusion and community. But before they knew where they would end up, the founders first rolled out their startup.

Unicorns and Owls

If you applied to work at Duo in the early days, you had to learn to draw an owl. 

Applications posed this prompt: Share a picture of a badass owl. Co-founder Jon Oberheide (B.S. ’06, M.S. Engineering ’08, Ph.D. Engineering ’12) knew someone was right for the position if they gamely improvised a hand-crafted attack owl; he’d dock them if they copied and pasted any old image plucked from a Google image search. 

A classic joke on the internet shows the two-step process for drawing an owl: Step 1. Draw two circles to approximate the body shape of the animal. Step 2. Just go ahead and draw the rest of the freaking owl in painstaking detail. When Duo started as a small company, all employees had to fill all roles. The silly owl tutorial demonstrated as much: First, understand the basics of the work, the company culture, and the mission. Then, go and figure out how to fill in all the rest of the details to create an impossibly beautiful end product. 

In the middle of a traditionally scary and unwelcoming industry, co-founders Song and Oberheide created an accessible company that customers and employees love to love. Duo’s net promoter score, a measure of customer feedback, rivals major tech companies like Apple. Literally all recent Duo interns rate their experience at the company as a ten out of ten. And since its humble beginnings, Duo has checked in regularly with the team through company surveys; employment websites show consistent positive feedback from hundreds of current and former employees. 

At work, they’ve created an atmosphere of acceptance and aligned values, hiring for cultural contribution instead of cultural fit. At national conferences, Duo regularly sponsors inclusive events that celebrate women coders and queer programmers. 

“You can follow the same recipes that other companies have taken, just as a cookie-cutter approach,” says Oberheide, “but you’re only going to be as successful as those organizations. We intentionally took different paths to success. 

“We were optimistic that it would be successful, but we were also just trying to do something that was very different in the security industry,” Oberheide continues. “Not only solving the right problems with our technology, but building a different kind of company, in the way that we communicate and the way that we market and sell our technology.” 

“We work very hard to think about how we align individual incentives toward the organizational outcomes that we want to achieve,” adds Song. 

In other words, he says, “If you’re building teams or doing joint research, you don’t really get to tell people what to do. If they want to join a shared journey that we’re on, with some larger purpose and mission — which in Duo’s case is to protect others from harm — then what they want to do can contribute to and develop their careers.” 

 

Being punk doesn’t mean that Dug Song (B.S. 1997) can’t start a successful tech business, living and working by the mantras “be kinder than necessary” and “assume positive intent.”


Song learned how to collaborate while cutting his teeth on open-source projects as one person on a team of many autonomous, impassioned volunteers. Hanging out in hacking communities as a youngster, he learned from the “general spirit of a true collaboration of peers, because that’s what the internet was, and that’s what a lot of the hacking community is,” he says. 

Song and Oberheide first met when, as the chief security architect at a company called Arbor Networks, Song caught the younger Oberheide hacking into the company’s system. Song admired Oberheide’s spunk and hired the high schooler for his hacking skills.

Since then, Oberheide has chalked up more exploits, which have resulted, for example, in a ban from making any purchases through Google; stern phone calls from detectives in the Ann Arbor Police Department; and free candy bars from a vulnerable vending machine. 

Department of Yes  

As an LSA student studying computer science, Oberheide loved the classes he took for his liberal arts degree. “I had a psych class about brain chemistry and everything behind what drives human psychology,” he says. “It was like trying to understand how a different computer works — the computer in your head.”

After undergrad, Oberheide had a choice: “Do I go and work full time at a company like Arbor Networks, or do I go into the Ph.D. program?” Either way, he would be working with entrepreneur-minded Engineering Professor Farnam Jahanian, who both led a lab at U-M and ran Arbor Networks. 

Oberheide chose the research track. He ended up working with graduate student colleagues who went on to form other hugely successful tech companies. “We didn’t want to just do some research and then publish it,” Oberheide says. “We wanted to build technology and deploy it — to see it in real life.”

As for Song, “My other hobbies tend to be things without too many rules or regulations,” he says, citing skateboarding, graffiti, hacking, and punk rock. “Those kinds of activities attract certain types of folks that are a little bit more transgressive, and more diverse because of that —  folks who find the edges to be more interesting.” 

After working together at Arbor Networks, and as Oberheide worked on his Ph.D., the two searched for ways to collaborate again. But the projects Song suggested, such as internet television company Zattoo, didn’t appeal to Oberheide.

Eventually, the timing was right. Oberheide graduated, and Song was ready to build something new. Together, they ended up building Duo. 

Both co-founders brought their computer science expertise to the company, but, Oberheide insists, “The technology that has traditionally been used to solve these problems was invented in 1985 and really hasn’t changed for 30 years. 

“The what we are doing is not anything new — it’s how we’re designing it, how we’re delivering it, and how we’re building security for people, rather than for machines,” Oberheide says. More than technical solutions, Duo brings better design to the interface of humans and technology. 

 

Jon Oberheide (B.S. ‘06) has a longtime interest and formal research background in offensive security research, which means that he’s made a habit of “exploring systems around us and finding unique ways to break them.”


Instead of defaulting to what Oberheide calls a “Department of No,” which might involve guarding a perimeter to keep threats out, Duo helps create an environment of trust that brings good users in. “Let your people use the devices they love and the apps that make them productive, but in a safe way,” says Oberheide. “Otherwise, if they have to jump through 20 hoops to share a file, they’ll just use some app that’s not secure. 

“Organizations can focus on building a paved path for their employees, to make it easy to do the right thing. And then if they start doing the wrong thing, they have some guard rails and friction.” 

All Up in Your Business 

Figuring out frictionless solutions as a business is where Oberheide and Song see the biggest return on their liberal arts background. They talk about designers at Duo, some of whom delve into user research and do the “anthropology of security with communities that we serve.” Because the design has as much importance as the tech, Duo hires one designer for every five engineers at the company — a huge ratio compared to the 1:30 or even 1:200 engineer-heavy ratios at other organizations. 

“But I think so much of what we do in life, including the humanities, is a kind of engineering,” Song says. “We’re engineering different outcomes and effecting change in society through what we do. And that’s where I feel like my own education in the liberal arts is probably some of the most useful and grounding in the business of company-building, versus product-building.

“We’ve done a great job building product and technology,” Song continues. “But just as much, I think we’ve hopefully done a very good job in building a better kind of company as well.” 

Duo now has more than 700 employees with hubs in San Francisco, Austin, Detroit, and London. To this day, the co-founders still meet with new hires to demo the owl cartoon, but they’ve turned their attention to more fundamental questions, too. “Dug and I focus a lot on why we started the company, why Duo exists as an organization, and what we’re trying to achieve as a company for our customers, for the market, and for the communities we operate in,” Oberheide says. 

Beyond Duo, they’re interested in modeling a pay-it-forward culture that can nurture other area startups and benefit the Ann Arbor community generally. 

“It’s just sort of the way we have always operated,” says Song. “Even when we started the company in the Tech Brewery, there was a community of startups that we were able to draw upon and draw from. Just the detritus and the life cycle of startups growing, dying, becoming part of the soil again, and feeding what does survive. We’ve brought into Duo a number of folks who were part of some of those companies. 

“I guess we’re something special, in terms of a large exit,” Song admits about the recent sky-high sale of the company, “but there’s tremendous depth to the community that exists in Ann Arbor. There’s a heritage of ideas and organizations here, and Duo is part of that long lineage of people, programs, groups, ideas, and companies. 

“It’s like every few years, people say, ‘Oh, now there’s tech in Ann Arbor.’” Song throws up his hands. “And I’m like, ‘There’s always been tech here!’” 

 

 

Illustrations by Jeremy Wheeler

 

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Release Date: 04/25/2018
Category: Alumni
Tags: Residential College; LSA Magazine; Elizabeth Wason; Social Sciences