Coating Metal and Stopping Hackers

Steve Melito: Welcome to New York State Manufacturing Now the podcast and video series that’s powered by FuzeHub. I’m your host, Steve Melito. We’re here with my old friend, tom Basile from Square One Coating. How are you, tom? Doing great, doing great, tom’s been on the podcast before out in Herkimer at our annual June event, and today we’re in Syracuse. And well, just in case you didn’t see that podcast, what does Square One Coating Systems do?Tom Basile: Basically we’re a metal finishing firm. We have all types of different coatings zinc, silver, gold, tin, copper, anodized conversion coatings, all sorts like that. We now do paint, also military paint, some of that. You’re a successful New York State manufacturer. Yes, when we met FuzeHub, we had three employees, okay, and Everton came over to visit us. I remember that still and even though we were small, he found us some assistance and aid on some programs and then over the years Steve himself helped us tremendously. He lined me up with our biggest customer and it’s growing even further now.

Steve Melito: Well, it’s nice to hear that, Tom, thank you, and to Square One’s credit, you come to events. You reach out to us when you need assistance yes, definitely the events.

Tom Basile: We’ve made a lot of connections, the events. I gotta say I have three customers here today at this event right now, and they’re smaller but still we connect, they help us connect to other people they do business with and it’s worked out very well with the three that are here.

Steve Melito: So good, good the time. One of the things that square one coats. They’re called bus bars. I wonder if you could tell us about what they are, what you do and why people should come and find you if they need to have their bus bars bus bars are basically electrical connection system.

Tom Basile: It’s a copper piece. First. We put nickel and silver on it because silver is very conductive and it’s used in a wide variety of electrical applications. We do it for various customers. We have a very large one that’s the one Steve found us that right now is probably gonna double in size and production in the next three months. That’s how fast it’s growing. And then we do. I can mention this customer named GE. We do stuff for them, the same processes, but they’re for big, huge generator systems. Ge has got a huge contract on generators and we’re a part of it, so we’re thrilled about that.

Steve Melito: That’s fantastic. And so, Tom, you mentioned that when you first heard of U-Sub, Square One had three employees.

Tom Basile: We had three employees. Yeah, how many do you have now? 52. 52, and did you add on to the building recently? We’ve now up to 30,000 square feet. We doubled in size, okay. And just the other day in the management meeting, Lloyd discussed putting another addition on. Our biggest bus bar company is asking us to go larger bus bars, larger, okay. So biggest bus bar company is asking us to go larger bus bars. Right now it’s four foot roughly.

Steve Melito: They want us to go 12 foot and Lloyd Ploof. He’s also on the FuzeHub board. Great guy owner of the company.

Tom Basile: Yes, yeah, Lloyd’s done a great job with his innovative how he wants to develop a company. He’s created a company based on service first. It’s not quality. It is always automatic, but his thing is you’ve got to have the service behind it.

Steve Melito: And how do you do that? Like everyone talks about having good service, but what do you do concretely in your industry to deliver on that promise?

Tom Basile: You look at your customer’s needs as far as how fast can you do certain tasks like quoting? Everybody wants it as fast as possible, because everything’s a rush right now with the military applications that we do also yeah so quote, he’s got me done very quickly. We also had to have quick delivery. Okay, quality again is automatic. You have to give quality no matter what and pricing also has got to be competitive. But well, it’s pretty good at all that Lloyd does a lot of the quoting for the company still, and when I call I do the follow-ups and they say, yeah, we’re very competitive and I’d say 99% of the feedback I get is always very positive, so I’m happy to see that.

Steve Melito: Good, that’s a great thing, and they get ahold of you by phone or email. They’re not going across time zone, continents, all those things.

Tom Basile: Right. My customers actually call me directly on my cell phone. That’s what they’ll do, a lot of them, and typically Lloyd’s philosophy is if it’s an emergency, get out there. Now that’s few and far, thank God, but we do strive on meeting our customers as much as possible and giving them the service they want, and I’m also probably friends with most of my customers now.

Steve Melito: And you still make sales calls the old-fashioned way. You actually go knock on doors, right, I do it periodically.

Tom Basile: I call, I have very good relationships with all my customers, but I still will stop. If I’m in a sales call at a customer and I’m in a business park, I’ll look to see what else is there and then do some background check quick, drop off our literature and go from there and that’s served you well over the years for sure. Yes, our sales have basically almost doubled in the last two years or better.

Steve Melito: Doubled in the last two years. So this is why Lloyd’s not going to let you retire.

Tom Basile: No, he won’t let me retire. I can see why. It’s going to make work till I’m 90, though just kidding. No, we enjoy what we do. That’s part of it. If you don’t enjoy it, you don’t want to stay. But we both enjoy what we do, and so does most of our management team. They’re very good at what they do and they enjoy their jobs. We’ve got a very positive management group, so that helps a lot.

Steve Melito: Nice people.

Tom Basile: Tom, thanks for being on New York State Manufacturing Now. Thank you.

Steve Melito: Hey everybody, welcome back to New York State Manufacturing Now the podcast and now video series. That back to New York State Manufacturing Now, the podcast and now video series that’s powered by FuzeHub. I’m your host, Steve Melito. We’re here on day two of the New York State Innovation Summit. I’m here with Geoff Halstread from Faction Networking. Geoff, how are you?

Steve Melito: It’s been fantastic.

Geoff Halstread: Yeah, my co-founder’s from Silicon Valley, San Jose, I’m from the East Coast and when we came out here the first year, really last year, to FuzeHub, it really changed the course of our company. We were more focused on the consumer kind of VPN market and then we saw what you had here and we also kind of talked to a lot of manufacturers and kind of realized there was really a crying need in the market in this area where, you know, because of you saw, because of this innovation ecosystem ability to reach these customers really felt that that was the formula that we could be successful with and really have a much bigger impact with our sure, sure.

Steve Melito: So tell me about faction networks, the business. When did you get started? Who’s involved, how long you been around? What’s coming up next?

Geoff Halstread: Yeah. So, yeah, the depends what date you’re counting. But I’d say we first threw a little bit of you know money into the pot back in March of last year, started developing. We kind of got to the end of the year we had finished the platform and then, you know, realize again, partly because of being a few sub, you know. We said, oh, we want you know, we, you know me, my finished the platform and then realized again, partly because of being at FuzeHub, we said, oh, we don’t, me and my co-founders have a few gray hairs. We’ve been through this a few times. We said, you know, before we go to market we’re going to take a deeper look at this whole business segment and where we can best serve customers. So we spent about three or four solid months, did some events with you, really talked to a lot of potential customers, felt like we understood now really our customer, how to get to market, and then we started to move back into raising capital to kind of finish the product. Along that path we discovered this fantastic program up in Rome, new York, called the Orion Assured Program. And that is a program. It’s an Air Force research lab program with two private partners, quatrain and AIS, and specifically its mandate is to vet cyber security technologies focused on IOT, industry 4.0, smart cities, uas, how to protect all these devices and systems right For accelerated adoption to the US Air Force, but also all of DoD as well, as really kind of giving things a stamp of approval almost like an underwriter’s lab for commercial. Because I think their vision’s the same as ours is that we’ve reached a stage with the internet where you need military-grade zero-trust security for everybody. Like it is when this thing breaks out with the kind of new age of hot cyber wars we’re entering, right, they’re going to come after your businesses and everything else, not really the military. So much, right, so, and the military’s been hardening itself for at least a decade, but that’s not happened at all in the civilian sector.

Steve Melito: This is true. This is true. Let’s talk about your technology. You mentioned protection. My understanding is the way that you protect is by taking devices off. The internet Is that, right?

Geoff Halstread: Yeah, so what we call ourselves zero trust for the rest of us, right? So the quick story is look, about a decade and a half ago, pretty much everybody in cybersecurity came to this one resounding conclusion that VPNs and firewalls, which were the dominant way of trying to protect ourselves from internet threats, were fundamentally, incurably, architecturally vulnerable, not suited to the way the internet evolved, and said okay, we have to do something about this. They came up with something called zero trust networking. That was a step forward. Last decade, a whole bunch of unicorns were minted out of Silicon Valley. Two problems one was okay, the only companies using this are enterprises, because it’s so damn complicated and expensive. And even in enterprises, they’re only using it at the top levels, right? So basically, the rest of the enterprise is still behind a VPN or a firewall. And then second was that they still they’re not really zero trust. They trust the cloud, they trust themselves, and we have now enough evidence to know that you cannot trust the cloud. You cannot build an architecture security based on any trust in the cloud. You have to basically assume that will be compromised. You have to assume your own company will be compromised. And that’s where we started with. Faction was okay. We’re going to start with those assumptions because that’s what we’ve seen. That’s what’s happening. Nobody else wants to talk about it, but that’s what’s actually real. That’s what we face now. The internet, cloud-based things it’s not. The cloud is bad. The cloud is good it’s good for reliability, robustness, so on is a terrible security architecture. So we’ve got to go back to how we network, and that’s what Faction Networks did was okay. Let’s create true zero trust networks that have no exposure to cloud, no exposure to us. When you create a Faction Network, you create a network with your own keys. Even we don’t have visibility into it. We can orchestrate it, but you create it, you control it yourself. So that’s the foundation, with Zero Trust Networking. Then we can talk about other things we added from there.

Steve Melito: Yeah, so part of your product is. I’m going to call it a box, you call it a pod, it’s a hardware device. Do you think you’ll make any part of that in New York State?

Geoff Halstread: Yeah, so I was talking about our zero trust journey. We kind of I guess we’re the fanatics you want to call us that but we said we’re going to take zero trust seriously and it’s slowest down coming to the market. But we kind of got to the final frontier where we said wait, what about your open source software? So we were taking off the shelf sources. We have found three manufacturers that don’t actually make routers in China, which is a huge problem I’ll come back to. But okay, we found one in Lithuania, one in Texas and one in Taiwan. But the problem is that every time I look on the TV I see warships circling Taiwan with their live fire drills about their invasion, right. So supply chain security here is a real issue, right, it’s not like some theoretical thing. And yeah, we got to the point where we said, okay, if we’re going to be the true zero trust guys, we got to take ownership of hardware. All your software is useless, right, it’s worthless if the hardware is compromised, and that’s what we’re facing today. Over 90% of our routers are manufactured in China, including the chips. And again, literally they are coming back door. I’ll talk about a study we just completed with Ladies Center. But literally you must assume again, that hardware is compromised. So all that zero trust security everybody’s selling is worthless, right. So we got to that point where we said, okay, if we’re going to do this, we got. You know, we’re not a manufacturer, but what we can do is go find some manufacturers that understand this, see the opportunity, and that’s what we’ve found.
We’ve got a manufacturing partner right here in central New York. Good, we’ll be in a position by Q3, q4 2025 to make everything here, including the chips, by the way, because Global Foundries who got a billion and a half dollars from Go Semi. They make exactly the kinds of chips that are needed. They just don’t make right now the exact chips, so they can darn well start making them, because this is a national security issue, right? So yes, we’re trying to be in a position so by the end of next year, to have everything made in America, full supply chain, orion assured through the leading cybersecurity lab in the country, and then adding our proprietary Zero Trust technology inside, so we can really create the gold standard in a way that enables. Yeah, finally, and I think the key thing about FactionWise is, focus on ease of use. So that’s actually something an average user. Small business can deploy themselves and use and protect themselves.

Steve Melito: So you don’t have to be a big defense contractor. You can be a small to medium manufacturer.

Geoff Halstread: I mean that is our core focus Now. The good news is that we’re finding a great path to contracts in defense and government, because ease of use is ease of use.

Steve Melito: Everybody needs cybersecurity.

Geoff Halstread: Everybody needs a better level of zero trust. But yes, on the most part at the high end of DOD, you know, at great expense and a lot more complexity they have kind of protected themselves. Same thing enterprises, but the gap in the market is everybody else. There is nothing available below this kind of thousand to maybe top end 500 person company tier that people that can have and use zero trust security. It’s too expensive and too complicated.

Steve Melito: Right, so let’s talk about hardware some more. You shared a story it was in the news about how the Israelis essentially took out Hezbollah leadership on pagers. Are there any lessons there?

Geoff Halstread: Yeah, so I guess the way I spoke about that was that’s a perfect, very visceral illustration of supply chain risk, right? I mean, that is like you need to understand. That’s what we’re talking about Now. I don’t think there’ll be exploding routers I can’t guarantee there won’t be but I do think that the cyber equivalent is what we all need to be worried about. And literally we just so we took five Chinese-made top popular brand routers and we apply a software process to turn them into what we call pod, which is this router, but it could only connect to one network in the world your faction network, right, but that was more testing software process. Da, da, da da. But we said, of course we’re not going to use these. We found other sources, but we sent those routers then to the Leahy Center in Burlington, which does a chip off analysis for the FBI Secret Service NSA? They’re always looking at consumer devices to understand what’s underneath there. I just got the report back three days ago and all of those routers all of them had over 60 CVEs critical vulnerabilities. Three of them had at least seven that were what we call level nine or 10, so remotely exploitable. So that means it doesn’t matter. Again, it doesn’t matter what software you have on top Underneath you in the chipset, in the board. You have remotely exploitable vulnerabilities, right. And so everybody should be paying attention to this. Because the other thing about these chips is that you know chips are reproduced, right. So if you talk about what goes in an enterprise router, they don’t remake the Wi-Fi chip for a 5,000 production run. They go buy that off the market. So we haven’t done the research yet, but we’re following up with that with the SUNY College of Emergency Preparedness, homeland Security, cybersecurity. We’re going to do a study and find out where else all these chips are being used, but it’s almost certain they’re pervasive throughout most of the business routers in the country. So again, that’s what we’re facing. Is you have to assume that we are backdoor or could be? And that if they come to shut us down, they won’t be there to steal the data. They’ll be there to shut down the routers. They’ll be there to blind us, to knee capper economy. There’ll be no routers available any place else.

Steve Melito: The CHIPS and everything’s made in China.

Geoff Halstread: Can’t replace it. It’ll take months to try to reverse, engineer and fix these things. So again, maybe that’s a worst case scenario and maybe we hope it’ll never happen, right? But we’re just kind of like as a country we can’t be taking this risk, right? And then the flip side of that is that the router edge router market in North America alone is billions of dollars a year. They last every four to five years, right, you have to replace routers because there’s a constant upgrade cycle. So everybody’s already buying routers and they’re just buying them To the tune of billions of dollars a year. They’re just replacing them. They’re currently made in China compromised routers with new, even better, more compromised routers made in China, right, and so it’s not even like there’s not funding. The money is there, people are buying them, and so all we have to do is kind of have the will right and the leadership. You know, certainly some less political. What we’ve been hunting for is kind of demand signals and say hey, show us, you will have buyers. We convince a manufacturer to put together a production line industrialize. You know this process and we can solve this problem. It’s not a hard problem to solve. It just takes a lot of moving parts that are hard to coordinate.

Steve Melito: So where do you think you’ll be in five years? Where do you think the company’s going to be?

Geoff Halstread: Yeah, again, what we see is that there’s no reason we can’t flip that entire captive supply chain of router production made in China to the US. So that’s multiple billions of dollars annually. We’re going to be, I think, the leader. We seem to be the first ones leading the way. Obviously others will follow, but that’ll be a big part of our business and then really, we are also a SaaS software business, right? So it’s a zero trust security for the rest of us. The way we first kind of looked at this market, we thought about it was like Zoom. If you looked at the video conferencing market in 2017, 2018, you never would have believed that there was room for some new entrant. It’s like there was a couple dominant companies, whole bunch of free stuff, Like everybody could use Skype for free, why would you want to buy pay for video conferencing? Well, they just made it better and easier, Sure, sure. And turns out that was like really, you know, a really big market became a really big company and obviously the pandemic came along, kind of transformative. We see certain things similar to that, and then what we’re saying is, hey, we’re just making zero trust security better, easier and actually secure, right, and literally nobody else is. Until you’re willing to own the hardware problem, right, All your zero trust claims are essentially worthless.

Steve Melito: Jeff Hosta, thanks for being on New York State Manufacturing.

Geoff Halstread: All right well thank you, appreciate it. Thanks so much to FuzeHub for all you’ve done.

Steve Melito: Very good, thank you.