In a Red Herring Conference held last week in California, Mitch Ratcliffe’s offers an analytical overview of an interview held with Stratton Scalovs, VerisSign’s CEO.

When asked about the next big trends, Stratton Scalovs says security is the hot topic for 2004:

We watch 10 billion network interactions on our DNS cluster and I can tell you where the viruses are and it is increasing. We’ve moved from low value hacking to concentrated attacks to accomplish theft [of identity and money].

I think the next three years of innovation in technology is about integration, where we take all the boxes we’ve bought and make them work together. We’ve underestimated the power of IP to be an integration point.

On his work advising the Department of Homeland Security, Scalovs said: “We are trying to prepare the country for that inevitable digital 911.” When asked what the attack would look like he says “Did you think someone would fly two planes into the World Trade Center?” This strikes me as a profoundly unrealistic charge—he says we need early warnings, as though there is a realistic chance of throwing us back into the Stone Age. It simply can’t happen. Systems may go down, and the whole Net may be clogged, but the destructive attack he is describing would not be possible in a heterogeneous network—all he is doing is making an argument for diverse open source infrastructures.

There are enough security vendors in this room that make great technology that you can stitch together to protect your network, but it is a simple risk reward calculation. Yes the Net is inherently insecure, and we will create layered solutions and then it is a matter of calculating the risk and return.

When asked how you could write down $14.5 billion and still have your job, Scalovs responded:

When we bought Network Solutions, we did it all for stock at a time when our equity was trading at north of $200 a share. Now it is trading at $17. We gave up 40 percent of the company to acquire an asset that generated 60 percent of our revenue for the past three years. That being said, we did not sell the Network Solutions we bought. We sold the retail storefront, the domain sales front end. We have a back end system, a directory technology, that we kept and has been as a core VeriSign asset.

All the businesses we are in now are recurring services that rely on technology we own for differentiation.

We are growing. If you strip out the retail unit of Network Solutions we just sold we were growing for the past two years. We have managed firewall services that will grow. The second area is new directory services: we’ll be a player in RFID, VoIP, and we route half the calls in North America and will move that to the Internet in the next year.

There are a lot of point competitors in the space, but our largest customers and competitors are the same group, the RBOCs.

A key to VeriSign’s business is being the directory outsourcer for the telephone industry. Four of the carriers have issued RFPs for backbone switching technology. The Vonages of the world have made their stand. The cable guys have said “Hey, I’m a carrier too.” I hope we are more realistic about the growth potential for that business [than in 1999]. But it’s all coming to pass.

Laughs when asked about ICANN…

I’m probably the only CEO in the history of technology to go to the government and ask them to regulate us because we stand today with the Internet as a well-meaning policy that is poorly executed. ICANN was designed at a time that has passed. This is not your grandfather’s Internet. You’ve got to be kidding me that we have volunteers running very important pieces of the addressing and messaging system of that infrastructure. It’s time to stop playing consensus builder and go commercial, like every other industrial revolution.

Asked about the SiteFinder address redirect trick VeriSign rolled out…

A group of “200 technical zealots” were against it and they got all the headlines. Did they misinterpret it? Of course. We’re not going to let this go. It is going to be the point where we answer the debate.

He then goes on to say that we need to move the complexity back into the center of the Net! He says the edge can’t be so complex. Get David Isenberg in here! Ross Mayfield, sitting in front of me, laughs out loud. I am dumbfounded. According to VeriSign, the Net should not be open to any type of application, only applications that rely on single providers of services, like VeriSign. This is troglodyte talk.

He says he’s laying the groundwork to bring SiteFinder back—exactly the consensus building he just condemned. So, the question is, why should he be able to politic and others who do should be labeled zealots?

SiteFinder was a way of monetizing DNS searches. He said eight of ten people clicked the Search box when the correct spelling of the site was in front of them. He says they will find new ways of monetizing DNS that they will talk about in the future.