Security heavyweight McAfee has agreed to acquire network firewall business Stonesoft for $389 million in cash, the company announced today.

Helsinki, Finland-based Stonesoft offers a portfolio of firewalls, SSL VPN solutions, and prevention systems that are suitable to help both small and large businesses. It has more than 6,500 customers worldwide.

McAfee is most interested in Stonesoft’s next-gen firewall technology, and it’s saying that combining Stonesoft’s offerings with its own cloud-based Global Threat Intelligence service will give its customers even better network security.

“With the pending addition of Stonesoft’s products and services, McAfee is making a significant investment in next-generation firewall technology,” McAfee President Michael DeCesare said in a statement. “These solutions anticipate emerging customer needs in a continually evolving threat landscape. … We plan to integrate Stonesoft’s offerings with other McAfee products to realize the power of McAfee’s Security Connected strategy.”

Pile of money via HamsterMan/Shutterstock

Ted Schlein, investor with Kleiner Perkins Caufield and Byers, built one of the first anti-virus products at Symantec. Today, he says the likes of Symantec and McAfee will run out of gas if they don’t get rid of their anti-virus divisions.

“They will either need to realize their core anti-virus business is going away and make massive shifts, or they will continue to lose market share,” said Schlein at the RSA Conference in San Francisco this week. “You’ve got to change with the times. You can’t be static in security,” he said.

The security community is starting to look down on anti-virus technology simply because such tools don’t get any better until you get hacked. Traditionally, anti-virus software looks at digital signatures to determine whether or not the file entering your system is malware or safe. But it only learns that bad signature if it has seen it. Any new pieces of malware slip in under the radar.

Companies like Symantec and McAfee are running the risk of becoming irrelevant if they don’t change course. Both companies dabble in mobile security and are trying to figure out the answer to the bring-your-own-device (BYOD) trend. But Symantec, as Schlein noted, has more pressure to pivot than McAfee, which is owned by Intel. In the end, Intel can decide what to do with McAfee’s technology — and employees — whereas Symantec is still independent.

Other companies have tried behavioral anti-virus techniques, or studying the typical actions a piece of malware performs to stay relevant. For the most part, however, the overall anti-virus market seems to be slowly becoming the kid no one wants to play with.

“I believe security has to be done from the inside out, not outside in,” said Schlein.

He also said we should do away with firewalls. In fact, he won’t invest in any. Instead, he said, we should focus on protecting the information on the inside of the system — care less about what gets into our systems and more about stopping it from executing once it’s there.

This is especially important in the days of automated attacks, which Schlein said are some of the scariest threats in the industry today.

Botnets are able to storm your system, they’re cheap to use, and they don’t require much heavy lifting on the criminal’s part. Botnets are a huge threat because they let hackers be fast and more economical in attacks, say against banks, that could lead to big financial gains.

Schlein suggests the industry forget about firewalls and instead build “botwalls” that don’t try to keep the bots at bay but instead break them down once they’re on the inside.

“A botwall will be able to figure out these automated attacks,” he explained. “You need to look at these automated bots and how they work. You’re not trying to stop a bot from executing, you’re trying to stop a bot from being successful.”

Image via Meghan Kelly/VentureBeat

This was a good morning for Palo Alto Networks. The security company went public today, with shares jumping 31 percent from its Thursday-priced $42 a share.

The company debuted at $52.20 a share on the New York Stock Exchange under the ticker symbol PANW. Thursday night, Palo Alto Networks decided to price $2 above its originally intended range of $37-$40, which was already bumped up from the $34-$37 range announced earlier this month. It offered 6.2 million shares and made around $260 million from the sale.

The stock was trading at $55.53 at the time of this article and hit a high of $62.07 today.

Palo Alto Networks sells a number of security products for the enterprise, with a smart firewall product at the helm. The firewall is smart because it can be told to keep out only certain pieces of information within an application. That is, most firewalls will block an application completely if the company does not allow its employees to use it. Many companies have apps such as Facebook and Dropbox blocked, but employees are starting to use these apps to be more productive at work. In order to facilitate that productivity, Palo Alto Networks’ firewall lets companies block only parts of an application, such as the chat function in Facebook.

This is a big IPO for the security community — and the tech community overall. It’s one of the first, alongside travel company Kayak (which jumped 14 percent this morning) to go public since Facebook’s IPO that effectively soured the market. It’s unclear whether the “Facebook Effect” is now over, but the tech community is undoubtedly feeling the love this morning.

Palo Alto Networks has otherwise paved the way for cloud security company Qualys to debut later this year. The computer security industry is much more visible now that hacktivists and cyber attacks are making the mainstream news. We can only expect the industry to get bigger, with more IPOs like this one.

Today’s younger generation suffers from “continuous partial attention,” Symantec chief executive Enrique Salem said at a security conference today. And it’s going to take a new kind of firewall to protect us, he said; one that doesn’t just pay attention to what’s coming in, but what’s going out.

Salem is specifically concerned about protecting today’s “digital natives,” or individuals born after 1990, who have never experienced a time without smartphones. To leave home without a connected device for this generation is like leaving home without your wallet for the previous generation. They turn to YouTube and social networks for answers and will quickly take this method of problem solving into the workplace.

“Most digital natives don’t think about identity and security like we do; their identities are free and open,” Salem said, speaking on stage at the RSA conference in San Francisco. “The way they work, we can’t stop it.”

Enter the next generation firewall. For Salem, this will be a piece of software that looks at every piece of information leaving the company’s system. It will know who accessed the information, when it was accessed, where it went, and will report these details back to administrators. The software will have to look at each file, determining what it is, and whether or not that user is allowed to have it. It’s protecting a company’s trade secrets from the inside, as opposed to defending against the outside.

“You and I know what I just described is not an easy task,” said Salem. “[But] we need to reduce administrative burden.”

Some companies fear the mobile and social world, and have adopted “lock down” mindsets — blocking off all kinds of social communication in order to protect what is inside. But this method is insufficient. Digital natives always seem to find a way to connect. Facebook chief security officer Joe Sullivan recalled an elementary school, which blocked all chat functions in its facilities. A class of fourth graders decided to use a “collaborative document” — probably a Google Doc — that had a built-in chat feature. It was a double whammy. Not only did they look like they were doing work, but all the students were in one doc having an instant message conversation under the noses of the school board.

While ingenious, this still poses a problem. Digital natives don’t think of how easily accessible their content is, or realize that a shared document is just that: a shared document.

“Security for us, the digital immigrants, we grew up in the Wild West of the Internet. We learned about carrying our own guns,” said Sullivan at RSA.

Because of this, Salem calls digital natives the “sledgehammer” of change. The task of building technology such as reverse-firewall, while difficult now, will never truly be a finished product either. Salesforce chief executive Marc Benioff explained it as companies learning to become completely new organizations to address new and evolving threats in cyber space.

“We’re holding it all together, but it’s a highly dynamic and rapidly changing environment,” said Benioff at RSA. “There’s no finish line when it comes to security.”