Capsicum moves to city from suburbs
Computer-detective firm takes advantage of the new Cira Centre
Philadelphia Business Journal - March 17, 2006by Peter Key
Staff Writer

One of the Cira Centre's new tenants is a technology company from the suburbs.

Capsicum LLC last month moved from Berwyn to the shiny new building adjacent to Amtrak's 30th Street Station.

The company specializes in digital forensics, which is the science and art of determining, among other things, what data is or was on a computer, and when and how it got there.

The company specializes in digital forensics, which is the science and art of determining, among other things, what data is or was on a computer, and when and how it got there.

"We're the whodunits," said Sandy Goldstein, Capsicum's president and CEO.

With technology having turned paper trails into electronic ones, Capsicum's specialty has become an in-demand one among investigators and attorneys across the country.

"We're probably involved in 10 of the 30 most prominent investigations in the country," Goldstein said.

Those include the investigation involving Washington lobbyist Jack Abramoff and his one-time partner Michael Scanlon, a former top aide to U.S. Rep Tom DeLay.

Abramoff pleaded guilty in January to federal charges of conspiracy, mail fraud and tax evasion. Scanlon pleaded guilty in November to conspiring to bribe public officials. Both are cooperating with investigators.

Closer to home, the firm is working with a local school whose name it can't reveal to discover how digital files involving sex acts got distributed across campus.

Although Goldstein's background is information technology, he founded Capsicum in 2000 as a department of Philadelphia law firm Pepper Hamilton, which is why the company is named after a genus of pepper plants.

It initially did general computer consulting, but Pepper Hamilton's attorneys kept asking it to do digital forensics work for them.

"We realized there was a real niche out there," Goldstein said.

Pepper Hamilton made Capsicum a subsidiary in 2001 and in 2003 Goldstein purchased it from the law firm with help from an individual and corporate investor, both of which he has since bought out.

When it left Pepper Hamilton, Capsicum had four employees. That's up to 15 and Goldstein intends to increase it to 25 by the end of the year and 50 to 100 over the next four years.

Not all that growth will be at the Cira Centre, where Capsicum occupies 1,800 square feet, which consists of office space and a digital forensics lab. The company has offices in New York, Chicago and Washington, D.C., and Goldstein envisions it having an office in every city with a major federal jurisdiction east of the Mississippi.

Digital forensics and related services to law firms, such as discovery and providing expert testimony, makes up about 60 percent of Capsicum's revenue, which Goldstein won't disclose. About 30 percent comes from small businesses, for which Capsicum acts as sort of an outsourced information-technology department.

The remaining 10 percent comes from consulting on data protection, doing regulatory risk assessments, and similar things. Goldstein sees that growing to about a third of Capsicum's revenue in the next two years.

Even if that happens, Capsicum will still be best known for its digital forensics work. Goldstein said there are only about six firms comparable to Capsicum in the United States, with about 25 or so one- or two-person shops that specialize in the field.

"There are a lot of firms in other industries that purport to do this," he said, "but they really don't."

Capsicum's move to the Cira Centre was spurred by a desire to be closer to both its Philadelphia law-firm clients and easy transportation to its Washington law-firm clients, although Goldstein said the tax breaks that come from being a tenant in the building were a factor.

The Cira Centre was designated a Keystone Opportunity Zone by the state, and opponents of the designation were afraid it would just cause Center City tenants to move to the building rather than attract tenants from elsewhere.

About 60 percent of the building's 694,000 square feet of office space is rented to tenants previously situated in Center City. A little more than 80 percent is rented to companies previously located in Pennsylvania.

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