Destroying Information is Company’s Specialty

Digital Data Destruction Services Inc. — also known as D3 — specializes in rendering its clients’ data completely irretrievable.

Roger Hutchison, D3’s president and CEO, said his company is one of a handful in the nation equipped to confidently promise that the data it handles will never again see the light of day. The techniques and equipment used in Iron River were first developed by Hutchison and others to meet the needs of the U.S. Department of Defense’s classified military community. 

Digital Data Destruction Assistant Manager Joe Lendabarker III listens as general manager Michael Martino explains the data destruction process at the company’s Iron River, Wis., facility Tuesday. [CLINT AUSTIN/NEWS TRIBUNE]

Where many others had been content to shred or dimple unwanted CDs, security-conscious government agencies demanded more thorough destruction of the sensitive data they contained.

Hutchison pointed out that a 1-square-millimeter standard CD scrap can contain 70,000 bytes of information.

Even a CD fragment the size of a period can contain the equivalent amount of data you could reasonably fit on 50 standard pages of paper, according to Michael Martino, D3’s general manager in Iron River.

The classified military community has required the destruction of CD-ROMs’ data-bearing layer to a size of no more than 250 microns. A micron is one thousandth of a millimeter.

D3 exceeds this standard by using proprietary machines Hutchison first developed for government use to physically grind off all data from the surface of CDs it processes. The resulting dust is then captured in a vacuum system and recycled. Once the data-bearing layer has been removed, all that’s left of the CD is a clear polycarbonate disk with high value as a recyclable material.

RECYCLING BY THE TON

Hutchison said that all the materials D3 handles are recycled. Nothing goes to the landfill. Among the valuable materials recovered at the facility are polycarbonate, nickel, aluminum, platinum and palladium.

D3 recycles about 10 tons of material per week, by Hutchison’s estimate.

“We didn’t initially start recycling because we thought it was going to be a cash cow. We did it because it was the right thing to do. But we’re making good money from recycling now,” he said.

D3 is so sure of the effectiveness of its techniques that it guarantees data destruction.

“We offer $6 million of liability protection per piece of media we handle,” said Hutchison. “No one else in the nation does that.”

Kara Foat, a computer desktop support supervisor for SMDC Health System in Duluth, said her employer also looked at other data-destruction services in Chicago and the Twin Cities before settling on D3 as its preferred provider in September.

“It’s extremely important to us that we handle patient and company information carefully. We take that information very seriously,” she said.

Foat said she was impressed by the thoroughness of D3’s system.

“We don’t have to worry when they’re done with their work,” she said, observing: “You can’t take a speck of dust and retrieve data from it — at least not yet.”

The problem with dimpling machines and overwrite programs is that they obscure but don’t entirely destroy the data stored on CD-ROMs. Hutchison said much of this data still can be recovered by a determined thief.

SPECIALIZED EQUIPMENT

D3 also handles hard drives. The first order of business is to run hard drive platters through a degausser — a piece of machinery that uses powerful electromagnets to erase data. The $14,000 piece of equipment used by D3 relies on special “rare-earth magnets” available only from one quarry in China.

Hutchison said these platters can then be melted down to remove constituent metals from them.

For D3, data destruction is an expensive business. Hutchison estimates that he has $500,000 worth of equipment installed in the Iron River plant.

The Northwest Regional Planning Commission helped D3 with its startup costs, making a $200,000 equity investment in the company through the Wisconsin Rural Enterprise Fund. The commission also provided the company with loans totaling about $600,000. About half of that has already been repaid.

It was the commission’s willingness to provide financial support to the company that in 2004 brought D3 to an unlikely destination — Iron River, a town of about 1,000 residents.

The company started with two employees but now has 12 full-timers on staff. During busy periods, D3 brings on as many as eight additional employees, and Hutchison expects the business will need a full-time staff of 20 by the end of this year to keep pace with demand.

Hutchison said Iron River provides an advantageous low-overhead setting. The company draws its business from around the nation, and the plant’s central location also keeps shipping costs reasonable.

Although Hutchison declined to share revenues or earnings figures about the privately held firm, he described D3 as a “highly profitable” business. In the three years since its inception, Hutchison said both the company’s revenue and its net income have climbed 800 percent.

HIGH TECH IN RURAL SETTING

“We consider D3 a huge success story,” said Myron Schuster, executive director of the Northwest Regional Planning Commission.

“When I first started talking about bringing technology-based companies to rural Wisconsin, a lot of people said it couldn’t be done. But D3 has shown that it can be done, and it can be done very successfully,” Schuster said.

Hutchison credits Schuster and the Northwest Regional Planning Commission for recognizing D3’s potential. He noted that he unsuccessfully sought support for his startup company from several other community investment groups in the Upper Midwest, including one in Duluth.

Despite its solid growth to date, Hutchison believes D3 is only beginning to break stride.

He pointed out that about 500 million hard drives and 27 billion CD-ROMs were produced last year. If D3 captures only a sliver of the end-of-life digital data market, the business could grow dramatically.

Interest in such solutions is intensifying as people become more aware of the dangers of failing to properly handle data, according to Russ Poe, vice president of DestructData, a Melrose, Mass., seller of data destruction equipment, including machines made by D3. The repercussions of failing to properly tend to data can include legal penalties and painful financial losses.

A computer breach at TJX Cos., parent company of TJ Maxx, allowed hackers to steal more than 45 million customer credit card and debit card numbers, resulting in a financial loss of more than $250 million.

Poe said such high-profile cases have grabbed the attention of business leaders. Since 2005, the personal and/or financial data of more than 215 million Americans has been exposed as a result of security breaches, according to the Privacy Rights Clearinghouse.