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Passwords, the last line of defense against malicious intruders to a computer network. When all else has failed and a hacker sits perilously over an employee’s desk at 3AM in the morning, little stands in his way from glancing over at a sticky note on the monitor, and running off with all your precious data. Ok, perhaps that’s a bit of a stretch, but passwords are a major problem for large corporations, especially ones where passwords must be rotated every few weeks or months. Enter Passfaces, a small company out of Annapolis, that replaces the traditional password system with a series of faces. A user has a set of five faces assigned to him or her that must be memorized, and logging on is as simple as selecting the faces they recognize from a grid of other random and unfamiliar faces.

The gift for remembering a face is an evolutionary trait that we use every day and often take for granted. Consider that time you bumped into an old junior-high classmate on the street and easily recognized him–even though the last time you’d seen him was many years (and perhaps many pounds) before. Or think about those identical twins you always manage to tell apart.

Davies, the Welsh inventor, launched Passfaces in March 2000, right in the teeth of the dot-com crunch. “Not the most auspicious time for a startup,” says CEO Paul Barrett, who has been with the company from the beginning. (Today Davies serves on the board of advisors.) “We downsized and went into hibernation,” scaling back from 12 employees to three.

Since then the company has rebounded strongly, to almost $3 million in annual revenue. Barrett can’t talk much about the U.S. Senate deal or other customers, but he says Passfaces expects to announce several new clients in the coming months, as well as another round of financing.

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