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His daughter was worried about being spied on so a CEO made a device to protect the home from hacking

When Yossi Atias came home one day a couple of years ago, he saw his daughter using her laptop but the camera had been covered with a Band-Aid.

"Why did you put in on I asked her? She told me that father of one of her classmates is a cybersecurity expert who gave them tips on how to be safe. When it came to the camera, he said the only way to know someone isn't watching you is to cover the camera," Atias told CNBC in a recent interview by phone.

"Then it hit me. We have a lot of internet-connected stuff at home, and it's really not a solution to put bandaids on all my devices."

The incident sparked the idea for Dojo, a tiny device aimed at protecting so-called Internet of Things (IOT) devices. Atias founded the firm, Dojo Labs, in 2015 in Israel. It was acquired last year by security firm BullGuard with Atias staying on as CEO of Dojo Labs.

The Dojo is a pebble-sized device that connects to a Wi-Fi router and detects any threats.
BullGuard
The Dojo is a pebble-sized device that connects to a Wi-Fi router and detects any threats.

Flaws in connected devices pose a number of issues. The recent Wikileaks document dump alleged that intelligence agencies had hacked Samsung TVs to listen in on conversations happening in the home, posing threats to privacy.

But vulnerabilities in IOT hardware can also cause serious problems of the entire internet infrastructure.

Last year, a major cyberattack wiped out internet access to hundreds of thousands of people across the U.S. It was an unprecedented outage enabled by flaws in insecure cameras that gave the hacking software access to key servers that were in charge of running services such as Netflix and Twitter.

"The issue that we are trying to solve is really all about security and privacy of consumers, using different type of connected devices. The problem is that most of those devices have software vulnerabilities by design," Atias said.

Dojo is targeting a burgeoning market: The number of IOT devices is predicted to reach over 46 billion in 2021, a 200 percent increase from last year, according to Juniper Research. The device connects to your Wi-Fi router and essentially filters any traffic coming through it to detect and prevent malicious software.

It is being released this month in the U.S. and will cost $199 which includes 12 months of service. After that, the service can be renewed on annual basis $99 a year, or $9.99 a month. Dojo will manage the security of your home without a user having to do anything.

But hackers are getting ever more sophisticated and security firms need to react. Atias said that Dojo keeps on top of security by learning the behavior of a device and detecting if it's acting in an unusual way.

"IOT devices are purpose-built, designed to do a specific function. It's not like a PC where you can do anything. For example, if your smart TV is suddenly starts sending a constant video stream from your home to a server in Russia or North Korea, it means it is abnormal activity. Dojo is constantly learning the behavior of the devices and detects any anomaly," Atias said.