To all the founders listening to this Podcast when we set out to start the Company not in our wiress dreams did we Imagine that the SPM and Thea become a Domain of its own we turn your robots Text file from a passive compliance to Active enforcement so if someone is not Supposed to access that we actually Force them a lot of the Institutionalsales that have these Massive funds because the companies are Smaller and we have less IPOs they have A ton of dry Capital to deploy so they Want put a giant chunk not a couple Million but hundreds of millions in your Company and if those hundreds of Millions now represents 20% of the share Price and they need to get liquidity and It's now going to tank the stock they Don't want to do that to a company They're supporting so this is a real Problem we have that not enough growth Stage entrepreneurs are even Addressing this weekend startups is Brought to you by Oracle Oracle Cloud Infrastructure or oci is a single Platform for your infrastructure Database application development and AI Needs save up to 50% on your Cloud bill At oracle.com twist intercom intercoms AI first service is the best thing to Happen to your customers sense you twist Listeners can get 90% off intercoms Platform at intercom.com
Twist and lemon iio hire prev vetted Remote developers get 15% off your first Four weeks of developer time at lemon. I/ twist welcome back to this week in Startups my name is Alex I am Alex over On Twitter and we are back with another Interview from our twist 500 series if You're not aware The Twist 500 is a list Of private Market companies that we are Building the most interesting startups Out there in the world and one of the First ones that we added was a company Called Huntress you may not be familiar With it unless you are an SMB in search Of cyber Security Solutions but the Company is a unicorn has raised hundreds Of millions of dollars is growing Quickly and says that it's approaching 100 million in annual recurring revenue And today I have its CEO Kyle Hansen Kyle welcome to the show I see you're in A hotel room I take it you're on the Road you can uh never expect where You're going to be as a CEO especially Hustle and entrepreneur and you're right I'm here in New York today and by the Time your listeners hear this we will Have crossed 100 million in Revenue so Things are going real good and that's 100 million in ARR right yeah pure Recurring Revenue no product no one time It's ARR bust here okay so I want to Double click on that just before we dig Into anything else when did that uh
Milestone actually occur the fun part Right most f don't know that you know These episodes are recorded and then Released so by the time in the next week And change we will pass 100 million in Revenue it's that close in that case Crossed into the nine figure Revenue Range which makes you uh what's that Phrase um asenta Centaur is the new word It's the one thing you can't fake right Uh valuations get inflated uh but you Can't lie about Revenue unless you're Cooking the books and that's a whole Different problem thinking about where We are 2024 company founded in 2015 9 Years to 100 million in ARR and if I Call you guys have grown at over 70% for The last 2 years so I'm kind of curious What's the next year's growth look like Are you going to keep that same Pace up Or do things decelerate as the base Revenue gets a little bit larger what's Wild is 70% has been our lowest Performance when you typically hit big Numbers you see your performance scale But it's actually our execution is the Biggest reason the market size when You're really going after from the Smallest businesses to like mid-market Enterprises the total addressable Market Is near ad infinim right it's huge and So there's still a good chance that we Actually exceed not only 70% this year But next year looking at what the market
Could support could be another 2x year It's just that large the biggest Question is do we fall apart while doing It especially as we've moved from like One Flagship product to many that turn Out to be kind of capturing lightning in A bottle multiple times so we'll see but It's not going to tip down below 70 in The near future I love to hear that Because growth is what makes startups Super fun now uh we are talking in Late July and that means we are sitting here In the wake of the crowd strike mess I Think is the right word for it I'm kind Of curious from your position I know you Work with SBS crowd strike's much more Enterprise focused does a catastrophe Like the crowd strike Microsoft mess Hurt or help your company because you Weren't the problem but also people now Think that people who do inpoint Security can be I think the answer is Yes it hurts and helps and what was wild Is day one when everything broke uh Simultaneously we did CNN ABC CBS You Name It We were the face that the media Chose to put on to help explain what was Going on and the big question folks Asked were like are they competitors and People forget like crowd strike really Does well for the kind of Fortune 5000 We're the fortune 5 million plus so we Really are peers you know kind of crowd Strike for the small Enterprise bidm
Market Enterprise small business so that Helped in the sense that folks finally Knew that there was an option for below We've seen a ton of demand gen come in And people didn't realize there was a Quality equivalent below kind of the What we called the Enterprise poverty Line however you can imagine any of this Has led folks to just asking like how do QA failures happen how did this slip in And I mean day one most people still Thought it was Microsoft right there was That unrelated Microsoft issue earlier But people hadn't realize the real Hurdle was so many of these windows Endpoints stuck in a blue screen of Death Loop That Couldn't boot back up And so I will say yeah there's been some Pros but to be very Frank it's brought a Great question in mind which is like Resiliency cyber security and all those Are supposed to be producting you know Productivity and when our products get Aggressive trying to stop hackers but we Make a mistake and actually cause that Productivity outage itself you could Imagine my number one question on the Support line right now is how is this Not going to be you what are you doing To make it you know impossible to happen Which is not possible so that's my long Way of saying uh we're eban and flowing With the good and the less good so a Question that I have about this because
To me cyber security is this thing that I know is very important very technical And slightly distant from my my personal Knowledge base so how do you ensure from Your perspective your company's Perspective that an issue like that Doesn't occur is it increased investment In QA is it more automated testing like Like what do you do to prevent that Because you keep people secure you can't Afford to make them less secure or Broken yeah my nightmare fuel is like While trying to protect folks and you Got to remember hackers are just so Creative and so shady that you have to Be very aggressive in our own like and We take offense to the offense is really A lot of our internal Mantra and I will Tell you like QA of course helps uh good Architecture design patterns help the Problem is that like it's kind of a your Known knowns you can you know dot eyes Cross te's button yourself up and you Can put process behind it the unknowns Are the ones that again like you just Don't know when you might have and we Have by the way at hunteress we've Actually caused small outages ourselves Usually it's a an environment that Didn't match what we test against it's Something very unique and creative so Usually it targets like less than 1% of Our business and if you think we've got 150,000 businesses so less than 1% is
Still a really big number and it's still Kind of a catastrophe I will say that Some of the bigger question I've even Been asking on this is is it time that We not just as cyber security vendors But we as like Microsoft and think about Architecture is there something we can Do in the windows kernel that's this Really sensitive place of code that it's Great for being able to look for the Most Shady of evasive malware but it's Also really dangerous really unstable And as a result when something goes bad There it really breaks bad uh and we're Asking the questions of like is there Anything even not just from us as a Vendor can we help Microsoft think Through a little bit of what does this Next architecture look like so when Things do crash can they recover so After maybe two or three things in a row You do an automatic revert and that's Something that other operating systems Have some of these protections or have Created an architecture that just Doesn't let folks like us have that type Of same access which means it provides More stability so if you can't tell There's a lot of places people could Point fingers I'm kind of asking both Shortterm what can I do to make sure it Doesn't happen and button it up Continuing to do that but if you can't Tell by like the sound of my voice
Hackers are going to hack all the Band-Aids and all the things we put in Place could make more stability happen But could also weaken us as security Vendors from not being able to find Hackers that do make it into that Sensitive part of the the operating System so uh I think this is a big Question that while the crowd strike Recovery is going to take weeks maybe Even months for unders sourced uh Resourced companies yeah I don't truly Know how long it's going to take for us To get to the point and say this isn't Going to happen again because I think It's very likely it will your point About working inside the kernel and that Being a very sensitive place to look for Bad actors sounds a little bit like Hunting for rats with a large stick Inside of a nuclear reactor like you Want to hit the rat but you really don't Want to miss and hit the wrong thing and Cause a big mess yeah or don't hit too Hard right uh you know that's You that's a great analogy right it's it You have to find it you don't want rats In a nuke Silo causing something like to Detonate by accident because it was Chewing on wires at the same time you Taking down or maybe making a great trap If your trap happens to Spring at the Wrong time could also set off the nuke And in this case I will tell you we've
Played out these scenarios we've tested These scenarios I never considered Because usually when you do deployment Of software you do it in phased you know Uh hey let's start with 1% of the base MH get up to five then to 10 and then You slowly deploy this was one of those Cases that I think that's probably a big Question that will continue to ask more Answers of like how did it slip by not Just through QA but how did it happen to Go straight to 8 million plus computers At that time and it does look like they Prevented it from going completely in The wild but uh there is some big Questions about like we probably needed Uh something that wasn't a foot gun so If you find it it's so much nicer to Find it on 10,000 computers which still Is terrible but 10,000 is a drop in the Bucket compared to 8 million yeah 10 10,000 probably doesn't take down Delta The hospital group my spouse works at at The same time right very different Industries different parts of the world And yet exact same problem and you're Nailing it that surge capacity problem Right most folks it's okay if we have These one at a time in disperate places That's how we maintain but I think what We really ran into is surge capacity None of us were prepared to go have Physical touching of all of our laptops Especially in this like postco semi-
Remote purely remote world it's it's It's kind of Wild all right I hate seeing companies Overspend gosh don't waste your money Startups that's why I am so excited to Share an offer from our friends at Oracle if you move your startup to Oracles cloud and that's called The Oracle Cloud infrastructure oci Oracle Will cut your current bill in wait for It half I am not joking move to oci and You will save money and you will build On a that can handle all your database All your infrastructure and all your app Development needs and they have ai Embedded everywhere you need it Oracle Wants to help your startup accelerate And save you money okay so don't wait This offer is valid until September 30th 2024 here's your call to action C if Your startup qualifies for this special Offer at oracle.com Twist that's simple this is Oracle Showing their commitment to me and and The startup Community they're here at This week in startups and they want to Cut your Cloud bill in half so just go To oracle.com twist limit to new oci Customers in the US minimum Financial Commitment and exclusions apply I want To narrow that on what Huntress does Because I I was prepping for our chat And I know you guys did inpoint Protection and I I know what that means
From a very high level but I'm hoping You can break down a little bit more of What you guys offer to snbs what parts Of their business you protect and then If any what parts you don't protect and They would need another vendor to step In for yeah yeah and we're really clear On this it turns out to be a good vender You just listen to people's problems and Be very clear on what you do and what You don't do so I think this is a Perfect uh chance to take a crack at That for us I started in offensive cyber Security at NSA my whole mission was Gathering intelligence which means Making the implants here quote malware And then deploying them to gather Intelligence that's what cyber criminals Are largely doing against from these Very small businesses to again midmarket Enterprises they don't have the ability To hire folks like me or other really Great cyber security Talent usually they Just struggle to find them and even if They do affording them is a whole Different thing and usually if they can Afford them and can find them somebody Wants to go work at a crowd strike a Sentinel one a Huntress they don't want To work for these smaller entities right Right and so the problem when I took a Step back leaving NSA I was like all Right I've been hacking just about Everything for 10 plus years I'd won the
World Series of hacking and I was like Feeling guilty about who could I give my Skills to and make a real difference you Know that's that soul searching that you Do after you do something really well And so I looked and it just turned out That the market was underserved like Nobody really cared about this again Imaginary kind of poverty line and I Realized like if I was going to deliver And protect well what was I going to Protect you know there's like a mile Wide of cyber security is it devices is It servers is it cloud is it data and so I looked and I realized everybody had a Laptop workstation or a server whether They were moving on the go and I needed Software that went with them and so the Natural decision just like malware you Push it to somebody's laptop I looked And said what if you had a 24×7 team of Experts that were actually fully Managing all that great Enterprise level Tech and if I could deliver this with Good cogs you know cost and good sold You know and at the price essentially Any small business could afford even if They're not a small business if you Could deliver worldclass human expertise Worldclass Enterprise Talent at the Price of a product that could be Differentiated that could be disruptive And it turns out like I didn't know how I was going to do that at first and it
Turns out the guesses that I made were Mostly correct people wanted the Software protecting their laptop they Wanted to protect their servers and even Though they have all these other devices That's where the most sensitive stuff Happens first absolutely and it turns Out like even though the whole world was Talking about like an ounce of Prevention is worth a pound of cure the Real hard problem is kind of like when You and I go to the doctor you mentioned You say your your spouse or your partner Works at somewhere in health yeah so Like think about like modern Healthcare Like we don't promise anybody like You're not going to get sick or you're Not going to get cancer like that's it's Kind of crazy talk still sure um and we Shouldn't do the same thing in cyber Security like you are going to get Compromised not an if it's a when the Whole idea though is like we do Preventative medicine by routine Checkups and like could you find a human That's maybe you want to find something That's stage zero stage one not terminal Because you don't have the time to Correct it so our whole bet was could I Go and again world class Talent world Class infrastructure and technology and Can I put a light piece of software that We hunt down the hackers that slip by Prevention and that's where we started
It's called endpoint detection and Response the whole idea is find it early Before the Situation's terminal and when We do it we don't just create an alert Because there's nobody there to action An alert we have to take care of the Full thing we have to enable whatever Junior it Talent they could hire right How could we turn them into the heroes How could we give them the full recipe Book the whole Playbook and within one Button they can just say all right I'm Going to run the Playbook and the hunter Team takes care of it and it's all of Our SAS that does it it's not the actual Humans clicking the buttons that's how We're able to deliver it at a cost that Makes sense and it was this one thing That started cute by 2018 we kind of Came out of I guess what people now call Stealth we started going to Market and Realized that um Not only was this an Acute problem that was solving the geeky Side CFOs and money makers were like This is going to improve my margin it's Going to help my Staffing problems and It turned out like the wallets kind of Just open it was an actual valuable Problem not just the typical add another Layer of security because Geeks want to Be Geeks and that has just blown up That's what powered the first couple Years of triple Revenue growth then Double Revenue growth and now 70 plus
Per. okay so using a lot of software Essentially to offer a product at a Gross margin that works for you and a Price point that works for smbs and Bringing them kind of you know much more Expensive skills and capabilities to Them in a delivered fashion okay that Sounds almost like too good to be true Because you don't need the humans you Can do it with software you can offer Topend stuff and at a price that makes Sense normally things aren't win-win win Win win so what's the is yeah I love That you asked this because it is too Good to be true it turns out like think About let's make a simple car analogy my Mom is my biggest like champion and I Always have to like put things in the Way that Mom can understand so like if You were in the Enterprise and you Wanted to chase down hackers or outpace Hackers sure you would need something Very fast let's call it a formula one Right fastest cars on the plan and think About a Formula 1 car right they every Part on them is custom made for Performance you can break within Nanometers of like pounds per inch of How you go around a corner on top of it You need a whole pit crew to manage his Sucker and drivers alone one they're Rare to find somebody who can perform at That level but two they're like I don't Know a million dollars plus salary a
Year if you want a driver that is a good Solution if you have infinite budget and You're in the fortune 5000 Crow strike Is the most amazing sexy cool Formula 1 Car and I mean that even with this issue They're a great team great product we Have huge respect for them but think About this if I was walking into an IT Department or that Health firm whether They're internal or they're an external It department and said here's keys to The Formula 1 they wouldn't even know How to drive it right it's complex they Don't know how it works but if I came in With keys and said here's keys to the High-end sports car I think a Porsche 9911 Lamborghini something along those Lines and said hey you got a driver's License take it for a drive you can Still out Pace the speed of hackers you Can still chase them down whether they Slip by or not and what's wild about This is we've used this analogy not just On the endpoint we've moved to Protecting people's like most you know Sensitive digital identities right That's Microsoft 365 Google stuff like That and we've also moved to protecting Humans using the same analogy and so Huntress at the end of the day the too Good to be true is we are not a Formula 1 car we are a very sexy high-end sports Car and what's wild about it is for the Price of that driver alone on that
Formula 1 analogy you can usually buy One or two of these sports cars so for Us we win because of total cost of Ownership we actually focus on what are The problems that actually face this Kind of 99% that falls below again the Poverty line and the whole goal is let's Build the right car that they need still Has to be fast enough to outpace yeah so Part of hess's magic isn't what we chase After it's actually the opposite it's What don't we chase after what data is So low signal to noise ratio that we can Actually just say we're not going to Collect it we're not going to store it We're not going to have to worry about Retention we don't have to do compute Against it for algorithms we don't have To do human analysis and as a result We're able to deliver that right priced Solution for the right price risk model And it's just been like I to me it's Very obvious of a decision if you kind Of come from the beginning but what Happens is most people start an Enterprise and then they're trying to Like how do I adapt my Formula 1 car so You could use it and that just doesn't Work so Again you called me out but it is true We're we're not the Formula 1 but we're Still fast enough that we just wreck Hackers all day I'm just trying to Imagine adding like a shopping cart to
The front of my Formula 1 car and maybe Like a kid seat on the side it wouldn't Quite work in that in that setting uh Yeah you know they wouldn't even add an Extra seat right because it would add Extra weight because you needed that Performance but like you can still drive I mean even think of like your highend Tesla your Model S you can put five People in that sucker yet you can go 0 To 60 in 2 seconds that is a good Analogy totally safe and a great idea For all new drivers out there uh yeah Endorsed by Kyle you heard by Kyle he Says buy your teenager a model us Plaid hey startups you've probably heard The saying better faster cheaper pick Any two well AI has changed that Equation and intercom is Allin on AI Intercom built its first AI customer Service platform so that no company has To compromise when it comes to caring For their customers or saving money and Controlling costs these things are Important intercoms AI tools are so Smart that 50% of their customers have Their issues resolved in just seconds That's thanks to Finn an AI co-pilot yes Intercom has an AI co-pilot it's called Finn think of it as like a personal AI Assistant for each of your customer Support agents so they get really really Good at their jobs it makes them so much More effective Finn is a big deal it's
Going to boost your agent efficiency by 31% or more and managers of customer Support teams that use Finn are Reporting happier customers and very Very productive teams all while staying On budget that means when it comes to Faster cheaper and better customer Support you can pick all three no Sacrifices and that's all thanks to Intercoms AI first software so if you're An early stage startup if you're a high Growth startup you're going to get Access to intercom at a massive 90% Discount that's right 90% off because Intercom and the team over there Lov Startups and innov as much as we do so Go to intercom.com Twist to apply or if you prefer you can Just do an email at startups Intercom.io one of the reasons why I Wanted you guys on the the list we're Building of cool companies was because Of your smv focus and when I hear about People who are using you know Cutting Edge technology usually you're thinking About big clients big customers you know Fat net retention thinking about Multi-year contracts smbs every VC and Founder has told me are hard to sell to They churn too much the the ASP is too Low etc etc etc but you guys have Clearly found a product that works Inside of the SB world so do you just Have lower gross churn than other S&B
Facing products because the growth seems To imply that this is just not a Weakness for Huntress thus far yeah we Being shady hackers we had to figure out A way how do we hack go to market Because to be honest everything you just Said from VC is not only true it's what We were told and denied like you know You started this out talking about yeah I've raised a couple hundred million 300 Plus million in venture capital Y but I'll tell you I've had a 100 plus nose That people are like you are insane this Isn't going to work and so we really had To figure out what were the problems and How to overcome them notice every single Bit of this model like I can't go and Say I'm going to do it su01 or Crowdstrike or all these other cool Cyber security companies Cisco I have to Build my own model and so our Inspiration was closer on like how did Toby and the team at Shopify get it done Right how did the team that people Who've done this before but really you Know reinvent ourselves and so when we Started I tell this story often but I Have to like it's known that Founders Have to fail fail fast fail often I'd Rather just not fail I've still made a Pretty uh handsome number of these mess Ups and my first ones were I started Calling these small businesses and by The fifth call people were like listen
Idiot we don't even have an IT Department so when I started I was going After people who didn't even have an Internal it department and it took like Five of these like you're not talking to The right person calls to realize I call The outsourced it department and it Turns out these people called managed Service providers and there's lots of Flavors of them some call themselves Value added resellers some call Themselves msps but there's like 50,000 Plus of them just in North America not Even like Europe a Mia let alone APAC There are tons of these and the average Service provider might have anywhere Between 20 to 100 of these mid-market Enterprises and small businesses and They maintain them all and so if you Figure out that for a go to market it's Kind of like a one to many and so we Would not only sell to these service Providers we would fulfill through them Meaning we wouldn't have a direct Relationship most of my 150,000 smbs are Reached through 5,000 of these partners And so if you could imagine all a sudden My LTV right was very good I was able to Retain customers when I started and the Lifetime value was solid they weren't Churning uh my gross retention right now Is over 90% but what's Wild is these Service providers are constantly adding New customers so my net dollar retention
Or net revenue retention in 12 months It's 140% larger CU they're growing Themselves at 24 months it goes over 180% uh and at the 36-month cohort I'm Closer to 220 or so% net dollar Retention it's crazy because you can Land adopt an expand so throw what what Do you want to throw at me so so I'm Just think I'm just listening so Essentially working with msps you have Put churn onto their side of the fence But as they grow their business they Bring more customers into your domain And so get very limited gross churn and Very strong net retention again so that Feels like cheating good job it is a bit Right and we have to give them margin we Actually go and like when we're working With a partner it's not like please Resell my product and I'll give you 10 To 20% margin like yester year our Product no joke they do the full sales Cycle which means top of funnel Marketing all the way through the bottom Of funnel they do the retention renewal And tier one and tier 2 support you know At my most uh egregious or aggressive Side of our business it's 50% plus Margin that our service providers are Getting upfront and some folks would Feel like uncomfortable with that but They're earning it they are doing all of It and as a result you could imagine my Deals like truly my arpa or my average
Revenue per account these are like $110,000 annual deals but there are so Many of them that I'm closing couple Hundred of these service providers per Month that were helping protect their Partner base and if you think about that That one to many that might be th 2,000 Plus businesses every month like Clockwork in a 35 to 45-day sales cycle It doesn't look anything like the Enterprise it doesn't feel like the Enterprise it almost more closely you Know matches to like a a b Toc style Model or a B to very small B model yeah And you just have to have a very big Tam In a very different way of doing Business so thinking about the MSP Market I think about that usually from The domestic context businesses in the US that's the market I know best does That model apply around the world and Then if so does Huntress in its current Form work in those other markets or Would you need to retool a bit to sell Into msbs in Africa and South America And Southeast Asia Etc so we had to test This because to be honest I didn't know The answer and there's no like Gartner Of the small Enterprise to small Business like that doesn't exist they Want to talk about the large so a lot of What we had to do is experiment we've Also had to work with great analysts Like at William Blair to be able to
Actually publicize what we've learned to The bigger Market because you can Imagine imine what I will go public one Day almost certainly we a company that From the get-go had been designed to be A long-term company of consequence Stealing my closing question by the way But anyways we'll get back to that in a Second we'll get back to it then because I'm glad because there there's good Questions of when and why and how but For me I had to like educate this market And so I didn't know and it turned out That a lot of what we were doing in North America US and Canada specifically It almost perfectly pattern matched the Australia New Zealand Market yeah and we Had to figure that out by we were just Like we're going to treat this as a Startup within a startup we're going to Get put one person on the team that's Essentially the CEO of you know Australia New Zealand and you own it all You own all sales all marketing and just Try to repeat this Playbook so we can Find out how far off we are and it Turned out almost perfect pattern Matching in Australia New Zealand so we Did that in 2023 2024 we made the bet in English-speaking Europe and so just this Year we moved into and you know notice I Haven't done any of the crazy like Internationalization there's all kinds Of localization that you have to do if
You really want to truly be Global but For us it's about small iterative steps Over and over still at the scale we're Taking small iterative steps and I'll be Darn we set up a team in uh England and Ireland they're servicing the English Speaking part so you can imagine Benelux Area and some of the other places that Speak other languages but also English And we are also crushing this model and That was a cool good old fashioned Hypothesis and we're still testing just Like we did back in 2015 on go to market Still learning these things cuz there's Nobody else to really copy off of we're Having to blaze our own trails and so I'm stoked to share with the audience Like this does work I will give you one Caveat though Alex that's worth and we Don't have to dive in I'll let you Decide where we go but it turns out While a lot of these companies kind of Below 100 employees don't have their own Internal it Department above a 100 Employee companies a lot of them start To have it and there's even some Contention where like an IT department Director is like uhuh I'm not letting an Outsourcer to come in here and steal my Budget well if I do I'm only going to Let them help me with security I'm not Going to let them touch it so one of the Hard lessons I learned in 2023 and it Was part of the reason we only had 70%
Growth we were bringing in so much Demand from people that were excited About us but when we would bring them to Our partners they weren't closing and we End up learning these internal it Departments did not want to fulfill Through a service provider and so we Went so narrow so narrow scoped through Service providers that we weren't Fulfilling our mission to elevate kind Of the small and midsize businesses of The world we were just missing it and so This year we had to open up that scope It's a very conflicting thing if you Bring people in and go direct and Through the channel you can cause Channel conflict right and so we run a Model that everybody we try to fulfill Through the channel we call it Channel First and only when they refuse and they Say no I want to go direct I don't have A channel partner then we'll do it and That minimizes conflict it protects our Partners at the same time it lets us Fulfill our mission and oddly enough we Watch just Revenue now same product Almost the same pitch and now it's being Used by these midsize Enterprises now And that's something for six plus years I got wrong I completely ignored and so While I have a lot of debuts right here That was a pretty big L not going International sooner to these countries That I just didn't know if it would work
And not expanding my segment to that Kind of midmarket mid Enterprise okay But still one or two L's aside companies Over 100 million AR growing very quickly And that means you are in the IPO Conversation as you mentioned the other Big piece of cyber security news from The business perspective recently has Been the Google whz possible tie up that Fell apart Google was offering Reportedly 23 billion for a roughly 350 Million AR company and I I got to ask You as a cyber security guy if you were Whiz would you have taken that deal or Would you said hell no that is a great Multiple I mean at the end of the day if You don't have just endless conviction You take that deal period and I'm still I don't think we completely know it Sounds like it might have fallen apart Because whiz walked away but me being a Part of a lot of these m&as we get People that ask us once a month and I Kind of have to turn it down yeah my Bigger point that I would mention here Is you just never know when to say no And I think that sometimes you can do Things in due diligence that uncover Maybe that 23 billion if that was the Real number maybe that valuation wasn't Going to stick or maybe people realized The multiple was high but if it was real You would have to have again conviction Of Steel and for me even going public is
Just the beginning well I mean that's What every single founder has ever told Me on a a preo calls well you know the IPO is more like graduation and then you Come back to school the next day at the Next level and I'm like I know I know But you can still celebrate the Fundraising moment the press the hype It's still fun I would harass you about When you're going to go public but I Also know that uh probably a couple Years out is my read just giving your a Little bit of a little bit of thought on That and I'm doing this the fun part of These like uh podcast for Meers they Don't have to be stuffy they don't have To be you know there's no legal team Telling me what to say yeah so for us if You go back and especially as a high Growth startup if you have the right Gross margins which I'm at by the way Humans in the loop I'm over 85% most Times I'm in like 87% gross margins and If you have all these things great kpis Great vision large enough Tam you get The benefit of everybody wants to talk To you and so for us I still have access To near unlimited cheaper Venture Capital it's something I've earned Though it's not a pitch it's not a big Vision it's I've earned it through great Kpis great discipline and as a result if You think about what an IPO means it Really means one is a source of
Fundraising sure two an opportunity for Liquidity but because I have such little Venture capital I actually need cuz I am Efficient like when I raised this last Series D I still had 70 plus million in Liquidity I raised it because I wanted To bring Partners who have been at this Post IPO stage to help me prepare for This last leg of the you know private Journey and so for me I'm not racing to Become public to be honest all the Hurdles that the SEC expects out of us Isn't really worth it for me that now Has to be very private we're a very Transparent company and so you could Imagine I don't have a desire to go Public tomorrow but it is inevitable if We want to keep making the difference And as you mentioned it'll be a cool Moment it'll be a great press moment Will be you know whatever whether we Choose NASDAQ or whether we choose New York Stock Exchange we will high-five Each other but then the next day we go Right back to Wrecking hackers so you Are right for us we'd love to see Ourselves closer to a 350 million in uh You know ARR the reason I say that is a Lot of the institutional these big folks Like Wellington and Fidelity tro price That have these massive funds they don't Want to put a tiny little bit of money They got a ton of dry powder and there's An actual problem right now in the
Market that because the companies are Smaller and we have less IPOs they have A ton of dry Capital to deploy so they Want to put a giant chunk you know not a Couple million but hundreds of millions In your company and if those hundreds of Millions now represents 20% of the share Price and they need to get liquidity and It's now going to tank the stock they Don't want to do that to a company they Supporting so this is a real problem we Have that not enough growth stage Entrepreneurs are even addressing so you Can imagine on my end I'm having to spin Up navigate this and figure out it's not An if but when is the right time and you Know who knows maybe somebody crazy Comes along and a you know offers a Number that's too big but we've got Pretty big conviction that our mission Is a lot longer than just you know let's Get Acquired and go so there there's a New rule on twist that I'm going to make Up right now which is if you come on the Show and you're candid about your Company's financial performance and if Future IPO plans you are now banned from Accepting any external acquisition Offers you can't do it so thank you for Committing to that now on the show I I'm Glad I signed the contract ahead of time No you know I but I do agree right you Got to put it if not you come off as Hollow right you come off and for me I
Get them once a month I have literally In nine years never brought an m&a offer To my board not one time we're the ones Doing the Acquisitions not the ones Getting acquired well growth rates nice Valuations plenty of cash that all adds Up to you being in control Kyle we we Have to leave it there I'm so glad we Had you on I'm so glad we had Huntress On the twist 500 thank you for your time Good luck in New York and uh when you Hit 150 million AR we'll have you back On we'll talk about what's changed Awesome thank you so much for just Having me and asking great questions Appreciate you right now startups have To do more with less we all know that And Founders have to be smart with how They deploy Capital investors are very Tuned in to being Capital efficient so If you need Great Tech talent but you Don't have the time to interview dozens And dozen and dozens of candidates you Need to check out lemon. they have Thousands of ond demand developers to Choose from and these devs are vetted And they're experience and most of all They're results oriented they're going To get you the result you're looking for They're not going to leave you hanging And guess what they charge competitive Rates great developers can be incredibly Hard to find we all know that and when You do find them it can be hard to
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Put it on the twist 500 right away was I Was very curious to see what would Happen at the intersection of people who Have content or essentially online words And data and the world of AI model Companies you guys are right in the Middle of it so let's start with a bit Of a summary about how you started the Company and to it I want you to tell me How it came to be well we have to go Back actually to April early 20123 Almost right I think this was right After gp4 had just come out uh you know Early 2023 right and when you you know I Was I was obviously on it I was Tinkering around I was poking around With it and you know if you asked us Certain questions right we realized that Because it was connected to the internet I was doing some research about about Apartments so when I was typing it in it Literally told you right there oh I'm Googling this or rather I'm searching on Bing for this I'm looking for apartments In this area I'm looking for apartments And then it was visiting uh Apartments.com and it was visiting Zilla And it was visiting realtor.com and I Think that was when we first realized uh I actually called Olivia right after That and uh one of my friends Martin who Would become our CTO a little bit later And we had a call and we said look these Tools it's just going out and scraping
The web and this was before there was an API for gp4 and we simply said well Let's extrapolate this for a second what Happens when everyone's using this tool Does this mean that everyone's just Going to be using a tool that's going on And scraping the internet and at the Time it was really early we weren't Really sure um you know where do you Enter the market you know apis obviously Exist how do you go to a site like Realtor and say hey there's a problem Here um it wasn't really clear right and Then that fall was when we started Seeing that you know late summer into Fall was when we started seeing all Those headlines you know the news media Alliance was upset medium was Upset and sight started blocking open AI Right and the New York Times lwuit Obviously and that's when we said Olivia And I looked at that and said this is Actually the same problem it's just Digital Publishers are the first to feel It and we realized it was coming for Everyone right because we had seen those Early days right it was going on and Scraping those sites so this is when we Said there needs to be infrastructure About this and then we decided that you Know we should build that yeah so IA Tell me about when the company got named Incorporated and when you raised that First round of capital yeah that's a
Great question so uh we officially Incorporated in November of last year Actually October I want to say and tosa And I in November December we started Talking about quitting our jobs because We were having some initial Conversations with Publishers that they Highlighted that just really told us That now was the time things were Picking up in the Emerging Market even More quickly than we had anticipated and So we were like all right let's take the Leap so uh come January we were Fundraising and by February we had done Both a pre-seed and a seed round we Expected to raise just a very small Amount of capital and obviously you can See in the headlines it turned into About a $7 million round I didn't know That that was a combined preed and Seed Round I thought it was one funding event My mistake in the intro saying you've Raised once what was the breakdown Between the preed and Seed yeah so um Our our seed round was about uh 3 Million it was led by a um they are Obviously more on the AI side have Companies like perplexity hugging face Etc and their portfolio company and some Of our preed investors fan like media Companies um such as the folks at lower Hippo have great connections there so That was kind of the breakdown and how Many people work at the company today so
We have about nine full-time P employees Most of those are obviously the Engineering team our CTO our Chief Architect folks on that side of things We also have an amazing Chief of Staff That's obviously helping us with our Primarily founder-led sales motions Right now um and helping the client Communications and all that so that's Where we are now I want to start by Talking about the media aspect of this And then I want to expand our RIT to Talk about more data types because TOA Mentioned you know Zillow and real.com So clearly we're talking about more than Just journalism but as you guys Mentioned one of the early flash points Was the world of media and I'm kind of Curious where the state of play is today We've seen some oneoff deals we've seen Some lawsuits behind the scenes when you Guys are talking to Publishers how ready Are they to jump into a solution like Tolit versus going it alone and trying To extract I don't know kind of single Party deals out of these major model Companies I think one of the coolest Things that we've seen is how quickly The space is evolved I mean we we start C uh you know the publisher pitch cyle Back in January right uh in December January and just the education around The space right and you know there's a Different flavor and sort of reception
To the pitch today than there was back In January right as folks are learning More and more about these tools right And it's interesting to see how quickly This has happened as well in the Beginning right when you know people Still weren't sure what is rag what is Training you know how are these AI tools Working you know the first AI deals had Just started happening I think folks Have since then really realized you know There's only a handful of these deals Done right and there's uh everyone you Know is curious like you know everyone Has an opinion here whether you should Do the deal or you should not do the Deal but I think our message to them is Is there is chaos right now there's Uncertainty it's a bit of the Wild West Comes up wide often in our conversations And we tell them look it's the wild west Right now we're trying to put some Structure some protocol some Infrastructure because the Norms are not Written the access Protocols are not Written more importantly the unit Economics are not defined so let's Figure out how to set up a a system Where Publishers can be fairly Compensated because on the other side We've talked to you can imagine every Major AI company small AI companies and And the rules are Unwritten they they Also don't don't have an answer yet yeah
No I I think the wild was is a very apt Analogy my question then is does that Make you guys the sheriff or like the Stage coach like what in that analogy Where do you fit in because the wild West had a lot of different players in It I don't know perhaps the sheriff Would be the right way to think about it Or maybe the market General Store Something along those lines now on the Supply side you guys said on your Website that there's I think 50 websites That are currently working with tolit as Of May where's that number expanded to Now that we're sitting here in Late July Early August it's definitely uh gone up From there we're uh you know I'd have to Like take a look at our data and speak With the team about where folks are Exactly in on boarding but I I imagine You may have seen some of the headlines Recently about what our Publishers found On our our analytics platform in terms Of AI company circumventing robots txt And so after some of those articles came Out as you can imagine there is an Onslaught of onboarding on the publisher Front and so I think to toast it Point Like this has always been a pants on Fire problem for them and existential to Their business I think there's Understandably so some hesitancy in Terms of how approach this in the right Way that continues to um I guess make
Sure that there's a reoccurring Revenue Model for Publishers in this new world It isn't just onetime checks for Training on your content and data There's a basis of needing to access That content data on a reoccurring basis That's really important did you just say There's an onslaught of demand from Publishers to get onto the platform Yeah We actually had to open up uh self- Serve onboarding on the platform for Folks because before we were actually Going to these conversations 101 I think I think latest count last I had seen was Over 110 and you can imagine all those Early Publishers it was all like very Founder Le very you know this is what to It is this is the agreement this is what We're doing and then after that and it's Quite interesting because I think a lot Of that Synergy does lie with the Longtail right because I think the Longtail Publishers really understand That they're not going to get one of These one-on-one deals right the Independent Publishers the independent Bloggers and this is an opportunity for Them to say hey there's a there might be A better way to get compensated okay let Me just make this about myself then Because I run a little blog for myself On the side it's a passion project it Doesn't make a lot of money but if there Was a way for it to make more money I
Mean who wouldn't want that and so I'm Kind of curious like how far on the Smallness scale can you guys go down Until someone's content depth reach or Whatever the metric is becomes too small To actually fit into the toll bit model So does it work for the small blogger or Do you have to be at least the teen siiz Publication we work with Publishers of All sizes I mean that was something that Was very important to us day one and Also very important to the demand side Of things as well because they need Access to the longtail of content and Data and doing these deals doesn't scale Well for them either um so the niche Content that's out there is really Important for them still to have access To is that because they want to have Like the edge cases covered and so if People are going to ask them about Badger farming they need to make sure That they have access to Badger farming Content absolutely I mean you use one of These tools you can see exactly what They're scraping and and and the way we Look at it is is you know on one side of On our supply side right the way if you Think about the market is there's no Limit to what site you can scrape right It's not just you know when we Google Things we're not just going to the big Brand name Publishers right we're Consuming content from all sorts of you
Know independent journalists and authors As well right like lifestyle bloggers as Well so I don't think there's a limit to To you know which which content can be Can be accessed or should be paid for by By these AI systems okay before we get Into rates and how you guys are letting Publishers and websites set that up I'm Just curious about the other side of the Supply demand equation which is the AI Companies you guys mentioned that you Were speaking to them are they excited About what you can offer are they Hesitant to pay would they rather get it All for free and just steal it I'm Curious about how that side of the Equation is looking one thing that has Been very interesting to us is there are Aligned incentives I think they Understand that you need to support Journalism you need to support broadly Content creation all of these models for Their cour training they need the tokens They need they need access to breaking News right for powering their rag Systems for example right and you can't You can't cut off that Supply right so There is an incentive on that side to Keep it going question is and I think Where the waters get muddy is no one Wants to say pay for Content because Everyone wants to protect their fair use Argument right if if you will right and So what we're doing instead is we're
Focusing we're Shifting the focus here Right and which we're saying actually You're not paying for training content Per se through toll bit what you're Doing is you're paying every time you go And access a page for that for that rag Use case right you're paying a toll for A bit of information that's where the Name comes from and I think the Incentives are aligned there and this is Where we're starting our Pilots with two AI companies right now where they're Going to be using our model to Compensate Publishers with two of them Yeah which two can't say yet can't say Just yet but how long until you can tell Me just so I can have a general Expectation there like weeks months Years it might be a few months okay I Think we're all waiting and I think this Goes for the biggest AI companies out There everyone wants to see both on the Publishers and the AI company side what The unit economics of this world looks Like because and this is why we're Approaching it with such care because What we're saying is people might not Visit websites right you can't just put Up a piece of content sprinkle some ads On it and then expect to make Revenue Right the world is Shifting so if there Is a new unit economic model emerging Right where every time one of these AI Agents come they pay some money to tax
Of content what does it look like right What is the market willing to bear That's why we're we're selective about Which Partners we on board on the demand Side and make sure that you know the Publishers are also comfortable with Those Partners so quoting from one of Your blog posts imagine a future where Microp payments are seamlessly Integrated into our interactions with AI Assistants every article research paper And expert blog post contributing to An Answer prompts a tiny transaction so Essentially you guys really do view this As when a company that has a toll bit Agreement goes to we'll stick with Badger farming Badger farming Information.com to collect information There would be some sort of transaction Happening there which implies that there Is going to be a set rate between that Publisher toll bit and the AI company do The rates eventually become standardized In Your Vision or does everyone kind of Pick their own pricing and then there's Kind of competition amongst Badger Farming websites to have the lowest Price best content for AI ingestion yeah So I mean to start out we're having you Know Publishers are certainly setting Their rates and and we're massaging that For some of the pilots and working with Folks I think we're this definitely goes Out in the long time there's there's a
Couple different ways it could go I mean One is which you know we could see a World where there's kind of a bidding Kind of going on in an automated fashion And sege pricing based on uh where we Could help certain Publishers who may Have Niche content uh capitalize more on Their revenue that's certainly One Direction it could go in but I I think Fundamentally you know there's just Going to have to be so much work that we Do to kind of get to that place in the Interim right now according to your Guys's docs there's kind of a hierarchy Of how rates are set there's the bot Level page level keyword time directory Essentially a way to sort how to Determine what to charge with the now Hundred some Publishers that you guys Have on board are you seeing a similar Vibe from them about how they want to Price access to their content or is are They all guessing in different Directions as well uh yeah so it's Interesting um those s for pricing have All come out of conversations with over A 100 Publishers at this point right Yeah and I think the key is is to to set Up a system that's flexible across all Of them right so for example there are Folks who say hey I have tons of Archives I have tons of content you know Tens of thousands of Articles every Single year we need to find a way to
Apply a rate for all of them right so This is where a directory based you know Things this year might have a have a Higher price than last year versus Things in 2020 might be because it was An election year right might be super Valuable again right we have uh folks Who have um apis so for example Tobit Sits in front of an API so instead of The partner onboarding uh every single Say you know content API consumer one at A time issuing new API keys they can do Basically a page-based uh so an API path For example can have a specific price And we enforce that and we debit the the The consumer um as the API consumer as They use it right similar for keyword Someone was like Hey I want my Taylor Swift article is to be worth more Because she's very In Demand right now Right so all of these vectors right and And the goal of this is to say we need To figure out again it goes back to Wild West the laws the rules are Unwritten so We can come out and say this is the way That we're going to start thinking about How to price access and the key is and And sort of the the world that we're Ushering is we realize this sort of Licensing it's a very timec consuming Paperwork heavy partnership heavy Process right is there a way where for Uh in fractions of a second and fr of a Penny you can get a license to use that
Content for rack and suddenly it's not Illegally scraped information anymore so This is actually more complex than I Thought it was going to be but in a cool Way because I feel like all the stuff That technology has done to extract Money from consumers search pricing Differential charging for different Things different you know like when They're in demand or not whatever now we The scribblers of the world the word Cells are going to get to use that Against the tech companies and they're Going to have to give us more money when Our stuff is in more demand I think this Is fantastic you guys have turned the Table makes me very very excited I'm not Going to lie but Olivia sorry I cut you Off no no I I think I was just um G to Expand upon too to point like how folks Are thinking about the pricing of their Content and data and you know going back To what we were talking about with Retrieval it's really what is the value Of one page view so often times that's Really comfortable for folks to back Into versus there's a lot of questions About how you would price content for For training use cases but the things That toet just outlined whether you're Pricing it by you know the time and age Of the content Etc are really valuable And very it's often something Publishers Have thought a lot about in terms of the
Value of their content whether that's a CPM rate or RPM rate or something that's Familiar for them to back into okay now Let's expand here and talk about other Types of data we started off talking About Zillow and realtor and other real Estate data sources which is incredibly Valuable information there's also data About the stock market and Global Economies and sports and just we can Make a big list do you guys Envision Working with everyone I don't know from Like the ESPN stats team through like The NASDAQ I mean it seems like the Aperture here is almost infinitely wide Given the types of data that you could Ingest into the tobet system yeah Absolutely I think it's started with Publishers we' have expanded beyond that Right so we have folks who uh like and I Think this is why we for example have The the page base rates right which was Super important for for especially our API driven Partners so we have Partners Who have and this is going to be very Important for the election coming up Right they have really upto-date high Quality like election content right that Can be available through Tobit right um And we s from apis and you could access You could pay to get realtime election Coverage right from this partner we're Working with folks for example who do Have uh I think a lot of sports content
Right so as sports scores get updated Right you can consume this information You don't have to go out and scrape it You can get it directly from the source Right and oftentimes comes it honestly Oftentimes comes at fractions of a penny In in some cases okay so clearly people Want to get compensated for their Content you're working with two AI model Companies that shall be named later on To get the process going the apertur Quite wide when does the system begin to To fully operate are you guys running Revenue from your two AI model partner Companies through the system to Publishers now or does that happen later On this year that'll happen uh in a Couple months as part of the pilot we're Working on in a couple of months okay When that happens you guys have to let Me know because I'm so curious to see How it all kind of works when it turns On but just before we go there is a Shift in the wind I want to say for a Long time the robots exclusion protocol Re or just robots.txt Has been The Unofficial rule of the Internet essentially letting websites Say to crawlers and other sources hey go Away or here are the rules and there's Been some Push by I was going to say Perplexity I didn't know they were a Fellow portfolio company with you guys But the perplexity CEO said that's not
Law that's kind of good manners if Robots.txt falls and people no longer Respect it does that represent a Material threat to the toll bit model Actually no I think it it it dovetails Pretty nicely with I think I think some Of this reporting that came up this last Month right so I think I ifia alluded to This earlier right we had dozens of Companies using toit that saw in the Analytics product that wait content was Still being accessed right uh you know There were companies that weren't Supposed to be accessing that content That we technically blocked that we're Still coming in and accessing it uh the Argument on the other end is is yeah Well it's a best practice it's a Guideline right it's not really enforce So well we went back to I think this Speaks to I think the onboarding that Has happened since then right which in Which we say well we turn your robots Text file from a passive compliance to Active enforcement so if someone is not Supposed to access that we actually Force them to a bot paywall we tell them We take them to a page that says you are Not authorized to access this content we Put them on notice right so now you have Two choices either you go and you make a Licensing deal with this company or you Continue to act surreptitiously and Bypass this pay well and go scrape that
Content ah so you're not only offering People a door that they can come in Through if they pay a fee but you're Also building a wall to make it more Enticing to go through the door ah so Kind of carrot and stick if you will Okay I love that all right well guys Thank you both so much I'm very glad we Put you on the twist 500 because you Guys are doing very very interesting Things and I can't wait to see what Comes next and when you do get those AI Partners live give me a call in the Meantime I'm Alex Olivia toet thank you So much and we'll see you again later on On Twist welcome back to this week in Startups we have get another twist 500 Interview for you now if you care about The era of AI if you care about cyber Security you know it all boils down to Data so we've been taking a look at the Startups that are working in the realm Of data that are growing the quickest And are the most excited and that's why I'm very glad to have sayra on the show Today c y r a it's short for cyber erao Together and we are very lucky to have Tomar bar Elon with us Tomar welcome to The show thanks so much Alec really Happy to be here so we put Sierra on the Ts500 for a couple of reasons one was The recent fundraise the valuation Increase and Cadence of the work that
You're doing on the financing side but Also just because data seems so Important today that it's impossible to Ignore from a startup perspective it's a Little complicated when we talk about Enterprise data management so what I Want to do is start with just you Breaking down what C does in your own Terms for folks out there who may not be Yet familiar data is really changing the World As We Know It And Gardner says That by next year there'll be 180 Zettabytes of data in the world and and Just to put that in perspective and and I assume most of the audience is asking What the hell is a Zab bite so if you Sum up the number of grains of STS in The entire world across all the deserts And beaches and oceans you get to one Zetabyte so 180 times more than that and We're seeing how every Enterprise now is Becoming data driven and and hiring data Analyst and data scientist and data Engineer and that's a huge huge Revolution that almost every Enterprise In the world is undergoing and SRA the Goal of our business is to enable that Revolution and to enable these Enterprises to leverage data and use Data to benefit their customers but to Do it securely and to do it according to All the regulations and and compliance Frameworks so Tech runch and my friend Ingred London over there described you
Guys as having built a platform that Quote takes a full assessment of an Organization's data where that data was Created where that data is stored and Where that data is being used is that a Good summation of kind of what the Business does 100% okay the background Here given the Zab comment is that There's the world is a washing data but But I also presume that the average Company out there has never generated And therefore needed to store and Protect more data than they are today Just because it seems that everything is Kicking off more total information as Time passes yeah exactly and it's not Just the amount of data it's the number Of different data platforms and data Technologies and you have Snowflake and Data bricks and red shift and bigquery And etls and a bunch of different Platforms and they're all making that Data landscape much more bigger and much More complex yeah and you guys talk a Lot about how SRA will link to existing Native apis to let companies kind of Sort out where where their data is and Kind of get a better visibility into it And you discuss how that part of your Business is agentless and because I do Not do data work for large companies Agent list is just a term to me that That I know kind of loosely what it Means but why is that an advantage for S
As you guys approach the market in one Word because of time to Value if you Have thousands or even tens of thousands Of data stores and and and data Technology the cross your environment You need a very very very simple way to Connect into those data stores and if You need the opposite of agent list is Agent based so if you would need to look At these data stores one by one and Install software on them or connect each One separately that just doesn't scale An environment where you have tens of Thousands of data stores and and Hundreds are popping on and off every Day okay so it's essentially it's a Complexity point and you guys don't need To have people go out and do it okay That makes a lot of sense to me now dspm Is data security posture management and This seems to be a very big deal for Both CRA and also I would say the larger Data cyber security space so visibility Into where there is sensitive data is Part of that but it seems to also be a Question of who can access that data so Should I think of dsbm as kind of like Um a map and then a set of keys perhaps Yeah totally a map a set of keys and and Maybe most importantly highlighting Where you have data risk and and where You have problems and where you have Exposure that is what it it essentially Comes down to say dspm it's a super
Exciting space and and from our Perspective a space that didn't exist Three four years ago at all when we Started the company and you know to all The founders listening to this podcast When we set out to to to start the Company not in our Wess dreams did we Imagine that dbm and daa become like a Domain of its own so like you said now This is a space that's recognized by all The largest security companies out there And largest customers and largest Research firms so it really is has been An incredible journey to see this just LW them and and and just become a thing That from thin air you could say or as Uh as people like to say from zero to One that don't so my question is Companies have had data for a long time The cloud isn't new having you know data Spread around a hybrid environment not New so why is dsbm something that just Kind of came into being in the last Couple of years or what drove the need For this that wasn't there before it was Always always a problem and you always Had a lot of data and at no point was it Easy for an Enterprise across its Thousands tens of thousands of employees To know what data they have out there But this question has really come to the Forefront now that enterprises are Looking to leverage data as their Business driver and as their key to
Success and we're seeing so many Companies where we're speaking to the Tech executive there and they're saying The CEO is is speaking to the entire Company and talking about data as the as Their business differentiator and as the Way this company beats its competition And and serves its customers more so Suddenly I feel like that entire Enterprise is putting data in the front And chief data officers actually a Sea-level executive that's in charge of Data something that didn't exist or was Very rare 10 years ago and suddenly We're seeing this in so many of of the Largest Enterprises in in the country so This is putting a huge focus on data at Enterprise-wide and this also includes Security so suddenly data is becoming a Much more important pillar and and Element to security teams as well as to The entire company okay so the overall Data platform that SRA offers to Customers does two main things then one It helps people keep their data secure Understand where it is who can access it And so forth and then also allows Companies to better leverage it to Generate insights build better stuff and So forth so it's a shield and it's also Kind of a sword at the same time is that Fair yeah it's totally fair I'll I'll Give an example I think now Chad GPT Came out around a year ago it was and
Suddenly a lot of Enterprise wanted to Leverage Chad GPT because what's more Amazing than getting twice the amount of Work done in half the time right but Then these enterpris are asking how do We use chat GPT what data are we sending Into chat GPT are we sending our most Sensitive IP or customer data into these These tools and even asking wait are There things we're not allowed to use Gbd4 cuz if you're a financial company You can decide whether to give a loan to A person based on cha GPT that would Violate the the fair lending rules yeah So you want to to there's so much Potential but a big Enterprise can just Turn this on and hope for the best they Really need to to understand what's Going on and that brings on the question Of what data is going into these Technology And and what are we using this these Technologies for yeah well I wanted to Kind of work our way towards your recent Funding round by kind of unpacking the Different things your company did Because I think it shows that it's doing A bit more than just what we might Bucket as cyber security frankly Although I do think all this lands under That loose umbrella I want to just talk About the the recent round for a minute Because a lot of Founders watch the show And they're always curious about how
People are who are successful Fundraising are approaching it so you Guys put together together a massive Round in I think it was announced in April $300 million $1.4 billion post About a year after your proceeding round So how did you manage to raise two very Attractive funding rounds within about a Year I think the answer is simple don't Focus on the funding grounds focus on Growing your business and I meet with a Lot of Founders at different stages and A lot of time the conversation is around How to to to approach fundraising And from my limited experience funding Is is you have to do it like very very Quickly and efficiently and not to think About it when you're growing your Business because it's so hard to to Focus on the customers and and to focus On closing deals and on on giving value When you're distracted by by fundraising So honestly it's not like something that Was so premeditated or It's not like we were plotting the Fundraising round months ahead of time We were focusing on the business and we Had achieved a lot of momentum and and Then it was more of a split-second Decision to to go and try to to Capitalize on that momentum to raise Capital I think that has to go into the History books as the most polite humble Brag I have ever heard because I I think
If you do have the metrics to make Fundraising quick and easyest something You don't have to focus on it does go Pretty smoothly um I just think that Probably more startups than fit into That bucket are probably being a bit More strategic because they don't have As much momentum perhaps so can you tell People who are listening anything about The company's uh financial performance In the last year 18 months I'm very Curious yeah totally and now just to go Back to that point I agree it's not like The circumstances aren't always Favorable and sometimes you have to Raise funding in not ideal circumstances Yeah I guess my point was more that it's Easier to achieve favorable Circumstances when you're not focusing On the on the fundraising oh absolutely But totally agree the reality is not Always ideal and not always like the the The way you want it to be the company Now were at tens of millions of dollars Of AR right now and grew I think 7x from 2022 which was the first year we started Selling through 2023 wow That was 700% growth on on ARR between year one And year two and now we're in the middle Of year three just closed a a very good U2 two days ago so so July 31st and Shooting to 3 to 4X that Revenue this Year so in the old days we used to talk
About the triple triple double double Double I've never heard the 7x three or 4X that's very very impressive now There's been a lot of conversation in And amongst the startup World about Balancing growth and profitability Growth and burn essentially what's the C Perspective on Cost Containment while Also pursuing incredibly rapid growth Our perspective is hire as fast as we Can while keeping the bar very very high So if you have an opportunity to to hire A great person that's an easy decision Always so we're pushing on engineering And sales and marketing and across all The Departments to to hire very fast While maintaining a very high bar and I Usually find that it's not easy to to to Find great people so when you set the Bar very high that kind of limits your Ability to to grow fast so uh yeah That's the the underlying underlying Methodology here I like that I think Sometimes companies are willing to not Loosen their hiring Norms per se but Simply be a bit more aggressive and Staffing up and I think that can lead to Cultural drift for example as certain Companies or just you know people that Don't quite fit in with the overall Vibe So and I quite like that now going back To going back to product on the Chad GPT Point and companies getting ready for Kind of an ai ai future how far along is
The average sayra customer in terms of Getting themselves ready to use their Data safely inside of an AI feature Because to me I know everyone's getting Ready or preparing or talking about it But I don't know how much progress They've made so far so usually the Business determines the pace and Security is is trying to tag along I Haven't seen many businesses where Security is the one with their hands on The wheel setting the pace so it's Usually Enterprises adopt you know the Business drives the business not a Groundbreaking statement here but uh Really there's pretty meaningful Initiatives to to adopt Ai and security Teams are are trying to tag along for The ride and and make sure that's done Securely but as a security teams it's Not easy because it really it's not like You can set the pace and it's not like You want to hold the business back so so I think a lot of cisos and and security Teams now are looking to be enablers and Looking to to see how they can help Drive the this data Revolution forward Rather than hold it back so I'd say they Like that job is not easy to both make The transformation secure while while Not wasting valuable time you joke that Saying the business drives the business Is uh is not a shocking statement but It's good to keep in mind that that will
Help us striate or differentiate AI Adoption levels which will then impact Uh overall purchasing flows so for Founders who want to serve companies That want to use AI that should help Them stack rent kind of what industri is To look at so it's useful even if it is In retrospect not the most you know Globe shattering Revelation but I Appreciate that all the same it's also Good to know what is true versus what Isn't now I'm curious about demand Because we know we talk a lot about Cyber security and I feel like there's a Breach every week that makes me sit up And want to cry and there's also this You know very exciting AI future out There and you guys can kind of help on Both sides so when it comes to like Demand for what s as building is it the The cyber security help me figure out my Data and keep it secure as side or is The we want to get ready for AI That's Driving more your growth today it's both I think when there is a business driver Like enabling AI that makes the projects Much more of a top priority and that Makes budgets bigger at the end of the Day when we go to the CFO and and when Our project needs to be approved by the CFO it's much easier when when the Reason for the project is it's an Accelerator for uh uh AI adoption than Purely risk reduction so so that
Definitely helps us with the economical Climate in in the last couple years We're seeing a lot more interactions With CFOs and and CFOs want much tighter Control on on spend so so the fact that We're like tying into a critical Business initiative is is amazing and And really helps Di's business so Essentially CFOs are willing to spend Money on gas pedals but are a little bit Less excited about spending money on Seat belts okay I can see that that also Helps me understand kind of where people Are putting more of their focus today Because it does seem that overall Software growth has slowed so I think That companies wanting to do more with Data to help drive more Revenue makes a Lot of sense given where we are Economically today oh from a business Perspective like when when the market Dropped a couple years ago we were Really break in for a difficult time and And I think we were very pleasantly Surprised to see that at the end of the Day software that helps Drive the Business forward is still very much in In demand so we were able to to Accelerate back very very quickly and That was great yeah I'm not surprised That software has recovered in certain Areas but I am a little bit surprised at Some of the Enterprise numbers we've Seen from tech companies large and small
And one thing tomorrow that I've been Kind of tracking is just changes in net Retention at a lot of software companies And they just seem to be pretty Lackluster compared to recent historical Norms has has C run into any any kind of Like pricing pressure or anything kind Of from a macro perspective that could Be impacting results or is that a bit Too far away from where you guys are Today yeah so we have been feeling price Pressures and customers are tightening Budgets and and and it's harder to get Larger spends I guess if the climate Were different maybe were we would have Been able to grow even faster Yes Actually that's really interesting I Wonder I wonder if you're a 7x would Have been an adex for example going back To 2022 you can always do better we tell Our C no pressure or anything at all to keep Those numbers up though right yeah I Want to talk about just cyber security From a general perspective for a minute Because I I don't live in a cyber Security world my last major corporate Job I was so far down in the Oregon I Didn't have any real visibility into how We were trying to keep ourselves secure How are we doing as a species on cyber Security because it feels like we're Doing worse but I I know that that might Just be me readings and headlines so how
Are we doing in generally speaking in Cyber security today there is a lot more A lot more growth in this space and a Lot more understanding that exists in This space versus four years ago like I Said a second ago you could always be Doing better and and it's usually the Most fundamental problems that that keep Tackling and and keep biting companies And are the hardest to to solve it's not Necessarily the most sophisticated Grand Cyber security attacks that only the top Espionage agencies in the world can Carry out that are causing the largest Breaches or the majority of the breaches Usually it's the fundamental problem s Like having data that's just publicly Exposed because somebody accidentally Turned access on wider than he should Have usually it's those kinds of errors That end up causing the most damage and I do think that there's progress but It's a big problem to solve and and Things take time on that point about how Easy it is to make a mistake and have Data be exposed to the public we always Hear about uh leaky S3 buckets for Example that seems to just an never Ending issue and also um when I was Prepping for our chat I was going Through the different SRA things that You guys do and one of them is data Access governance which I kind of Summarize is like passports for data
Access like who can do what that to me Is like locking a door and making sure That only some people have the key which I which is good but we also have a lot Of encryption technology today that I Think both at rest and for data and Motion can do quite a lot and I um I Know the CEO over at a company called FL Entre Sharma who Tau me a little bit About um zero trust encryption and so Forth so I think about this but do we Need to have more companies just do a Lot more in encryption of both data at Rest and in motion to prevent the public Access mistakes from becoming so Dangerous and damaging to the digital Economy I'm not sure that's a magic Solution I think that applying Encryption could be incredibly valuable But there is a perception sometimes that Okay let's just encrypt everything and That will solve all our problems and That notion I don't find to be true at The end of the day you need the right People to be able to decrypt that data And and to be able to access that data And if all the data is encrypted then it Can't provide any value it goes back to The problem of how do I control who's Able to decrypt the data and and it kind Of goes back to the problem that we've Been talking about all right we we have To leave it there we will have you back On the show because I have many more
Questions but just before I go can you Please promise to not sell to like Google before you go public 100% I think The same way uh Nvidia and is now the The biggest company or at moment the Biggest company in the world and that's Thanks to the the data Revolution that We've been talking about yes I truly Believe in all my heart that the data Security in the future will be the Biggest cyber security company out there And that's just too big of an Opportunity for us to to give out out on All right folks you're already here First tomorrow promises to go public and Become the next $5 trillion company for Everyone who's been tuned in to these Twist 500 interviews we have more coming Of course if you want to check out the Whole list that we are growing as we Speak twist 500.com if you want to Submit a company for consideration alexw Launch. I'm Alex over on Twitter Jason Is Jason over on Twitter thank you Tomorrow for your time we'll talk to you Soon bye everybody thank you Alex
