TWiST 500! Huntress, TollBit & Cyera | E1989
07 Aug 2024 (1 month ago)
Introducing three founder interviews from our TWiST500!
- The chapter discusses the challenges faced by founders in the domain of Security, Privacy, and Threat Analysis (SPTA).
- The chapter highlights the need for active enforcement of security measures, particularly in the context of institutional investments.
- The chapter emphasizes the problem of liquidity and its potential impact on the share price of companies receiving large investments.
Huntress CEO, Kyle Hanslovan joins Alex.
- The interview is part of a series called "Twist 500," which features interviews with CEOs of interesting startups.
- The interviewee is Kyle Hanslovan, CEO of Huntress, a cybersecurity company for small and medium-sized businesses.
- Huntress is a unicorn company that has raised hundreds of millions of dollars and is approaching $100 million in annual recurring revenue.
Celebrating a milestone in ARR and discussing growth strategies
- The company has reached $100 million in annual recurring revenue (ARR), a significant milestone.
- The company was founded in 2015 and has achieved this milestone in nine years.
- The company has experienced growth rates exceeding 70% for the past two years.
- The company's growth is attributed to its strong execution and the large total addressable market.
- The company anticipates continued growth in the coming year, potentially exceeding 70%.
- The company's growth is driven by its expansion from a single flagship product to multiple successful products.
- The company's growth is not expected to slow down significantly in the near future.
- The company's position in the market is discussed in relation to the CrowdStrike incident, which is seen as a potential opportunity for the company.
Impact of cybersecurity incidents on Huntress
- The speaker discusses the impact of a recent cybersecurity incident on their company, Huntress, and the broader cybersecurity industry. They highlight the significant demand for their services following the incident, as many businesses realized the need for robust cybersecurity solutions.
- The speaker acknowledges that the incident, while highlighting the importance of cybersecurity, also raised concerns about the potential for security solutions to inadvertently cause disruptions. They emphasize the need for increased investment in quality assurance (QA) and automated testing to prevent such incidents.
- The speaker explores the challenges of balancing aggressive security measures with the need for stability and reliability. They question whether the current architecture of operating systems, particularly the Windows kernel, is conducive to both robust security and system stability. They suggest that a more resilient architecture might be necessary to prevent widespread outages in the future.
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- Oracle is offering a special deal to startups that move their operations to Oracle Cloud Infrastructure (OCI).
- This offer will cut a startup's current cloud bill in half.
- Oracle Cloud Infrastructure provides a platform for database management, infrastructure, app development, and AI integration.
- The offer is valid until September 30th, 2024.
- Startups can check their eligibility for the offer at oracle.com/twist.
- The offer is limited to new OCI customers in the US and is subject to minimum financial commitment and exclusions.
Huntress's services for SMBs and endpoint detection and response
- Huntress provides endpoint detection and response (EDR) services for small and medium-sized businesses (SMBs).
- The company focuses on protecting laptops, workstations, and servers, as these are the devices where sensitive information is most likely to be stored.
- Huntress's EDR solution is designed to detect and respond to threats early in the attack lifecycle, before they become critical.
- The company uses a combination of software and human expertise to deliver its services, enabling SMBs to access enterprise-level security capabilities at a more affordable price.
- Huntress's approach is based on the idea that SMBs need a solution that is both effective and easy to use, rather than a complex and expensive system that requires specialized expertise.
- The company's EDR solution is designed to be user-friendly, allowing even junior IT staff to effectively manage and respond to threats.
- Huntress's focus on cost-effectiveness and ease of use has enabled the company to achieve significant growth in recent years.
Intercom - TWIST listeners can get 90% off Intercom’s platform
- Intercom has developed an AI-powered customer service platform that aims to improve customer care while also saving money and controlling costs.
- The platform utilizes an AI co-pilot named Finn, which assists customer support agents in resolving issues quickly and efficiently.
- Intercom is offering a 90% discount to early-stage and high-growth startups, allowing them to access the platform at a significantly reduced price.
Selling to SMBs: Challenges, strategies, and early lessons
- Selling to SMBs is challenging due to high churn rates, low average selling prices (ASPs), and the perception that they are difficult to manage. However, the speaker's company, Huntress, has found success in this market by focusing on managed service providers (MSPs) as their primary customer base.
- Huntress's go-to-market strategy involves partnering with MSPs who serve a large number of SMBs. This creates a "one-to-many" model, allowing Huntress to reach a significant number of customers through a smaller number of partners.
- Huntress provides a high margin to its MSP partners, who handle the entire sales cycle, including marketing, sales, support, and renewals. This allows Huntress to achieve high customer lifetime value (LTV) and net dollar retention rates, as MSPs constantly add new customers to their client base.
- Huntress's model has been successful in North America, Australia, New Zealand, and English-speaking Europe. The company has tested its approach in different regions and found that it can be adapted to various markets.
- Huntress's success in the SMB market is due to its unique go-to-market strategy and its focus on providing value to MSPs. The company has had to blaze its own trail, as there are few other companies that have successfully targeted the SMB market in this way.
- One challenge Huntress has faced is that larger SMBs (over 100 employees) often have their own internal IT departments, which may be reluctant to work with MSPs. This has led to a lower growth rate in 2023, as Huntress has had to adjust its strategy to address this challenge.
Addressing internal IT departments and IPO considerations
- The speaker discusses the challenges of scaling a business and the importance of adapting to market demands. They initially focused on serving small and medium-sized businesses through service providers, but realized that internal IT departments were reluctant to work with them. This led to a shift in strategy, opening up direct sales channels to reach a wider market.
- The speaker also reflects on the decision to not go international sooner and the importance of expanding into the mid-market segment. They acknowledge these as missed opportunities.
- The speaker discusses the recent Google-Whiz acquisition attempt and the decision to decline the offer. They emphasize the importance of having conviction in one's company and mission, even when faced with lucrative offers.
- The speaker shares their perspective on IPOs, highlighting that it is not necessarily a goal in itself but rather a milestone in a company's journey. They emphasize the importance of having strong financial performance, a clear vision, and a large target market.
- The speaker discusses their current financial position and the fact that they have access to ample venture capital. They are not rushing to go public, as they believe the current stage of the company does not warrant it. However, they acknowledge that an IPO is inevitable if they want to continue growing and making a difference.
- The speaker highlights the challenges of navigating the IPO process, particularly the need to attract large institutional investors who require significant investments. They emphasize the importance of finding the right time and the right valuation for an IPO.
- The speaker concludes by stating that they are committed to their mission and are not looking to be acquired. They believe that their company has a long-term vision and that an IPO is just one step in their journey.
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- Lemon.io offers a 15% discount on the first four weeks of developer time for listeners of the "This Week in Startups" podcast.
TollBit’s Olivia Joslin and Toshit Panigrahi join Alex.
- TollBit is a startup that has raised one round of capital.
- The company focuses on the intersection of online content and data with AI model companies.
- TollBit was founded in early 2023.
Tollbit's early development and fundraising journey
- The speaker and their team recognized the potential issue of AI tools scraping the internet for information, particularly after the release of GPT-4. They observed that these tools were accessing websites like apartments.com, Zillow, and realtor.com without permission.
- The team realized that this issue would become more widespread as AI tools became more popular, potentially leading to problems for websites and online publishers.
- The team decided to build infrastructure to address this issue, recognizing the need for a solution as digital publishers began to experience the negative effects of AI scraping.
- The company was officially incorporated in October or November of the previous year.
- The speaker and their co-founder began discussing quitting their jobs in November and December, as they saw increasing demand for their solution.
- In January, the company began fundraising and secured both a pre-seed and seed round by February, totaling approximately $7 million.
- The seed round was led by investors focused on AI, while the pre-seed round included investors from media companies.
- The company currently employs nine full-time employees, primarily focused on engineering, with a Chief of Staff supporting sales and client communications.
Media readiness and increasing publisher onboarding
- The text discusses the growing trend of AI companies using online content for training their models and the challenges this presents for publishers.
- Publishers are increasingly aware of the need for a sustainable revenue model in this new landscape, as AI companies are often hesitant to pay for content access.
- TollBit is a platform that aims to address this issue by facilitating micropayments between AI companies and publishers for each access to a piece of content.
- TollBit has seen a surge in publisher onboarding, particularly after articles highlighted AI companies circumventing robots.txt to access content.
- TollBit works with publishers of all sizes, recognizing the importance of niche content for AI companies.
- TollBit is currently piloting its model with two AI companies, with the goal of establishing a standardized pricing system for content access.
- The platform allows publishers to set their own rates, but TollBit is exploring ways to automate pricing based on factors like bot level, page level, keyword, time, and directory.
- The text suggests that the future of content access for AI companies may involve a system of micropayments, where each access to a piece of content triggers a small transaction.
Flexible pricing models and expanding data types for AI partners
- Flexible pricing models for AI partners: The discussion focuses on the need for flexible pricing models for AI partners who want to access and use content from various sources. This includes pricing based on factors like the age of content, its popularity, and the type of access required (e.g., API-based access).
- Expanding data types beyond publishers: The conversation highlights the potential for expanding beyond traditional publisher content to include data from other sources like real estate, stock markets, sports, and even election data. This would allow AI partners to access a wider range of information.
- Addressing the robots.txt challenge: The discussion acknowledges the potential threat to the TollBit model posed by the potential disregard for the robots.txt protocol. However, it emphasizes that TollBit is actively addressing this by transitioning from passive compliance to active enforcement, creating a "bot paywall" to deter unauthorized access and encourage licensing agreements.
Tamar Bar-Ilan of Cyera joins Alex.
- The chapter focuses on an interview with Tamar Bar-Ilan, the representative of Cyera, a company specializing in data security.
- Cyera was included in the "TWiST 500" list, which highlights the fastest-growing and most exciting startups in the data security and AI space.
- The interview aims to explore Cyera's work and its significance in the evolving landscape of data security and AI.
Cyera and its data security mission
- Cyera's mission is to enable enterprises to leverage data securely and compliantly, as data is becoming increasingly important for business success.
- Cyera's platform provides a comprehensive assessment of an organization's data, including its location, creation, and usage.
- Cyera's platform is agentless, which allows for quick and easy integration with existing data platforms and technologies, even in complex environments with thousands of data stores.
- Cyera's platform focuses on Data Security Posture Management (DSPM), which involves mapping and securing sensitive data, identifying access risks, and highlighting potential vulnerabilities.
- DSPM has emerged as a critical area of focus in recent years due to the increasing reliance on data for business operations and the growing need to protect sensitive information.
- The rise of data-driven business models, the appointment of Chief Data Officers, and the increasing importance of data security have all contributed to the emergence of DSPM.
- Cyera's platform helps companies keep their data secure and compliant with regulations.
Overview of Cyera’s data platform and recent funding
- Cyera's data platform helps companies understand and control their data, providing both security and insights. The platform acts as a shield by protecting sensitive data and a sword by enabling companies to leverage data for better decision-making and innovation.
- The company's recent $300 million funding round, bringing its valuation to $1.4 billion, reflects its rapid growth and strong performance. The funding was raised quickly and efficiently, demonstrating the company's momentum and success.
- Cyera has experienced significant financial growth, with its annual recurring revenue (ARR) reaching tens of millions of dollars. The company grew its ARR by 700% from 2022 to 2023 and is aiming for a 3-4x increase in revenue in 2023.
Company growth, AI adoption, and demand drivers
- Company growth and AI adoption: Companies are prioritizing AI adoption, driving demand for security solutions that enable safe and secure data utilization within AI applications. This trend is influencing budget allocation, with CFOs more willing to invest in solutions that accelerate AI initiatives rather than solely focusing on risk reduction.
- Security teams as enablers: Security teams are shifting their focus from solely preventing breaches to enabling secure AI adoption. They are actively seeking ways to facilitate the data revolution while ensuring data security.
- Demand drivers for security solutions: The demand for security solutions is driven by both the need to protect data from cyber threats and the desire to enable secure AI adoption. The latter is becoming a more significant driver, as it aligns with business priorities and leads to larger budget allocations.
- Pricing pressures and market conditions: The software market has experienced pricing pressures and budget tightening, impacting growth rates. However, solutions that drive business growth, such as those enabling AI adoption, continue to be in demand.
- Cybersecurity challenges: Despite advancements in cybersecurity, fundamental issues like accidental data exposure remain prevalent. Addressing these issues requires a multi-faceted approach, including data access governance and encryption technologies.
- Encryption as a potential solution: Encryption, both at rest and in motion, is seen as a valuable tool for mitigating the risks of accidental data exposure. However, it is not considered a magic solution and requires a comprehensive approach to data security.
Encryption's role in data security and future IPO plans
- Encryption alone is not a complete solution for data security.
- Accessing and decrypting encrypted data requires the right personnel.
- Data security is a crucial aspect of the data revolution and has the potential to become a major player in the cybersecurity industry.