How Code42 CEO Joe Payne grew Code42 to $60M revenue and 800 customers in 2023.

guys last year Code 42 with their combined products h10 million bucks of Revenue they sold off a $50 million or sorry a $70 million Revenue stream for 250 million bucks to a private Equity Group Joe's now in a very good defensible position with a bunch of cash on the balance sheet and the product Left Behind which is a product they're very excited about at Code 42 doing still 50 million bucks of Revenue that was a year ago targeting 20% year-over-year growth who put them if they hit it at 60 million in AR this year we'll see what happens there think about 800 customers on that product several paying uh more than a million per year which is great 220 folks on the team 30 quota caring reps as they continue again to build products here to make sure that internal employees don't accidentally or or intentionally take files from your company into their next gig hey folks my guest today is Joe Payne he's the president and CEO of Code 42 a leading data security company that focus on reducing the risk of data leakage from Insider threats with more than 20 years of experience as CEO he's a proven track record leading high growth technology companies uh over a long period previously he served as CEO of eloqua e security and E Grail and as president of I defense Joe you ready take us to the top let's go all right so Code 42 I guess help us understand how you're helping big I assume SAS compan or companies in general prevent Insider threats is it social engineering is it team training is it code exclusively what is it yeah it's really interesting Nathan um a lot of security is focused on the external threats it's on the it's on the bad guys on the outside and that's it's easy in the sense that you can when somebody tried to reach your network they are a bad person and you can hit them with the hammer and you can isolate their Network traffic or their machine or something like that um and security people are really attuned to those kind of threats and and they're growing and they're a big deal and we need to pay attention to them however um if you look at what actually happens in terms of data loss in an organization most data loss actually comes not from external actors but from insiders from employees from contractors um sometimes malicious sometime accidental sometimes sort of in the middle and so what we we see is that about 60% of employees admit that they took data from their last company to help them in their current job and um and that's the 60% that admit and our data pretty much shows that it's almost 100% of people especially when they leave a job take a bunch of data with them so we founded this company sort of inside another company we founded this product called Insider uh we built it from scratch starting about five years ago um to really tackle that problem and give visibility for security people into hey who's moving stuff to Dropbox who's putting stuff on a thumb drive who's uh you know opening up a window in Gmail and emailing themselves some source code or customer list or or or things like that and so um we built this product to give great visibility and also you know we're we're people uh that like building great cultures so part of what we've come at this is with the strategy to help course correct employees and contractors to not do things they shouldn't do maybe not go against their you know wor not be their worst self and take a bunch of things they shouldn't and so we provide part of what we do is also provide a lot of education and positive reinforcement for people that um to do the right thing so that's a key part of our strategy also understood and and what do you charge for this technology on average per month or per year well that's a you know we sell to organizations from as few as 200 people uh our largest customer has over 120,000 employees so what we charge really depends on your size but think about it is you know maybe um you know $100 a year $120 a year per employee um that's just a good rule of thumb but obviously it depends on you know the sophistication of the product that they buy how how many features they buy Etc I mean our product as an example connects to things like salesforce.com that's an option you can have so you can see who's exfiltrating data using Salesforce our product connects to your one drive your G Drive account to see who's publicly sharing documents that they shouldn't share there because that's where all our data sits you know our our the product that product makes tons of sense I we hear about this all the time um I guess just to just to hone in there a bit though a company with 120,000 employees using you if you build them the full rate of a 100 bucks per seat you're doing the same math I am right we'd love for you to be making 12 million a year on that contract maybe you are well would you say the average though customer paying you is paying per seat is it more like maybe 20 per seat 50 oh no no the average is closer to 80 bucks a seat so you know there's there's comp companies that are paying us more than that uh obviously but and there's companies that buy 120,000 seats they they get to price they get a better price as you would expect so um it's it's all over the map but we have a number of multi-million dollar a year customers for sure and um you know this is a multi-million dollar problem it's um our research shows that the average cost an organization $16 million think about that so a big company is going to pay a lot of money if they have a breach from an Insider so we're we're a small drop in the bucket compared to that oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 287 interviews I've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different valuations inside of your founder paath dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from realtime valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22% of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all the recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founder path.com products SLV valuations or if you go to founder path.com and hover over products click on get your valuation here and go ahead and sign up to give it award again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview that that makes sense and what would you say you know you have teams as small as 200 and as big as 120,000 what would you say your sweet spot is a thousand person team what would an average be there well you know Nathan the thing I love about SAS software is it's democratized software for everybody so the same awesome product that I'm giving people uh you know at 120,000 I'm giving to a 200 person company so so I'm giving them that same power and capability um so I'm not going to define a sweet spot per se I will say the people that are buying fastest today from us are midmarket companies so think of that as companies between sort of a thousand and 5,000 employees because honestly they're making Fast decisions today and it's much easier for them to make decisions today in this economy big companies are taking forever to make a decision on new technology purchases so again that if you talk about who's buying today I would say The Sweet Spot is in that 1,000 to 5,000 sweet spot or medium I understand there's obviously edges on both sides but a thousand person company wanting to sign up with with Joe Payne's Code 42 you know paying 80 bucks a seat we can sort of think about okay these average contract values are called 80 120k on average something like that yeah that's...