Cororevenue, valuation & funding

Introduction hey folks my guest today is george lieber he is the cio of the idf's military police which put him on a technology track or so he was a cio he's now a serial entrepreneur that built six startups before coral which he's building with his three co-founders to be the go-to cyber security platform for mid-market companies he's passionate about d crapping marketing which we love draw are you ready to take to the top i am all right how does a cio i mean in the idf get excited about fixing marketing oh it's a long story when we have a little time but i started the technology track uh moved around uh after leaving the military and uh ended up in the us uh for about 20 years and one of my uh tracks that i took was i worked for a marketing company as a technology guy and then i looked at the marketing guys and i thought hey you know there's lots of it's a lot more fun so i decided to move into that direction and that's how i ended up being a cmo after being cio and chief security officer and all kinds of different things amazing okay and then when did you leave and start coro what year was that so we started uh in 2014. 2014. okay and for folks not familiar with the product maybe tell an example give an example of a customer and what they pay you for what do they get okay so our average customer is a mid-market company uh that is very concerned about security uh security cyber security i should say um and can't afford or deal with all the uh products that are out there to create a uh cyber security environment for themselves they would need to buy anywhere between six to 15 different products uh spend between 40 to 115 per user per month and then deal with all managing and integrating and dealing with all of these platforms and what we've done was we created a single platform that takes care of all the security needs of a mid-market or a small business uh company uh for seven dollars a month um and uh just covering everything from their users to the devices the user the networks that they uh connect through to the cloud services to their email everything through one platform uh which is extremely simple to use so that's supe that's what when the average company signs up how many seats they typically pay for normally our sweet spot is around 600. okay around 600 seats at seven bucks a seat right yes okay very cool by the way super cheap price for this kind of security package right not cheap affordable the whole affordable no and i'll explain we actually think that the industry is designed for the enterprise market and therefore it can afford to price itself that way the enterprise market can pay 40 50 100 bucks per user per month uh my customer can and um really what the enterprise players have done was price it in a way that justifies the millions of dollars that they spend on marketing and on winding and dining their customers and we come to the table and say none of that focus on the customer give them exactly what they need in a way that they can actually manage it for a price they can't afford yep now uh i want to go back and get the story of your first customer in 2014 but let's not bury the lead how many Currently serving 4500 customers customers are you working with now today we have about 4 500 uh customers on our platform today wow and they each have 600 seats not all of them we have customers are as small as 20 people and customers as large as 30 000. oh wow yes so the sweet spot is the 600 700 okay okay 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 2807 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 evaluation 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 frowner path 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 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 real time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to 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 this 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 valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna 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 founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl 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 but is it is it fair to say that the total number of secret platform has something around two to three million seats it's actually it's actually very fair to say you get it almost exactly amazing all right give me the back story here tell me the story of how you launch close your first customer and if you can without you know breaching you know any agreements can you name who that customer was we cannot name any customers nobody wants to be named in a security uh how did you how did you find them then tell us the story so the story is that we very much like every other cyber security company in the world started off as an enterprise plate uh we looked uh to sell into the enterprise market and uh in that market there are 2700 vendors so uh fierce competition and we noticed that while we were targeting these large players the people that were actually interested in buying were mid-market and smaller players and then we did a complete redirect we looked at that market and we said why have they not bought so far cyber security and uh understood what were the issues the issues were complexity and price and dealing with multiple platforms and then we decided to take a take a break redesign the product to fit that market which is exactly what we did we launched with uh secure cloud in 2018 and then uh rebranded and launched a new uh version of a platform just this year uh called renamed coral and uh even made it simpler to use um more integrated uh with what our customers were interested in which was mostly email and storage and endpoint devices and uh gave them something that was extremely easy for them to absorb manage and uh and get the security they need and george you had obviously the major rebrand you have new products coming out all over the past 12 months what was growth rate revenue growth rate and percentage over the past 12 months so we have grown 300 year over year for the last three years straight wow okay that gets harder to do once you're bigger absolutely it's much easier to grow from 100k to 300k it's much harder to grow from 6k 6 million to 18 million you know yeah it's a whole different ballgame so i mean do you think you can break 18 Monthly recurring revenue million this year that's what we're shooting for is that a stretch goal or is that like you that's a very comfortable goal for you nothing is comfortable especially not being today's economy right uh it's uh we can't take anything for granted we do think that our product is uh uh has it's a very unique uh market product fit where the market really needs what we offer uh and we offer exactly what they need for the price that they can afford and jorah it's fair to say if you're growing at 300 year-over-year and you're planning to end this year at 18 is it fair to say you closed last year up north of six something like that yes that's great now where is most this growth gonna come from do you think it's gonna be from adding new seats across the current 4500 customers or adding new customers all together it's adding new customers our um even though our uh turn is a negative turn because how negative uh it's uh we're at 103 the idea here is that our customers actually add seats but that's not uh the growth engine the growth engine is uh getting new customers on board either directly or to our uh partners uh we sell through uh very very uh wonderful channel uh partners uh msps large and so forth uh so about fifty percent of our revenue comes from that can you share some of your top channels like can you name one of the partners that you're really proud of um i'm horrible with names so no i can't is it like a company though or is it like an individual with a big youtube channel no no it's all companies it's msps it's managed service providers these are people that uh do ip on behalf of uh companies that don't have an internal ip interesting and now yeah cause i and so i imagine because i was gonna catch you on this right you said you said you had two million seats well two million seats right at seven bucks a seat would mean you're doing 14 million of monthly revenue which obviously you're not and that's because a lot of those seats are either not paid or that these resellers are keeping most that seven dollar margin so uh we do have a freemium model so our freemium model is all about uh free monitoring for life and then if you want us to also do the mitigation on your behalf then that's when you start paying so we do have lots of people on our platform on the uh on the free monitoring side where they get alerts this is a little bit of old-school cyber security where uh platforms send you alerts and tell you when things go wrong and then expect you to fix it our platforms ai engines can go in and fix cyber security issues on your behalf and that's when you start paying i got it so based off my quick calculations you've converted something like 150 000 of the 2 million into actual paid seats correct and so how do you get more i mean can't you penetrate that i mean that's that's not a horrible conversion rate for you to pay but can't don't you think there's room there to expand and get that conversion rate higher absolutely absolutely and that's a major focus for the organization our growth historically has also come from getting people into the freemium and then moving them on to the page so we are if our growth has been so far completely uh organic through new customers coming in we do expect and the reason we've invested in giving people uh a premium product which obviously costs us money is exactly for that reason because we want to convert them into uh paid customers uh within a reasonable period of time draw you have to teach us about this my audience is always asking nathan have people on that are successfully doing freemium to paid you're doing it so what's the playbook how are you currently converting folks from free to paid oh providing value it's very simple can you quantify though like are you using snowflake to track engagement metrics and then optimizing for those specific engagement metrics before they hit the paywall can you like get detailed there so the value that we have is a little different you see what we're doing is we're providing them for the first time disability into the real uh risk environment so we're for free they're they're connect to our platform they deploy us onto their email and onto their endpoints and onto whatever it is that they're using their storage systems or whatever and then suddenly they start getting visibility into the scary stuff that might be happening and once they start seeing more and more of those alerts and they they realize that they are at risk uh it's uh a relatively easy step over the pay wall where they say you know what i don't want to deal with this race let coral do that on my behalf so and then we uh jump in and get all the risks and they they get nice reports on a daily basis of you know uh all the terrible stuff that could have happened but did because that is a major lesson right there guys if you can if you can emulate that in your business right if you don't convert to paid here are all the bad stuff that could happen that we're going to make not happen for you that's i think a great analogy applicable to anyone doing premium to paid sas it's just easier for you to say the bad stuff because literally your website's hacked your emails you know phishing attack or whatever our favorite story is uh it's the it's the ceo who uh suddenly uh their i.t guy sees that the ceo is connecting to their email uh from a country they're not in uh and and then they realize oh crap you know somebody hacked my ceo and i found out by mistake um and now i need to react to this but what if i were asleep what if it was 3am in the morning when this happened we are we're our machines our ai the the beautiful part about having machines do the work that normally humans do is machines don't sleep don't take breaks and uh don't go on strike so they just run in the background and do uh all of the uh mostly in cyber security it's menial tasks it's constantly monitoring and running around and doing what in the cyber security world is called chasing events and uh what we do is we let the machines chase the events and let the humans deal with really important stuff and not deal with you know just just turning on and off or we uh sending a new password to someone or identifying when someone's email has been uh infiltrated with malware or something like that now jorah before we wrap up we obviously love to learn about how founders fund their business so did you bootstrap or Bootstrapped have you decided to raise capital we raised capital from day one uh we were part of a uh uh an accelerator an accelerator yes thank you we were part of an accelerator uh and then we raised uh money over the years uh we've raised over 125 million dollars so far yeah so break break that down for me the first round was in 2016 i believe how much was that for no the first one was in 2014 we started yes we started with a seed uh round of 1.5 million um and then we just uh did our c round of uh 80 million and then uh in between we raised another 35 million yep i i think what what the uh the b was in 2018 i think for 20 something like that correct and and did you raise it was the report of the series c was for 60 million was it really 80 and 20 million was secondary no it's pretty um so the official sea round was 60 but we raised another 20 just before that so uh okay we prefer to look at it as an in uh in total for and did you crave and you've been doing this your early employees have been with you since 2014 did you use this as an opportunity to create a little bit of secondary opportunity for them or no we have not had yet tell me why i mean it found there's not a right or wrong answer here but why'd you decide not to do that well part of it is because the founders and the employees believe in the organization that they don't want to give up their equity this is uh we believe that we are in a position to dominate one of the uh only blue oceans left in cyber security which is made in small business market and small business the entire industry is focused either on the consumer market or the enterprise market there's a massive the question is less about do people believe in the company or not it's more about there's a newly married couple who's been with you since 2014 and finally want to have a kid or buy a house and all of their net worth is stuck in the business and they'd like to buy a house how do you help them do that uh well we paid very competitive salaries and we have great benefits so it's it's not about the exit we've never ran the organization uh with the goal being an exit we've built the organization all of our employees are behind us on that by having a vision on riding along and being the dominant player in the market and the wrong that we're writing is actually the fact that this huge uh segment of the economy has been completely neglected by the industry couple last questions here drawer uh the series a you raised that was in i think 2016. how much was that for uh four and a half or five and a half i don't remember exactly five and a half and which there i mean it sounds like you have felt a pretty standard fundraising path is there anything looking back you would have changed and done differently not really i think that uh the key thing that we've done right was we've selected uh to partner with investors that really believed in our vision uh so um jdp who has been with us literally from the sea days until today they've invested in every single round every single round until the last one until the uh cnc um you know it's very important who you partner with and we took that decision being that uh all of my partners and i have been around the block several times we realized how important it is who you partner with and we've made a very conscious decision to go with jdp and they've been a phenomenal partner all through uh these these uh seven years that's jerusalem venture partners draw going back do you remember which year you passed a million dollar run rate uh 2019 2019. okay so after you passed a million run rate after you raised that 20 million series b yes wow okay so i mean you were really able to sell people in on a vision then your revenue was fairly young for a series b company absolutely wow okay very cool all right anything i missed you want to touch on before we wrap up i don't know you i think this is a great story i think we learned a lot from you so i think we can wrap up number number one well actually no i'll ask you one i'll ask you one last thing uh most folks in their series c are selling you know five to ten percent of the business were you guys serving that same range i can't disclose that you can't say if you followed the standard path or not we followed a relevant center yeah we tried to think well i'm sure you've seen the news reports on what the evaluation was well you closed before that though right hopefully you closed before the sort of market took a dip oh no so techcrunch reported that our valuation was 500 million is that accurate it's very it's very close okay very close that post money or pre uh it's uh post post okay very cool well listen we're rooting for you this will be a fun story to track and follow in the meantime let's wrap up here with the famous five number one what's your favorite business book um [Music] i'd have to say blink link number two is there a ceo you're following or studying number three what's your favorite online tool for building coreo ah that's a great question so we have a few but i guess hubspot was huge for us okay number four how many hours of sleep to eat every night four and a half four that's not a lot of sleep owners don't see how do you survive that feels unhealthy but maybe you're super human or something lots of caffeine i see all right and what's your situation draw our married single kids i am married to a wonderful wife and i have two beautiful daughters two kids and how old are you i am 53 53 last question something you wish you knew when you were 20. oh invest in uh invest early guys there you have it coro.net launch back in 2014 they were helping mid-market companies with team sizes have caught 200 to maybe a thousand quickly beef up their security and their security stack with with affordable pricing high value pricing seven bucks a seat on average they've just broken caught about a 12 million dollar run rate up from six million just six months ago growing 300 year-over-year as a scale just close to series c 80 million 500 million posts or somewhere in that range serving over 4 500 enterprises as drawer looks to scale and continue scaling this year dora thanks for taking us to the top thank you very much one more thing before you go we have a brand new show every thursday at 1 p.m central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 pm central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya