How Coro CEO Dror Liwer grew to $100M revenue and 13.5K customers in 2024.

next speaker just closed a $100 million series D we usually don't celebrate funding but I'll celebrate the funding here because he's also very transparent he's a natural teacher we're going to dive into the story the security SAS space today and how he's broke 50 million bucks of ARR please tell me welcome to the stage dra lure of k.net Jor it's great to have you again thanks for being back come on up here um did I get the numbers right it was $100 million series d the series D was 100 million total raised so far was just north of 280 and the valuation on the series D was about how much um the Press has conf has stated that we don't state it publicly but the Press said it was 750 MH and uh and they were pretty close okay press is generally generally close so 750 okay great let's go back to the origin story so you got going I mean when do you guys when was the first line of code written for k.net would you say the first line of code like the MVP uh 2014 2014 so we still see like pretty small Revenue up to really like it looks like 2019 here right what took so long to get to revenue that's a great question um so we are a cybercity company for those of you who don't know we Target mid-market and small businesses and uh initially you like that right I love that throw back I love that I love those colors still to this day I think orange is my favorite color from a branding perspective I got overruled by my partners uh but basically we started off like every other cyber security company uh trying to sell a niche product into the Enterprise Market very quickly understood that that market was um uh not very uh receptive to new ideas um started um really morphing the product got uh the product to be a lot more complete continued to sell to the Enterprise and then I remember the board meeting where I presented on a big graph saying here's where we are selling here's who's buying maybe we should sell there and what was there this was uh mid-market and small businesses midmarket and small okay that really love the Simplicity that we uh created that really led the whole concept of an all-in-one so we slowly grew the product from a very Niche product to a platform that covers basically everything that a midmarket or a small business needs try and ignore everything you've learned over the past years because I want people to like get get in your head in this moment of time when you pick push on this website the thesis was that you were selling what was it to to to to police group it was uh trying to uh so so the attack Vector was called com jacking which uh is a name I actually coined and the whole concept was preventing a man- in the- Middle attack uh on in the wireless realm so either Wi-Fi or cellular it's very very easy for an attacker to step in the middle and basically intercept all the traffic and then either manipulate the traffic steal the traffic or whatever and uh yeah so when we went to sell this people said oh that's a great technology we had patents we won awards and everything but uh but people said it's too much of a such a specific Threat Vector uh that it wasn't really um they weren't willing to spend money to prevent it it's not about just a spending the money they weren't willing to add one more thing to the stack I see that's a very um when you look at it from the eyes of uh Chief Information Security Officer or an IT person adding something new to a stack has additional costs mhm uh which is why cyber secur is so broken MH uh because you need to have layers and layers and different tools an average company on the Enterprise side will have 40 different cybercity products that they've bought each one of them has a massive um side cost not just the cost of the software but the team the training the the uh the uh maintenance and so for and so on let's push this forward and I want people to take a snapshot in their head so they can follow along with the story right so this is the funding history right first off you had three co-founders I think right uh three co-founders other than me so four total did you guys do the easy thing 25 each yep fair enough he owns it 25 each was it a simple as that you're like okay Pizza beer 25 feels right let's go it it was uh we all brought so much to the table so it was clear that each one of us has equal value and therefore we should have equal share and you're running for president soon I am running foral very I'm saying very very political answer but no it is what it is but okay so anyways you start with 25 25 and then you're first seed round series a 5.5 million 2016 I mean most people were selling 20% in their seed round would you fair was it around that just around that yeah okay so that was like called like a 20 million valuation you were still though pre a million 2 million of AR in 2016 right in 2016 we were zero zero okay yeah yeah so you don't really do that big round until 2018 20 million and if we go back to the revenue graph we still see basically no zero or zero in that range what was being valued at the time was it the patents um it was both the patents and the potential okay because we started Focus we I think we really showed that the potential was phenomenal um smbs are the least protected um animal in the in the business world and if you wanted to know how big that opportunity is we can ask this audience I think all of you are what we would consider smbs under 2,000 employees how many of you actually have endtoend cyber security that you can trust uh covering your devices the network the cloud the email and the data yeah no some people three people by the way for the rest of you 40% off on cororo if you go to k.net SAS openen oh he's a I've rarely meet an engineer that can sneak in a sales pitch at the same time that was very good do it one more time because it was so good coral.net SAS openen 40% off on our entire I love that that's great all right so but but here's an interesting thing every body in this room will spend easily 50 bucks a user on CRM but they won't spend $15 a month on Cyber SEC until they get hacked and pain until it's too late right you're selling you have that's the problem with what you sell right is you got to sell that pain and no one will pay for until they feel the pain so let's talk about the story though right so you're going from this you learn you learn you learn 2015 2016 you learn you learn okay now this is the new messaging 2017 yes so basically in 2017 we created this all-in-one MH uh that covered basically um Extended what we've originally done so we were very much in the network space then we extended it to SAS on the one end and to the device on the other end and we launched it in uh 2017 we called it secure cloud and that's really the the uh the time where we noticed that the Simplicity the concept of all-in-one was really uh attractive to the ICP that we weren't even considering MH the midm market the small business uh you know um 20 to 2,000 employee range uh which you know all four Founders come from the Enterprise world and to us this was a uh sort of like an epiphany that there was a market and they were buying and they were interested so you keep learning from 2017 2018 2019 now this is what your website looks like in 2019 feels more enterpris right less words less colors more direct right using Office 365 G Suite Dropbox you know plug Us in uh let's go forward you keep learning you keep learning here's what you look like now in 2021 you've expanded the industries you're serving Healthcare manufacturing which of these six sort of Industries was making up the most of your Revenue in 2021 do you remember uh actually I would say pretty equally distributed one of the things we're super proud of is the fact that uh we are very evenly spread across verticals so we're not exposed in any way to a specific vertical tanking or something like that like uh uh and we've all had our battles cars where you sell into Financial Services and then 2018 happens and everything gets uh shut down uh so we're very proud right now uh we see two specific spikes uh and this is where you're at today right so you're trying to Brand this idea of sort of modular cyber security as a brand yeah correct so right now we're seeing two spikes in education and in automotive uh and that's because these two industries have suffered a significant amount of attacks in the last couple of years so they were waking up to their reality and understanding that they need to make that investment and we made that investment extremely easy for them to make yeah because it's an allinone it's 15 bucks a month for the entire platform per user very easy to digest I mean from a consumer perspective I'm most concerned about Automotive cyber security because I'm terrible I always think about worst case scenario but again I drive a Tesla and they brag about the fact they can push updates any night but I'm also like crap if anyone wanted to kill me they would hack Tesla and drive my car off a cliff while I'm in it uh if you do that times a million cars on the road at the same time that's like a major terrorist attack waiting to happen yeah so I mean could that actually happen or are you seeing enough protocols in place with these iot devices our uh security doesn't cover iot it covers the what we call the workspace the user the device to use the network they're connected to the cloud services the email the data MH uh we're not touching um iot that's a totally different world of security I see which most of the people here probably don't even touch yeah all right we've got we got three four minutes left I want to jump into your capitalization history right so you talked about early stages here you do the series see 80 million 500 million post money valuation in 20122 the thesis around that round was what why' you need that that amount of money in 2022 so if if you go back through the uh Revenue growth you'll see that suddenly we started growing at uh 3x uh so you mentioned before 3X 3X 3X 2x 2x so we did five years of uh 3x and then uh this year is going to be our first 2x year cuz the base number has become this projection of 100 million this year are you where are you today like you're on track okay wow so yeah going from 50 to 100 million in today's SAS Market that's pretty incredible so you use that to drive growth you keep doing fundraising right because you obviously did the series D 75 million and the series Z it was a Series E for 100 million right or was it no the series D was uh 100 million uh there is an error here the series C was actually 155 so together yeah it's it's sort of like a two uh so the 80 million at 500 and the 75 at 600 were actually the same round just two different it's C1 C2 I see I see okay what I want to get into though uh and I didn't ask you for this and it's gon to make you uncomfortable so I apologize but just roll with it um I I've modeled um I've modeled your cap table did not ship my Kevlar vest yes but it's important and I know you're open and I think you'll talk about it most people won't talk about this so I have to take the opportunity but this is I believe what your cap table looks like so there's some key assumptions here I made the assumption that your four co-founders all own 2 % at the start so you see that in the upper right right you doron carmell and guy and then I assumed 20 20% sold in the 2014 series uh seed which you confirmed earlier and then some of these other metrics are already public like we know you sold 16% in the series C we just got confirmation on the series e of about 133% sale if all this is true you've been diluted down to about an 8% stake in the company assuming there was no top up or ESOP pool are you in that range today so there there were top UPS along the way because it's important to the investors to make sure that the founders stay very engaged and that's the way a smart investor thinks yes that's one thing but the second thing is I'm not really worried about dilution at all because I much rather own um 5 8% of a 10 billion do company rather than 30% of A10 million company yes but this is what all the early employees at Hoppin said and then it Crash and Burn and all options are upside down and the employee number two gets no money so like that's not an option for us well that's my question for you right so if you see my you see my sort of ugly text in the bottom left right as you raise more Capital your options for exiting decrease there's less buyers that will pay that amount of money so how do you turn you're you're this you have not just to be clear he has not confirmed this I am guessing his onp paper net worth based off the percent on the top I put on the bottom but I'm guessing on paper net worth for cor is around 50 60 million bucks the question is for you personally like how do you turn this into actual Cold Hard Cash is IP your only option have you done any secondaries yeah so from my perspective and and I can speak for my other co-founders as well because we're all on the same page with that uh we're not all that interested in uh shooting for an exit we're interested in shooting for A10 billion Revenue uh AR company uh because the market is massive so we're looking at a market that we uh The Tam uh is about $ 1110 billion dollar in our market and we want to be the dominant player in that market so we're much more interested in building the largest the most uh successful company in mid-market small business cyber security rather than thinking about an IPO or or an exit and I think that our uh funders uh also view it that way because that exit will come if we build that massive organization we've got about a minute left uh have you or anyone on your team talked to Google's m&a team and anytime in the past 12 months no none so they just pulled out of a massive cybercity acquisition they never talked to you guys about I'm not sure they pulled out you think way pulled out whiz whiz pulled out I I jokingly I said we should uh rename Coro wza because apparently Google buys wz uh companies whiz ways from Israel wait why do you think whiz pulled I thought Google probably pulled out why do you think whiz pulled out so the official line is that whiz really wants to do an IPO that's what their CEO is saying um we have no in inside information whatsoever so what I know is what you know from the Press what do you think wiz's revenue is I think it was uh 230 230 million so I mean you're not you're half that size yeah we're not that far they were valued at Google was thinking 23 billion yeah so you think you can make a fair argument you're worth 10 billion today the company I uh if if we're half of what they are and our offering is actually W much wider and our Tam is much bigger than theirs then I'd say that would be fair taking the spotlight off of you for a second you guys can see here the reason I like building these graphs when a research team does research at get Latka is you can see sort of the series a position of 5.5 million assuming the delution happens the way the waterfall shows you can see they they've effectively more than you know 15 20x their position to be worth effectively 91 million today up up from the 5.5 million or the series B went from 20 million to now with 47 million today so it's just fun to understand sort of how this works to your point Point again I put in some ESOP topups here you did that pretty much in every round some sort of ESOP topup uh for us and for all of the employees as well yeah we want to keep everybody engaged we want to make sure that people are uh with a View to a personal success as well yep uh guys it is not easy to be this transparent but again launched with ugly orange and green colors back in the day into the completely ug I they're pretty ugly orange yellow or orange and yellow pretty ugly but not a designer so you get a pass 2015 very little Revenue to 2018 2019 patents issued finally pivoted the business you grow from nothing you 3x you 3x you 3x you're going to double this year at scale from 50 to more than 100 million bucks of Revenue also just a great guy super transparent please help me give it up for drawer at cororo thank you man that was awesome thanks for letting me push you a little bit

Introduction quick context this was recorded March 28th and 29th so a couple weeks ago at my live event SAS open.com we had a thousand software CEOs there if you missed it we hope to see at the next one September 5th and 6th in New York City SAS open.com but for now let's jump into the recording he we hired him as our cro he looked at our plan and he said you guys are nuts we expect to end this year at around 100 million and we're building a billion dollar ARR company [Music] hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the Dror Announces $100m Funding Round interview so first an announcement so um if you were here during Nathan's session he mentioned that I have a big announcement to make and because the ass Open Stage is where you break big news I'm here to tell you that this morning at a.m. uh we announced a $100 million D round um led by one Peak out of London so I need you to do something for me I'm going to speak to the camera this is a shout out to one Peak and David Klein and his team thank you for believing in us give it up for them thank you so I am going to talk about Exploring Channel First Strategy for Growth something that is um a little unusual for most startup Founders um and this is uh all about Channel first strategy how many of you have a Channel program in place okay how can you have a successful Channel program in place cool so very much a minority um so the entire storyline uh today is going to be about how we went from okay growth to explosive growth by leveraging the channel um so first of all let's start Impact of Channel Strategy on Revenue Growth with the session so one you can skip direct we'll talk about that uh not all Channel partners are like and of course the right channel is what we call a force multiplier so this is the coral Revenue growth uh year-over-year we've been growing 300% year-over-year for the last 3 years straight this year we we expect anywhere between 200 to 300% growth over last year again uh the numbers are becoming very large so those leaps are becoming very difficult um so uh we expect to end this year at around 100 million and we're building a billion dollar ARR company in the cyber security space I should have said Coro is the world's first and only modular cyber security platform that is targeting the midmarket so if you look at Cyber in general the entire industry is either focused there's about 2700 vendors uh they're either focused on the Enterprise Market or they're focused on the consumer market and really what they're trying to do is they're trying to shove an Enterprise product down a mid-market company's throat or a consumer product down a an smb's throat and we came to the table and we said enough of that we're going to build something that is unique to this market and Target this Market in a way nobody else has so we've built a product from scratch it's a SAS product that cover basically all aspects of cyber security that a mid-market company might need so as you can tell in 2019 we had a uh very respectable zero revenue and we've grown uh since then very aggressively including during covid including uh during all kinds of conflicts and so forth and so on so um when we launched a product uh it Launch and Evolution of Coro's Cybersecurity Solutions was cyber secur 34 smbs uh so we we literally went into a dark room and built something that we thought they would need so we built something for the first time that we called an all-in-one so instead of buying multiple cybercity products we made it very simple for them to consume it it's one product that covers the user the endpoint the network the cloud the data the email everything in one system in uh 2020 we launched it Transition to Modular Product Offering aggressively into the market with a very much old school direct sales model so we had uh a team that basically out of Chicago that cold called into organizations and sold them cyber security and you have to understand that when you look at the small businesses or the midm market the deal size is relatively small so a cyber security company normally sells a deal size of anywhere between 700 to 1.5 million dollar we are a fraction of that I'm talking to companies who are 200 employees 500 employees not 30,000 so we needed to figure out a really good way to scale this thing and direct sales while very important didn't cut it incomes in 2021 this fine Gentleman Jim Tarantino he we hired him as our cro he looked at our plan and he said you guys are nuts you can't sell direct you need to sell direct but you also need to build an aggressive Channel program which means other people are going to sell your Introduction of Channel Sales Strategy stuff and you know I don't know how many cyber security people you know we are very suspicious Bunch because that's our job and the concept of relinquishing control and letting somebody else run with our product was a very difficult thing for us Jim convinced us and he brought this guy Tom Turner who our um there's actually a thing called um Channel Chief he's our Channel Chief he's been doing it for 20 years and he very meticulously started building a very aggressive Channel program at Coro in addition to that what we heard from the channel was that our all-in-one concept was really good but very hard for them to sell because all of their customers basically already had some sort of cyber security so our story of oh rip it out and put us instead was a little bit difficult and in 2023 we reimagined our product as a modular cyber security platform it's basically the same thing but we allow customers and partners to consume it module by module so if they want email security they can just get email security if they want endpoint security great they can just take that and really the entire approach with us and with our partners is a land in expand so we go in selling endpoint security and then we slowly try to displace everything else and that's the training and that's what we're doing in 2024 we're making a massive investment in Channel this is how many of you have been to CPE in Las Vegas Channel Partners Expo in Vegas incredible show it's about 9,000 people that are all channel that are coming out there to basically do deals find out what else they can sell um and I'll talk about what I mean by channeling in a moment so Massive Investment in Channel we had a massive booth there we actually won best of booth in the show uh and we brought in a a very large team and basically it was a statement we're here we're serious about the channel and this is what uh and the channel is very important to us and we're here to build with you and support you so here's an interesting graph um this is our direct two channel mix so we started with pure direct 2022 was still very much direct I'm sorry 2020 direct 2021 Channel becoming a little bit more prom about 20% right now we are at about 70% channel uh 2023 we ended at 70% and in 2024 we expect it to be 85% now why are we even keeping direct if channel is so successful why keep the direct two reasons direct is our way of testing the market with new products new Concepts our Channel Partners don't have an appetite for testing or Adventures or new stuff so when we came up with a module of cyber security platform the first people to sell it into the market were our direct people to show that you can actually sell it and then you go to the channel partners and say you see this stuff actually sells you can actually make money on this so this is why in the previous slide I said you can't skip direct you can't go all Channel immediately all the companies that sell predominantly through Channel have a direct arm as well even Cisco which I think is about 90% channel has a direct team and that's because you need to prove to the channel That this stuff works and the only way you can prove it to them is if you can sell it and you can't just expect them to sell it if you you can sell it um so again we grew our Channel program very aggressively uh Overview of Partner Types and Their Roles we're at about 300 and actually this is a little bit old uh but we we plan to be close to 1,000 Channel partners by the end of this year now when I say partners and channel what do I actually mean so for us there are three different types there is a lead exchange channel so for example uh we have some companies that we work with that basically they throw leads our way and they get a commission we close the deal they don't do uh any of the actual selling they do the introduction and that is it we have service providers which are our largest channel uh our largest channel those are msps msps and so forth these are people that already have a relationship with that mid-market small business and they're selling them normally IT services so what have we done we came to the table and told them now you can sell security effectively safely and very profitably you see building that big stack that they had to do in the past and trying to sell it into uh the Enterprise was easy not easy but doable and they could make money on it but selling that expensive stack to the midmarket or small business was completely impossible definitely not something they could make money on and then my favorite and this is where you guys come in as well is extensions it's companies that can actually extend we can extend their service they might be able to extend ours I want to pause for Importance of Partner Incentives and Mutual Benefits a second and tell you an observation before coming here I got about 20 LinkedIn uh emails from people in this show in this conference uh basically trying to sell me um which is fine I believe that Founders have three jobs sell corporate development fundraising that's that's that's what you need to do in life right so selling is really really good uh but the thinking was buy my service Coro why don't you draw come listen to to what my service can do for you and I think that's great but that's missing a much much larger opportunity the opportunity is how can we help each other how can we gain access to each other's uh customer base and grow both our businesses exponentially as opposed to one deal at a time so I want to give you a great example of that but before I want to show you a very ugly graph see the Challenges and Rewards of Managing Channel Partnerships channel is expensive to maintain and if you look at that um an average Channel partner will start generating Revenue about 2 months in and become profitable for you only five months in so the expectation that a channel will become profitable immediately and you're going to make money on them immediately is the wrong expectation you need to know that you need to invest in the channel uh and you see that there is an actual dip in month six anybody can guess what that dip is it's the commissions you pay them right they started selling seriously in month five you need to outlay their commission and there is they're barely making even for you so that commission dips you and it's a very painful check to write especially if you're not a very profitable organization but it's an important one I always say uh to our the channels Channel Partners at CP one of the guys said oh you're going to have to uh uh get a truckload of cash to pay me my commission because I'm going to sell so much Coro and I said I'm not going to get a truck load I'm going to drive the truck and bring it to you because I think that if they're successful and if I'm paying them a lot of commission that means that they're making a lot of money for Coral okay so I want to jump jump into what is a good Channel partnership what does a good Channel partnership look like so it depends on the who the what and the why or as I call it audience incentive and reason but the thing is they're not separate so the best Channel partners that you're going to have are the ones that are in the center there of the VIN diagram if you only have two of these three it's not going to work it's just not going to work we've tried it numerous times what do I mean by that audience audience means that they must be selling your channel partner or potential partner must be selling to your ICP if they're not selling to your ICP the likelihood that they're going to be successful is zero not 2% um there has to be an incentive for them and the incentive doesn't necessarily have to be money I'll show you something very interesting in the next few slides but there has to be a really clear incentive for them to go out and sell your stuff and three there has to be a reason and the reason here is actually not theirs or yours it's their end customers have to have a reason to buy whatever it is that you're selling through the ch Channel partner if all three don't exist this is going to be what I call a paper partnership a very nice contract that your legal team is going to file somewhere that's never going to generate Revenue so I want to give you um uh a quick story Case Study: Rapid Onboarding with ComplyAuto so the wait so yeah okay so quick story in 2003 the FTC Fair Trade Commission uh established something called the Safeguard rules the Safeguard rules were rules that defined what is the responsibility of a company from data protection perspective and cyber security perspective imagine 20 uh 2003 um and and and then they tried to push it through they tried to push it through didn't become a reality in 2021 the rules were amended and included a lot of cyber security things that were supposed to be enacted by December 2022 the rules were so harsh and people suddenly understood that holy crap the FTC is now going to go after me if I have any kind of financial dealings with anyone so historically the FTC and the federal government in general went after the big Enterprise as far as uh rules are concerned and and fins and so forth and so on suddenly this rule said anyone with financial uh dealings that are electronic with anyone has to have a cyber security program in place to be compliant or else they must cease to do that part of their business so the people that got affected were private trainers stores people that you would never think about and car dealerships there are over 95 9,500 car dealerships in the US they are the largest the second largest originator of Consumer loans in the US and this rule basically said either comply or you can't offer loans to your customers anymore which is a huge part of their business well there is a cyber secur a uh compliance company a SAS compliance company called comply Auto that was providing a compliance platform to car dealerships in the US all of the 9,500 about 4,000 of them were on that platform and then they said they came we we've met each other and they said okay we sell them regular compliance you know EIP and and uh uh employee compliance and oia compliance and all the rest of the stuff in this platform how can we now sell them cyber security compliance as well we worked together we created a joint uh offering went to Market um and virtually all of their 4500 uh car dealerships are on our platform today this was one of the fastest um uh on boardings we've ever had with a partner why one remember what I said audience they're selling to my audience I'm selling to midmarket car dealerships are mid-market by the way the car dealership that you're driving by and you see car dealership on the road it's normally part of a conglomerate of like anywhere between 5 to 20 of them so it's a it's a mid-market business it's about 2,000 employees um and and they have an inventory of anywhere between 20 to $50 million so it's it's a real business so one the audience was spoton our audience two they had a really good incentive to sell us because that would mean that they can generate brand new revenue and create stickiness with their customer base and three there was a reason their customers needed this because if they hadn't done this they couldn't have offered loans to their customers which is which is why also the uh the onboarding was so so quick in this uh in this realm so just a couple of kpis before I Key Performance Indicators for Evaluating Partnerships uh get off the stage so how do you measure a partner program one how many partners do you have what is their activation rate activation rate is basically the difference between paper contract contct an actual producing contract where the partner actually produces revenue on your behalf um activation rate is varies dramatically depending on the industry uh partner retention if they stick with you that means that you're a good partner to them and then partner engagement how engaged are they with you and year-over-year growth that's for your partner program how do you measure your partners because they need to know that you're measuring them as well because you're in a symbiotic relationship and what we do actually we have Financial incentives that are driven by those uh those kpis so for example how much revenue did they Source how much revenue did they influence uh how what's the number of active deals and of course the all-in cost of acquisition so we covered a really good story around um a really successful partnership I didn't have time to tell you about the unsuccessful Partnerships but grab me over uh lunch for for coffee and we'll talk about them because we had a lot of them as well uh you learn through it you know you get a lot of Partnerships that there's one partnership that cost us us uh millions of dollars and moved nothing and then an example of uh of uh comply Auto is a great example of a relationship with a SAS company that is symbiotic we offered them something they needed to offer their customers their customers needed it we had a love fist so I'd like to leave you with this when you approach another SAS company us for example don't think about selling us on your software think about how can we leverage each other well beyond that one sale yeah so if you sell us your SAS that's great you get 300 people on your platform but what if I told you that there is an opportunity for you to make 100x that if you build the right kind of relationship with other other SAS companies and I actually think that SAS companies are um the most ripe for this kind of um uh collaboration so with that any questions we Q&A Session: Insights on Channel Management and Strategy Adjustments have thank you very uncomfortable onel your numers market and question Le yeah okay so how did we make the decision we felt we had no choice and when you know you hire a really senior guy into your executive team you got to let them do what they say they know how to do and he came in and he looked at our plan and he said you guys are nuts we need to go Channel all four Founders were very nervous can tell you that for sure because relinquishing control you know we're cyber security people and we're Israeli relinquishing control is not part of our vocabulary right so relinquishing control and and letting other people run with our destiny was really difficult um the second question resources uh so we do have a channel partner program on our site there is some information there but there is tons and tons of data about Channel Partnerships and programs and there is an analyst from called Canalis that focuses only on the channel Channel they're a little expensive but their content is amazing anything else yes sir I can't hear you I'm old I I couldn't hear the question I'm sorry how do how do I ah great question how do I think about commission split and the duration the only way this works is if your partner doesn't think you're out to get them so I'll give you an example anybody here from Microsoft great Microsoft screws their Channel program Partners what do they do they give them a nice 30% Commission on the first year and a nice 5% Commission on the second year when the customer renews what does that create an incentive to the channel partner to do churn the customer you know now Microsoft thinks oh who's going to churn us we Microsoft and they're somewhat right unfortunately oh Closing Remarks and Invitation for Further Discussion I have the Oscar um so so my point is we not only continue to pay the same amount we actually increase the amount depending on volume if the if the partner generates more volume we will actually give them better commission over time because our in our objective is to make it as lucrative for them as possible so they sell much more of cororo and much less of anything else I'm sorry the music is on catch me later and ask me questions thanks

Introduction Coral is all in one cyber security folks that help you get up to speed quickly serving over 13 500 mid-market customers they just broke uh 18 million bucks in AR as of the end of 2022 hoping to 300 grow that 300 percent this year which means they would need to add about was that about 36 million dollars of new AR he says they're on track to do that they just raised another uh series C plus we'll call it 75 million bucks at around a 600 million valuation his team is growing a lot of talent 297 folks with concentration up there in Chicago as they look to continue to scale across their three e channels hey folks my guest today is drawer Lee where he is a Serial entrepreneur and investor who took two companies public sold three and is now building the world's fastest growing cyber security company at coro.net that's Enterprise grade cyber security for the mid Market door are you ready to take us at the top absolutely Nathan all right so for before we get into the the sort of customer profile the product we picked over the last year you did come on the show about a year ago and I remember you said uh quote Nathan we're targeting 18 million run rate target by the end of 2022 so my first question is did you beat your goal now tell us tell us how you did it what what are your customers using you for and how are you growing so um first of all our customers are the uh neglected people in the world of cyber security so the entire cyber security industry is focused either on the very rich the Enterprise Fortune 500 or the consumer Market nobody's focused on the economic backbone of the American economy the mid Market uh companies uh that are actually uh 65 of the GDP uh we focus on these guys and we provide them with Enterprise grade Security in a way that they can actually Implement uh and uh protect themselves so we've solved the four biggest problems that they've had and our growth which has been 300 percent uh year over year for the past four years straight uh with this year expected to be yet another uh 300 percent uh growth um has shown you think you'll break forward a 40 million run right by December um oh yeah yeah I mean that would write that would be 300 you're 18 million 2022 so 300 year over your growth would be somewhere above 40 45 million yeah so our expectation is to beat that number um and and the main reason is we are in this really um unusual Perfect Storm where on the one hand side the attackers are changing course and now attacking the mid-market companies and the small businesses as well uh simply because a they can and B they're vulnerable and uh it's much harder to go after the Enterprise which has you know much larger budgets much more experienced cyber security teams uh and is a lot better protected so I always equate this to if you're a burglar and you're walking down the street and there are two equal houses but one has two Dobermans a barbed wire fence cameras and an alarm system and and bars on the windows and one has the window open where would you go uh and that's really what our attackers are doing the bad guys are going after the people that it's uh easiest to go and uh grab so granted their Roi is lower on a per attack basis but they have a lot more of these attacks that they can execute and now they they've automated everything and with with all of the automated tools that are out there it's much easier for them to execute those attacks and they're going after these uh these mid-market and smaller organizations talking to those users because you told me last year you'd already signed up 4 Currently serving 13500 customers 500 of them these mid Market folks to users where they were happy they're using it where are you today how many paying customers uh so it's triple that oh wow okay so you're about like 13 500 paying customers 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 the 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 evaluation 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 evaluations inside of your founder 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 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 raise they sold 22 percent 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 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 valuation 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 evaluation 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 wow what drove most that growth was it an outbound motion inbound motion what growth levers did you pull so we actually have uh three different motions uh in parallel um that uh we're going to Market with one is a direct outbound we have a team in Chicago very diligent that is going out and engaging with potential customers and bringing them on board on that team um a total of about a hundred wow 100 on the outbound team okay yeah and then uh maybe I'm exaggerating a little bit it's more like 80 because we uh I'm uh mixing up uh some of the direct uh with the uh with the channel the second one is of course the channel team uh so we are selling through a very very good Partnerships that we have with msps with mssps with vars with Master agents uh and there are also um using us to open new doors where historically they couldn't sell cyber security into the market that we're selling because the offerings were too expensive and too complex and too labor intensive and now that we've removed these three barriers they are able to go to market and offer a cyber security solution to their mid-market uh customers as well and the third is through what we call technology Partnerships we have a team that focuses on Tech Partners where basically we become the cyber security component of what they sell name one so an example is a company called comply Auto they provide compliance software to the automotive industry so now they also offer uh security compliance and that's really us um it's not white labeled it's uh um co-branded call it so are they bringing you the customers are you billing a comply Autos customer directly no no comply Auto owns the relationship the customer knows that they're using a core of product we're not hiding uh that but it's it's uh it's a partnership the ownership of the account the ownership of the customer is comply Auto uh we're just providing that uh cyber security engine to make sure that those uh Automotive customers are protected and are compliant with in this case uh the glba Safeguard rules that they're now supposed to uh comply with just comply Autos say hey drawer we want a thousand seats here because that's what we think we can sell you say here's a bulk discount and then they mark it up whatever 50 and then sell to the end user what's the revenue relationship there what's the partnership agreement like so we don't disclose Revenue relationships uh in public but basically comply Auto sells a package to their customer we have a relationship with comply Auto where they get our product for a fixed fee proceed and how they mark it up or how they sell it to their customers their business so the reason I'm asking is what prevents can apply Auto from undercutting a customer that's going to sign up directly on coro.net they might see cheaper pricing on comply Auto we're not worried about that we're not in the uh we're not competing with our partners in any way we actually prefer that our partners win because from our perspective you know there is a much a very strong uh sales multiplier when you're using Partners so we're not trying to uh compete with them on those customers if the customer prefers to buy from comply Auto more power to them more power to comply Auto we're very happy about that because their sales forces can buy auto sells it though like let's say your ACD told me last year has two thousand seven hundred dollars right so your website lists two thousand seven hundred bucks but if comply Auto lists the exact same thing at a thousand dollars for a year basically your partners would effectively cannibalize your own direct Revenue you're saying you're okay with that a hundred percent okay cool and then how is that different from the VAR agreements or the channel the channel team agreements when you sign up a new channel partner what is that relationship like so very similar we sell to our partners for a uh discount of the MSRP and they mark it up and they add on top of it also their services so for example in MSP doesn't just sell product they sell a service they help manage the platform on be on behalf of their customers so from their perspective their offering now is a lot more complete and what we can give the MSP beyond that margin or that uh you know that discount that they can the haircut that they can get from it they're actually getting a lot more from it because they are getting a new market open to them because now they can offer cyber security at a very reasonable cost to a customer uh to whom they could have probably offered only anti-virus in the past um because the price points are just so difficult and Beyond the price point maintaining a security stack is a very expensive thing from an HR perspective and what we offer that customer that MSP that partner is the ability to offer a stack that manages pretty much itself because of the engines that we have so there's a lot less work that a human needs to be doing so we've removed more than 95 percent of the human element through AI through automation through um so the same team can now support a whole lot more customers from an msps perspective so now I can go out and sell it at a very reasonable price you're helping msps expand their margin absolutely and expand their foothold within their existing customers and you know in the MSP world it's all about stickiness yeah yeah that makes tons of sense have there been any drastic change you told me last year your average customer is paying about 230 bucks a month has that changed drastically either up or down or is it about the same yeah it's changed significantly so first of all uh with economics being what they are we've raised our prices a little bit so last time we spoke our prices were at about I think they were about six dollars per user now they're uh at about uh 8.99 per user so that increased but also the size of our customers has grown uh significantly um so now we're seeing customers that are more in the 700 seat range uh whereas uh when we last spoke the range was more about 150 to 100 maybe yeah yeah okay um so I guess what does that mean in terms of the average annual contract value like maybe it's now instead of 3 000 it's looking more like four or five thousand on average per team it's actually more like uh 9 9 500 9 500 okay per team per year interesting do you have any million dollar accounts yet million dollar accounts well if you look at our Partners like uh msps or Master agents then they would be considered well okay uh seven digits uh because they come with a bunch of seats uh you know they come with you know three four thousand seats ten thousand seats sometimes so those are big accounts but as an individual account the answer is no because our focus is mid-market uh and the mid Market it but the way we Define it is up to uh 5 000 seats so if you do the math at uh eight dollars per user per month at five thousand you'll never get uh to a million yeah we're not even eight but you should have half a million dollar accounts here in the next year if you don't already yeah so there are some accounts that are beginning to get to that point yeah that makes sense um now help me understand my math is wrong here if I take 13 500 customers at an average 9 500 per year that puts you at like 128 million dollars in Revenue so that 9 500 I'm guessing that's not the average right your average is lower no no yeah absolutely there's a range the the average is so we're tracking like like every uh SAS company we're tracking a rolling average of where the accounts are going so um the average it has been moving up over time as the customer size has been growing um so if if I'm looking at the last month that's the average if I'm looking at the average across a year it's a little bit lower I see you're looking at average new signups last month are signing nine thousand five hundred annual contracts yeah yeah I see I see now help us understand growth because it's obviously important it's really hard to grow right now so I want to give you a lot of credit where you're growing if you finish 2022 at your target of that 18 Monthly recurring revenue million dollar run rate now we're what six seven months into 2023 what is monthly recurring Revenue today so we don't we don't disclose that publicly but let's let's say that we're on target to tripling our Revenue this year uh we beat our number in q1 Q2 is shaping up to be so so we obviously have a plan exactly of what needs to uh happen every quarter so in q1 we beat our number by about uh eight percent which was a great thing and then this quarter looks like we're going to hit our number um again um and the next two quarters uh there's no reason to believe we're not going to meet what we expect to uh hit just to understand your quarterly targets if you finish last year 18 million and you want to grow 300 on top of that that would mean you need to add 36 million of net new ARR this year if you divide that by four to get down to the quarterly numbers you can sort of get to I imagine what your quarterly targets might look like um I guess what outside of the three Revenue channels are the three channels that you just described um I mean why so aggressive I mean I know you raised an 80 million series C and you told us those around 500 million evaluation last year but are you getting just tons of pressure from the board to grow at all costs actually there's news on that front as well we raise an additional 75 as a C2 Raised okay so the total waste was 150. uh in April uh this year yes so we've re we've completed or we've added like call it a C2 whatever you want to call the C uh and uh another 75 so a total of 155 in the last 12 months did you did you give the new investors at 75 million the same value the 500 million valuation the same valuation of the earlier folks no there was a little bit of uh yeah it was uh so so we're very uh fortunate because our valuation has been growing uh whereas I'm sure you know that a lot of the valuations in the market have been going uh the wrong direction uh mainly because a lot of the valuations in let's say 2020 or 2019 were a little overpriced uh so our valuation has been growing so um the the last valuation was about 20 higher than one a year ago that you knew about the 80s call it 600 million for the second 75 million round something like that we're very close was that primary money or secondary primary okay so it's on the balance sheet for operations yeah yeah yeah absolutely it's uh yeah yeah okay that makes sense and then I mean the reason I was going on this valuation trans was a lot of Founders at your same stage that I talked to that say man I wish I didn't raise it such a high valuation last year because now option grants are underwater with 12 million in AR when you did your series see the first 80 million out of 500 post that was a 41x multiple do you regret raising at such an aggressive many people are going aggressive multiple today no because we were able to raise again at the very aggressive multiple uh this year um and as long look the uh we are showing phenomenal growth both ARR customer base uh in every aspect of uh um every kpi that we're measuring we're showing uh phenomenal results so from an investor perspective you know when you look at a company and you analyze a company and having been an investor having been on the you know the dark side of the VC world I can tell you you look at you look at uh kpis and and that's how you make a decision so when a company despite the economic downturn that we're experiencing out there despite everything that is going on uh in the market uh is able to show that kind of aggressive growth you understand that there is something unique about coral and uh and that's really what's happening but your valuation multiple compressed you didn't raise a second 75 9 out of 41x multiple it was like a 25x ish multiple based off my math yes but it's still an amazing multiple considering that the numbers do you worry I know I agree and that multiple is way higher than others at your stage that I'm seeing I mean do you but I don't know that we should I mean you could brag about it I don't know if that's a good thing to brag about I mean do you worry about growing into that valuation we don't think of it that way at all we think that evaluation was very fair because evaluation represents uh the potential moving forward and as we've shown that we've grown in the year that has passed since the previous uh the previous uh fundraise we've shown that we've again tripled our growth um and this year we're expecting to do the same I think that from an investor perspective when you look at those kinds of kpis you're looking at the potential the growth moving forward and being that we were able to hit our quarterly um commitments for 48 months as for 12. I'm sorry for for 12 quarters 48 months I meant uh for uh 12 quarters uh straight um it gives a lot of confidence to an investor to come in and say you know what these guys know what they're doing yeah and they're executing it's not a dream anymore it's execution and this is what the machine is all about right now and those of you that missed the first interview we draw a year ago the company launched in 2014 raised a 1.5 seed raised 5.5 series a in 2016 another 20 million series being 2018. so it's not like that this wasn't a two-year overnight success thing he's been at it he's been consistent for almost 10 years cranking along which is great help drawer help me understand that the team size today how many full-time All In uh just under 300 I think we're uh 290 something so we're about to hit the 300 number how are you thinking about you I mean I imagine you raise 150 million over the past 12 months I imagine well I'm guessing more than 100 million is still in the bank how are you thinking about using that cash in a world where folks are cash before sometimes can you go buy a competitors at cheap discounts so that's a great Point uh Nathan so so we're looking at uh the money being used in uh three different ways um one of course increasing our r d uh expenditure and making sure that we continuously invest in the product uh two investing in the go to market so granted I'm sure you know all of your listeners understand this kind of aggressive growth costs money and being that we're growing from a larger base the the 300 growth is it requires a lot of capital and three you're absolutely right we're definitely looking into uh potential Acquisitions uh to increase our portfolio uh through acquisition so both organic and inorganic that makes sense now do you still have over 100 net dollar retention yes uh we're at about 106. okay yeah I was 105 a year ago so that's good you've been able to hold that which is nice and then what are you wanting to pay today to get a new customer that's paying you Customer acquisition cost 10 000 a year so normally our cost of acquisition is about eight months okay um which is in line with what the SAS industry is uh is all about so you'll spend seven eight thousand bucks to get a ten thousand twelve thousand dollar a year customer yes our lifetime value though is a lot uh a lot more than that because normally uh so so the cohort that signed up with us in uh 2019 is still with us today so uh so far we're running a four-year um a four-year lifespan and uh hopefully it's going to be even longer so do you assume and this is all sort of guessing but do you imply a pro-formal lifetime value of something like 50 60 000 on these accounts at least 40. um but um most probably on the higher 40s yep yep yep yep very cool what else what else do you wish people like me asked you about but you never get a chance to talk about no you always ask all the right questions Nathan [Laughter] incredible year for us uh and I'm extremely proud of the team uh We've uh We've grown the team uh tremendously um and both uh We've we have a massive office in Chicago right now this is where our sales Center is so we have well over 200 people just there um and uh it's an amazing team I mean we just moved to a new office we took over an entire floor in a building it's it's really great as a founder to see that kind of uh development um and when they show up you know sometimes it's kind of weird because as uh as a Founder you show up and there's a whole bunch of new faces um and uh heartwarming but also very strange not not to know everybody so if we want to host a big SAS open in Chicago and we're gonna bring 300 founders with more than you know 5 million in Arn all together we can use your place to host it for a small fee for sure there's the sales guy all right Jordan let's get up here with the famous with the famous five number one your favorite book oh my um what is uh my favorite book now I I have to say it's still uh it's still the Tipping Point Tipping Point number two is there a CEO you're following her studying still Elon Musk despite all the controversy I think the man is a genius and uh despite every strange aspect of both his behaviors and some of his decisions I still think the man is uh is somebody to be reckoned with number three what's your favorite online tool for building quarrel oh wow there's so many we're heavy users of Monday these days and it really helps keep everybody together uh especially when we're across geographies across time zones and number five how many hours of sleep are you getting on average for a night and that drawer come on that's not healthy uh that's uh I'm I'm naturally I'm an insomniac so it's not just because of coral it's because I am an insomniac that's fair that's fair okay and uh situation married single kiddos oh yeah I'm very much married has have been married for the same with the same uh wonderful wonderful woman since 1990 so wow and two kids right and two kids you're absolutely right and I think you had a birthday you're 54 now I am actually turning 55 next month oh very good okay so I must have caught you on the back end of your 53 so okay so 54 now 55 coming up happy early birthday and last thing something you wish you knew when you were 20. uh invest early I think I said that last time had I known what I know today about investing and creating wealth uh I would have uh I would have done it Coral is all in one cyber security folks that help you get up to speed quickly serving over 13 500 mid-market customers they just broke uh 18 million bucks in AR as of the end of 2022 hoping to 300 grow that 300 percent this year which means they would need to add about was that about 36 million dollars of new AR he says they're on track to do that they just raised another uh series C plus we'll call it 75 million bucks at around a 600 million valuation his team is growing a lot of talent 297 folks with concentration up there in Chicago as they look to continue to scale across their three e channels drawer thanks for taking us to the top thank you very much Nathan always a pleasure to be uh with you speaking with you one more thing before you go we have a brand new show every Thursday at 1pm 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 our poo 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 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2PM 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 nathanlacka.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 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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