How Cygilant CEO Vijay Bisani grew Cygilant to $8M revenue and 300 customers in 2017.

hello everyone my guest today is vajay bassani he's the serial entrepreneur with the track record of building successful businesses delivering enterprise class solutions before starting his current company sigilent he was he founded app iq an application storage resource management provider acquired by hewlett packard in october 2005 and web managed technologies a policy driven content delivery solution provider required by network appliance in august 2000. vijay are you ready to take us to the top that's correct yeah okay good so tell us about uh sigilant what do you guys do and what's your business model how do you make money sigin is in the business of helping companies of all sizes uh with cyber security specifically our motto is that every company respect to the size of the company deserves a enterprise class security program to protect themselves against never-ending cyber attacks as well as compliance mandates and what's the business model is it a pure place ass we are a sas security as a service provider okay and what's the average i mean are you talking enterprise or small business what's the average customer paying per month would you say we tend to focus on sub 500 employee company segment and the the average uh payment is anywhere from you know 25 000 to 50 000 per year per year okay got it so on the low side we'll say 25 000 annually which what does that come out to about 2 000 bucks a month and um walk me through more the back story here so you had some successful exits in your past why jump into the cyber security space and what year did you launch the company in so if you look at the cyber security space in the last 15 plus years we have seen the market evolve pretty rapidly um now i can't i tend to compare cyber security to something similar to the human medical field where the the new problems continue to come up every you know two three years and the old problems don't go away just like the way in humans now the new the old diseases continue to exist and the new diseases continue to be invented and uh while we discover new drugs the the old problems health problems continue to be prevalent out there similarly in the cyber security space in the last 15 years plus we have seen that the 15 year old problems don't go away they're still very effective and every not 12 to 24 months a new type of threat or new type of headache is invented or introduced into the market segment and new types of technologies are introduced and as a result we have seen in the last 15 years the securities staff sorry security stack uh continue to get uh more and more complex and in addition to that cyber security by its nature is a very complex area and to manage these technologies you need expertise uh somebody coming fresh out of school will not be able to uh do an effective job they need hands-on training so you like that because the better the barrier to entry is a bit higher barrier to entry is higher and also the challenge is extremely difficult uh the problem that we're trying to solve is very very difficult to solve so did app iq i mean did that touch cyber security like why were you uniquely positioned what did you learn already about cyber security prior to starting the company um actually you know when we started sigil and you know we used to be called eiq networks and what year was that by the way in 2001 we started the company uh initially we were in the in the firewall analysis and sim log management space and over time we realized that it is not just the technology that is going to solve the problem we need people processing technology to really effectively help solve these never-ending escalating cyber security threats for our customers and and in the last about four years ago we went and said no we need to provide an effective comprehensive complete solution to the market segment because majority attacks are beginning to take place in this segment with market segment and this market segment tends to have no few challenges one is they're always challenged with security budgets thereby destroyed to be small they tend to have no very very few number of security professionals on the staff you know in our survey we found out that 75 percent of this market segment customers tend to have uh two or less security professions on the team so if you are serious about security uh you need 24 7 vigilance in terms of understanding what is happening getting visibility into your environment and actively monitoring your environment to figure out what where the potential weak links are what are what is being exploited so vijay i think sorry i don't mean to cut you off but i want to get as much in as possible in the time that we have so i think i understand kind of where you're going and why it's important but for use i mean where was your brain at in 2001 when you launched this thing and also i i thought you said you sold app iq in 2005. so were you working on this company while you were still building app iq that is correct yes got it okay so so did you build sigilent because you needed that product at app iq and then you said wow actually a lot of people need this uh actually we we started i started two companies at the same time separately i and when we started sigilent at that time there was a need for firewall analysis uh and reporting and over time that evolved into security information event management log management uh space and in the last of as i said this space has evolved and the company has evolved and our strategy has evolved over time now when you sold in 2005 to hewlett packard i mean was that a meaningful financial event for you or was that like a soft landing kind of thing that was a very meaningful uh exit okay what was the exit was it public uh it was sold for about 280 million dollars 280 million and how big was the team when you sold it we were as a company over 100 people okay and what did your founding team look like was it just to you or i had two other co-founders got it and did you bootstrap that company or raise we raised a ton of vc money like more than 100 million about 30 plus million dollars about 30 million now what about on on this one on sigelent have you raised capital are you bootstrapping we initially we bootstrapped and then we raised uh our money to date we have raised total of 38 million dollars okay so you're very much a creature of pattern then huh that's correct all right and what are you at now today in terms of total customers on using the platform we have uh several hundred customers using this uh uh sigillin platform right now okay so can we say maybe between 300 and 600 is that fair that's correct yeah okay great and what are you doing to acquire these customers i mean you're in the mid market this is a very kind of popular space you have no before that's kind of in stew they're kind of playing below market lower price points and then you have very and then you have enterprise solutions above you charging you know a million per year so you are focused in the middle how are you acquiring these kinds of customers we are we use inside sales model so we have a pretty decent sized it's our sales team we have about 30 plus people oh wow and what's the total team size in total we have 170 people in the company 170 okay 30. so wow so about 20 of the team is inside sales great and they're following a typical playbook or have you altered the playbook at all yes we do we do have a typical inside sales uh playbook uh we also have a small number of channel partners okay does now if you look at kind of new revenue each month what percentage comes through channel partners versus direct via your channels i would say about twenty percent comes from the channel apartments person from uh exact sales okay and how do you how do you incentivize the channel partners are they taking thirty percent of acv or what we tend to give anywhere from ten to thirty percent of the ac you're a nice guy well no we we do care about our partners you know you cyber security guys you're supposed to be tough you're supposed to keep the bad guys out but you're giving away 30 so that's good you make your channel partners happy that's correct yeah all right now as you're building a company you're looking at scale talk to me about unit economics i mean what do you like to keep your payback period under we tend to our goal is to get it below 18 months okay what are you at now like 20 we are not closer to 20 plus okay 20 plus okay how do so are you able i mean that's much longer than what most people try and be at but are you able to kind of afford that because you've raised cash so you don't have a huge cash gap problem that's correct and also because of the problem that we're trying to solve we tend to have pretty good stickiness so our churn rate is very low how low uh is negative turn rate okay so net negative revenue churn net negative revenue churn so as a result now we we can uh confidently say that we will be profitable and we can make pretty decent amount of money over the top over the long run yeah when you take that churn number and you just do it i know this is a little bit unfair but you do it just on a logo basis annually what is churn on a logo basis gross annually on a dollar basis on the local basis we probably have you know anywhere from two to five percent turn rate annually on annual basis that's really still really good yes and the dollar return rate including the expansion and cross-sell it's uh we have negative children how...