How Living Security Reached 130 Customers and 150% Net Dollar Retention with a Land and Expand Playbook (Interview with CEO Ashley Rose)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Ashley Rose, the CEO of Living Security. She's been the driving force behind the company's rapid growth. Since its founding in 2017, the company has raised more than $20,000,000 for growth and product development and accelerated revenue growth over the for three consecutive years. She's continuing working continually working to build a diverse and inclusive organization around the belief that the team should reflect the community at large. They're playing in a very competitive

00:24cybersecurity and human risk management space at livingsecurity.com. Ashley, you ready to take us to the top?

Ashley Rose

00:30>> Awesome. Yep. Ready.

Nathan Latka

00:31Alright. So

Land and Expand Strategy and COVID Transition

Nathan Latka

00:32so you I was so impressed when

00:33you came on the show for the first time because of your land and expand strategy. You were doing in person escape rooms to then eventually land these much larger sort of software upsells. Is that still the playbook today?

Ashley Rose

00:44>> Yes, we are still doing our land and expand strategy, have obviously converted many more organizations now over to our kind of software upsell. But with COVID, we actually have completely gotten rid of all of our in person training. So we can kind of talk through that transition today. And as we think about future growth and cross sell, we're actually launching a new product here at the end of the quarter, which I'm really excited to kind of

01:07>> share with our our listeners, Unify.

Nathan Latka

01:10Very cool. So I wanna dive into that as well. Talk about the current product though. What do you what are customers currently paying you for?

Current Product Suite: Teams, Training, and Phish

Ashley Rose

01:16>> Yeah. So we have Living Security's human risk management platform, and the platform is comprised of three separate products. When COVID hit, we actually brought our team based training that was run in person through escape rooms prior into a digital environment. So that's something we call teams. It's all a team kind of social learning environment, but again, all online for a digital platform. We also have our Living Security training platform. And this is where we're giving high quality

01:44>> individualized training content out to end users. Really high quality, the highest quality in the industry. It's super personalized, and we have risk scoring on the back end for our admins and our program owners. And then we have Living Security Phish, and that was a new product that we launched this year. And that's a phishing simulation tool. So right now, we have all the tools and techniques that you need as a program owner to build a really

02:09>> successful human risk program focused on data.

Nathan Latka

02:12What was the difference in the first two? Virtual training for teams and then risk risk scoring for admins?

Ashley Rose

02:18>> Yeah. Teams and training are the two kind of primary products in the market. But on the front end, we're delivering training and content to the to the end users. On the back end, there's data and risk scoring for the administrators.

Nathan Latka

02:30Got it. Which so which one of these is, like, closest to, like, your SaaS product? Is it a phishing simulation tool?

Ashley Rose

02:35>> So the SaaS so it's a SaaS platform. All of them are actually SaaS, but then they're just different parts of the same platform. Yep.

Nathan Latka

02:41I see. Interesting. Okay. So we'll dive into, Unify, the new the new idea here in a second, but give us some of the backstory here. When did you launch the company?

Ashley Rose

02:50>> Company was founded in 2017, so we're going on four years, four years now. Yep.

Customer Base More Than Doubled to About 130

Nathan Latka

02:55That's great. And I think when you came on last, you told me you were this was in 2019, that you had just passed about 55, 56 customers. Where are you today?

Ashley Rose

03:04>> Yeah. So we more than doubled our customer base last year. So we're about 130 different customers. And yeah, saw significant growth through 2020. I mean, mentioned earlier, so when we first met and we did the other recording, we were doing both in person training through our escape rooms and then we had launched our SaaS platform and we're really scaling up significantly. I can't remember if this was right before or right after we had raised our ARROW

03:29>> when I met with you the last time.

Nathan Latka

03:30You had raised 1,700,000 at that point.

Funding History: Seed, Series A, and Series B

Ashley Rose

03:33>> Oh, perfect. Great. So that was yeah. So that was a long time ago. Yeah. That was just after our seed round. So, yeah, saw really significant growth through 2019. And then we raised our $5,000,000 Series A led by Silverton Partners. And then through 2020 with COVID, we had to transition our entire offering and product suite into an online SaaS platform. So it really accelerated our digital transformation. And then we more than doubled our customer base in

04:01>> 2020 and then saw, of course, significant revenue growth there as well.

Nathan Latka

04:05And so the $14,000,000 raise was 2021?

Ashley Rose

04:09>> Yes. So we closed our $14,000,000 series b in March of this year.

Nathan Latka

04:13March of this year. Okay. Great. So total capital raise today is what about $20,000,000 to $21,000,000?

Ashley Rose

04:17>> Yes.

Nathan Latka

04:18Interesting. You you are on the path. You are not bootstrapped Ashley Rose anymore. You are like, gotta be growth year over year, raise it at at a up round and go IPO one day.

Ashley Rose

04:28>> Yeah. Absolutely. We're yeah. Really excited and that's the journey we're on.

Average Contract Value and Market Positioning

Nathan Latka

04:31Okay. Very cool. So 130 customers, and then if someone's listening right now, maybe they were just or they're scared of being the next headline about a phishing scam or something or their credit card or their customer data leaking and they wanna pay you to help train their team, what are folks gonna pay on average per month to use the tech?

Ashley Rose

04:47>> So it really ranges just depending on the size of the company. But we're really competitive when it comes to other security awareness solutions today with our existing platform. Once we move and we actually launch Unify, we're creating an entirely really new category. And there's not an existing product or platform out there in market today that's doing what we're doing from a behavioral integration and human risk metric measurement. And this will then be a kind of a

05:18>> different pricing model than what we have in market in comparison to other security awareness providers.

Nathan Latka

05:23I wanna dive into that here in about two minutes. The ACV that you told me last time, you said people could get started for somewhere around $25,000 a year. Is that sort of still are you moving up market or down market or status quo?

Ashley Rose

05:33>> Yeah. So we ACV is still in the 25 to $35,000 range, but we have a larger portion of our customer base that's now over 6 figures. We also did move down into kind of the middle market as well. And so we brought on people that range anywhere from 10 k to $150,000 per year is kind of the range that we're in right now.

Nathan Latka

05:55Well, if I remember correctly, you had a really nice way. It sounds like now it's virtual, but again, you had a very nice, for being so early, expansion, like, component to the business. I mean, where you were, like, doubling and tripling contract values fairly rapidly. I think it was, like, 400 or 300% net dollar retention when you told me, something like that.

Ashley Rose

06:12>> Yeah. Yeah. We I mean, that's definitely been continue to be a part of our growth strategy of just getting in the door, giving them a really quick way to access and start kind of trying out the the new way of running their training and human risk management program. So we're still running that very much heavy land and expand. And then our CSM team, our customer success management team is really focused around growth of our client base.

Nathan Latka

06:32Mhmm. Now can I take those 130 customers times that ACV? I mean, that would put you, like, at somewhere, like, a 250,000 per month right now on revenue.

Ashley Rose

06:41>> Let's see. We'll do that.

Nathan Latka

06:43You don't have give exact or if wanna give a range, that's fine too. But

Ashley Rose

06:48>> We are, so we're over that.

Nathan Latka

06:51Okay. Yeah. Great. So what's the big goal for this year? I mean, you're now planning sort of how do we make sure we can invest in a new unified product, drive growth, and then prepare ourselves for a round maybe late next year? What do you think you have to get to in order to in order to see that happen?

Ashley Rose

07:04>> Yeah. So we last year, we about tripled our revenue, and so we're looking for a very kind of similar growth path this year.

Nathan Latka

07:12Mhmm. Okay. Interesting. So, I mean, do you think I mean, is it insights? Do think we can get above a million bucks a month in revenue in the next twelve months, you think?

Ashley Rose

07:19>> In the next twelve months. Yes.

Nathan Latka

07:20That would be exciting. Okay. You're gonna do this with this new product. Why is it new? Why is it innovative?

Introducing Unify: Behavioral Risk and New Category

Ashley Rose

07:26>> So right now, the way that most companies are managing their human risk program, it's typically been driven on what we call activity metrics. So how many people are engaged with the program? Are they completing training? We're trying to check that box for compliance. And so what Living Security has done is really transitioning the way that we think about success for our program as being outcome driven. And the outcome that we're trying to drive is behavior change.

07:52>> And so in order to do that, we've built Unify, which is actually integrating into the existing security technology stack to bring in end user behavioral data and to generate insights for our security leaders. So they can say, who is the most at risk and what are they doing? What are these behaviors that are really causing risk for the company?

Nathan Latka

08:13What arsenal are they doing?

Ashley Rose

08:14>> What's that?

Nathan Latka

08:15What arson like, tease me a little bit. What arson was being like, hey. That employee, Nathan Latka, he's always clicking those random emails from external emails coming in and with an IP address and, like, I don't know, some weird off, you know, location. He's at a high risk for a phishing attack.

Ashley Rose

08:28>> Yeah. So I mean, that's a really good example. And right now, the data that most companies use are phishing simulation metrics. So they'll send out those phishing emails to their employee base to figure out who's gonna click, right, and who's gonna report. And then that's the data that they're presenting. There's a lot of other behaviors that we need to watch out for and that could present risk for the organization. So

08:51>> what's your password hygiene like? Are you reusing the same passwords across websites? Are you using a password manager? Are you connecting and accessing sensitive information, sensitive applications, leveraging your virtual private network? Are you browsing malicious websites? So there's all of these different types of behaviors that we really need to be capturing and measuring and that we want to fight against as an organization. And ultimately, you want to create a positive security culture around people making good

09:18>> risk based decisions about how they're behaving online.

Nathan Latka

09:21And talk to me about pricing. You mentioned new pricing model.

Ashley Rose

09:25>> Yeah. So with the new model, again, this is not something that is currently existing today. So we're helping companies first of all, we're educating why this is so important. A lot of organizations, almost all security leaders can tell you, when it comes to data and measurement to their CEO, to their board, they're really still left with a lot of unanswered questions. What does risk look like? What should we do about it? Okay, great. We took these

09:47>> three steps. Well, what was the return on investment? How much did we save? Or where's our risk at now? And so that's really valuable for an organization to have that sort of strategic overview dashboards and reporting. And so we've really surveyed the market. We think that these will be over 6 figures, could be much larger as we go to market with the new product as it matures.

Nathan Latka

10:10So this is gonna help you target enterprise accounts because you have the ability to upsell based off many more parameters than your current product offering.

Ashley Rose

10:17>> It's a more strategic solution for the organization and one that is measurable. And that's really important when it comes to security and investment.

Nathan Latka

10:25If you could only drive growth over the next year by upselling Unify to your current 130 customers, how many of them do you think would sign up for the new product and pay for it?

Unify Upsell Target and Go-to-Market Plan

Ashley Rose

10:34>> Over the next twelve months. So that's definitely a goal that we have. I think all of them need it. It's really how quick can we get it to market and can we get budget out there. But yeah, I mean, over the next twelve months, we're targeting anywhere from 25% to 50% of our customer base really selling Unify into, and then expand from there.

Nathan Latka

10:52Yeah. And driving that expansion, obviously, is be critical on your team and how they make these new users fall in love with you, activate them, etcetera. What is your team size today? How many people?

Team Size and Ukraine Engineering Partner

Ashley Rose

11:00>> We have 60 people on our team, and then we have about 15 engineers and developers in Ukraine. So we're growing really, really rapidly from a team's perspective.

Nathan Latka

11:1060 plus 15 are inclusive? Right. Okay. So 75. How did you spin up this Ukrainian team? How did you find the first person to build around over there?

Ashley Rose

11:19>> I'll So actually have to give credit to our director of engineering. He found the team and then they're also growing really rapidly as an organization over there. So it's not one of those very, very large orgs, which is awesome because they're partnering with us. They've been really flexible in our relationship. And then also allows us to kind of keep our cost model down and have a little bit of flexibility as we're growing.

Nathan Latka

11:40So it's like it's sort of like a dev shop. It's not one person then hire a team. It's like it's a shop that does this for a lot of companies and they have a dedicated group for you.

Ashley Rose

11:48>> Correct. Yep.

Nathan Latka

11:49I see. Very cool. Talk to me about sales team. How many are carrying a quota?

Sales Team Structure and Outbound Motion

Ashley Rose

11:52>> So we have, five account executives, that carry quotas and then we have a BDR team. So really heavily kind of outbound driven right now and so building up that business development function.

Nathan Latka

12:04And so what is its total team its size of the sales team, including folks that don't carry the quota?

Ashley Rose

12:10>> Well, so the BDRs have a quota for meetings. But let's say we've got five account executives. We've got six BDRs. And then our CSM team also carries a quota from an from a growth and install base upsell perspective. And we've got four CSMs that carry quotas right now.

Nathan Latka

12:26So 15 total there. The CSM thing is unique. Very few people are doing this because if you get the incentive structure wrong with your CSMs, they're going to do the wrong thing or try and sell too hard. How are you giving them a quota but making sure they don't sell too hard?

CSM Quotas and Empathy-Led Growth

Ashley Rose

12:38>> So we are actually really big around two main goals for our CSMs, one being empowerment and one being growth. And so what we drive home is from a partnership perspective, if we're giving them the tools that they need to be successful and we have the best solution on the industry, why wouldn't they want to do more with us? And so we go in first as a trusted partner, and then we set expectations around how do we

13:02>> want to grow and mature your program. And then they are partnering with us to help grow our business so we can continue to innovate and provide more solutions. So today, it's been working really well. And I think it's leading with empathy and value and then being able to drive growth on the back end.

Nathan Latka

13:16Last couple of questions here, Ashley. Dollar retention, obviously a big metric. You got a new product to upsell. You hope people fall in love with it. What are you guys at right now in terms of net dollar retention?

Net Dollar Retention and Churn Breakdown

Ashley Rose

13:25>> So last year's numbers were about 150% net revenue retention.

Nathan Latka

13:30That's incredible. And and is that I mean, can you peel that on in a bit? Gross broach churn versus expansion?

Ashley Rose

13:36>> Yeah. So our from a software perspective, well, we lost one customer on our software last year. So our our churn was extremely low. And then we did a really great job last year growing our install base with our CSM. So majority of it was expansion driven.

Nathan Latka

13:52Yeah. Yeah. So very less than 5% annual revenue churn, more than 50% expansion gets you to 150% net dollar retention. Right. Very cool. I love this. Okay. So Unify is coming up. You just got some fresh capital in the door. Where are you spending most of this capital? Is it really scaling that team in Ukraine or is it anywhere else?

Series B Capital Allocation

Ashley Rose

14:10>> Yeah. So it's really split between three major initiatives. So obviously with Unify, we're hiring tons of developers and talent, so a lot of R and D. And then sales and marketing. With the creation of the new category, working with Forrester and Gartner and trying to get a lot of education out there, we're spending a lot in marketing this year. And then growing our sales team, which is both inclusive of our direct sales team as well as

14:33>> bringing in channel this year.

Nathan Latka

14:35You mentioned last time you were on that you were comfortable spending about $12,000 to get a $25,000 sort of ACV account for a six month payback period. Do you anticipate that sort of spike longer payback period as you invest in Gartner and the new product?

Ashley Rose

14:47>> Yeah. It it's it is going to be spiking, and it is. But know from a lifetime value perspective, we've been able to prove out that we can retain these clients and we can grow. And so we're keeping it a really healthy kind of path to LTV metric, but yes, we're expanding our investment.

Famous Five Rapid Fire

Nathan Latka

15:03All right, Ashley. Let's wrap up with a famous five. Number one, favorite book.

Ashley Rose

15:08>> Oh, man. I am reading the oh, man. I totally did not. I totally forgot about these. You should be I reading right know. So I am reading The CEO Tightrope right now and I'm liking that book, so.

Nathan Latka

15:23Okay. Number two, is there a founder you really respect or you're following or studying?

Ashley Rose

15:29>> There's so many good founders. I've actually really started following a lot of local founders people that have just built really good companies in Austin, obviously, Bumble and the like.

Nathan Latka

15:40Number three, what's your favorite online tool for building Living Security?

Ashley Rose

15:45>> We so I've started we started using, SaaSOptics, and so that's been a really great tool for us.

Nathan Latka

15:52Number four, how many hours of

Ashley Rose

15:53>> sleep do get every night?

15:56>> Six to eight.

Nathan Latka

15:57Family situation, married single kiddos?

Ashley Rose

16:00>> Married with three kids, still in a 14.

Nathan Latka

16:02Goodness, so busy. Okay, three kids. Can I ask how old you are?

Ashley Rose

16:06>> I'm 34.

Nathan Latka

16:0734, last question. What's something you wish you knew when you were 20?

Ashley Rose

16:13>> To not care as much about what people think about you.

Nathan Latka

16:17Guys, Living Security launched in 2018, they're on a tear, broke a million dollar run rate in under eighteen months, now scaling 200 to 300% year over year growth, doing north of $250,000 a month in revenue and a very exciting new product coming out called Unify. You wanna check it out. They help you understand who on your team has healthy password hygiene. Are they using their own VPN? Are they browsing malicious websites? They're very excited about it. Currently serving

16:40a 130 enterprise customers. They expect a lot of those customers to use this new tool. They just raised another $14,000,000 to help invest in this new tool. Team is 60 right now as they look to continue to scale. Ashley Rose, thanks for taking us to the top.

Ashley Rose

16:51>> Thanks,

Nathan Latka

16:51Nathan.

16:54One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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, 1PM

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