How RealDefense grew RealDefense to $70M revenue and 2.8K customers in 2026.

How much in top buying revenue will it finish the year with real defense this year? [music] 2025. >> Between 1670 and EBID will be between what 10 and 20 million or more? >> No, it's between 20 and 25. >> What was revenue right before you went public? >> It was relatively small amount, less than $10 million. >> When you bought the company back in 2017, how much revenue was it doing at that point in terms of ARR? >> They were doing like 7 million a year. >> Gary, you're at 70 million of revenue today with $25 million of EBID. Someone comes to you and offers you $350 million all cash upfront. [music] Do you sell the business today? Hey folks, my guest today is Gary Gusenv. He's the CEO of Real Defense. He founded the company actually all the way back in 2003. It was called Cyber Defender back then. Grew it from 0 to 70 million bucks of revenue by 2009. Then took it public on the NASDAQ. Long story short, bought it back much later in 2017. Rebranded it. Is now scaling again. So we're going to jump to the full story today. Gary, you ready to take us to the top? >> Let's do it. >> All right. So let's actually start off with the buyback which I think happened in 2017. What did you end up buying back the company for and then tell us what the product does today. >> Sure. Yeah. So it was u a relatively small amount less than $10 million. We we bought it back when it was declining precipitously month over month and year over year and we you know put a plan together to bring it back to life and uh grow it through acquisitions. And so the whole concept behind real defense from the beginning was to do acquisitions of small companies that are either declining or flat and turn them into synergies and uh generate more revenue, more LTV, reduce CAC and and grow these businesses. We've done six acquisitions since 2017. >> Interesting. And when you bought the company back in 2017, how much revenue was it doing at that point in terms of ARR? >> Oh, we were doing less than 10 million. I think we're doing like 7 million a year. >> Okay. So you bought it for around or under 1x AR? uh under one if arrow. >> Yeah. Okay guys, we're going to go back and learn like what the hell happened, right? You go to zero to 70 80 90 million. The new management came in. I guess something happened. We'll get more on that, but let's not let's not bury the lead here, which is what the product does today. So Gary, just I'm going to share screen here. Go to your website. I think this animation here is actually really powerful. Help us understand what the product does here. >> Sure. It's actually not just a product, it's a platform. Uh, Real Defense has many products and brands underneath it, but the fundamental concept is that we monetize our partners' user bases. So for instance, if you're an anti virus company and you're looking to build additional revenue, but you don't want to invest into R&D, you don't want to invest into your infrastructure. You want to add additional revenue, ARR, higher LTB, increase retention, you would license some one of our technology stocks or or all of the products that we market or develop, and then you would add them to your existing portfolio of products. And we so so that's that's the sort of the big picture view within the platform. We have um a a technology called real defense smart scan. What smart scan does, it analyzes data on your device and looks for telemetry signals. So for instance, let's say you have a laptop and you're at a a coffee shop and you're connected to the internet. We're going to give you an opportunity to connect to through a VPN. So we're going to know that you're connected of coffee shop. Here's a VPN offer. Let's say your computer is running out of disk space. you want to know about that ahead of time and you want to prevent crashes and problems with your your software, we're going to sell you that. We're going to set sell you an optimization product. And so that telemetry stack and the monetization that comes along with it integrates into your existing platform. So if you're an anti virus company, you have an anti virus product that sits on users devices. We plug run into that and we deliver very customized messaging based on telemetry. It's just in time marketing and it performs really well. It's far more efficient than adding advertising or other forms of monetization that pisses people off at the end of the day. So this is really efficient. >> Yeah, I like the word you use just in time marketing. So guys, before we jump into more of the backtory, I want to make sure you don't you're following along here. Gary is selling a painkiller, but what's cool about this is he doesn't have to wait for someone else to talk about the pain. He sells a platform actually tells you the pain, right? Your PC is running low on drive space. Oh, buy this product, right? So it's the pain and the painkiller. Really interesting vertical integration there. So Gary, let's go back to the founding story just briefly. You launched the business in 2003. How old were you in 2003? >> Oh boy, I think Well, but I should know that, right? Cuz it's his age. Uh I was 33. Yeah, 33. >> Okay. And were you already like wealthy? Was this your second company or were you sort of risking all this business? >> Yeah, I I had successes very early on. I had a a direct marketing company that I found in the late 90s and uh it it became a multi-million dollar business fairly quickly and so I used that knowledge and used some of the capital to build uh my my first cyber security company in 20 2003. So yes I had some success had some money was on my first rodeo but the company that I found in 2003 cyber defender was substantially bigger than the company I had prior to that. >> Interesting. Okay. And how much of your own capital did you put in in 2003 2004? Did you raise equity instead VC? >> Yeah, it's oh my god so long ago. So yes, I do put in my own money and I think it was like 50,000 or $75,000 and then we went out and raised about quarter of a million dollars in the initial raise and then subsequent to that we raised probably close to 100 million from investors and that that public funds uh private uh debt equity did all kinds of rounds. >> Okay. And during that period 2004 to 2009 public filings say you grew basically from 0 to $70 million in revenue. Help us understand how you did that. Any tactics you used then that are relevant for founders today looking to grow that fast. >> Sure. So what we realized early on is that you have to you have to have multiple stages of product offerings in order to generate significant amount of revenue in terms of selling a low price product and then sell a middleric product and and an expensive product. Meaning something cost 20 bucks, something cost 50 bucks and then something cost 200, $300, $400. And so we created path where consumers can buy something at the introductory price at let's say $ 20, $30, and then they would be offered other products that are more expensive. And we found that their elasticity is is material. You can go from 20 bucks to $1,000 if you just ask. And so what what we found a lot of companies out there didn't know how to ask. And and we've learned from their mistakes. to learn from our mistakes and we started asking for more money and so we saw a significant increase in revenue and uh profitability. >> What would you remember before you IPOed what your largest customer was paying on an annual basis? >> Oh wow. Um the largest $500 probably $700 a year. >> Okay. So you were still a low arpoo high volume play. >> Yeah. We we were Yes. So and this is you're talking about like 20 years ago. So it's very different environment. highspeed internet is not is not available to everyone there. You know, billing is difficult. Recurring billing is not how it is today. There's all these dynamics that didn't exist that we have today. We have a lot more there's a lot it's more it's a lot more favorable landscape today for enterprise or SAS companies who sell to consumers or or businesses. It's far easier today than it was before. >> Guys, remember I am not just a YouTuber. I'm investing into my third fund. We've deployed $250 million into 550 software companies so far. are again at founderpath.com. If you're interested in capital, I would love to cut you a check because I know you're investing in your education. You watch my show. So, sign up at founderpath.com and when you get the onboarding email, I reply and I see all those. Just reply and say, "Nathan, I found you through YouTube and I'll make sure to prioritize you. I would love to cut you a check. Check out founderpath.com." Yep. One of the distinctions that we're going to get into later on the episode is this first company raised a lot of equity. You mentioned $100 million raised. I believe this new company, you're keeping more equity. You're using debt. We'll talk about that in a second. But to that degree, can you share what were you diluted down to at the first company before you IPO? Do you remember? >> Yeah, I I I diluted down to about 32%. >> Okay. And and what was the highest valuation you guys hit before the IPO? >> Um, it wasn't that high. It was maybe $45 million. >> Fun 70 million top line. >> No, no, no. That that's at the time that's at the height of the business being public, not before going public. Oh, I see. What was revenue before you went right before you went public? >> Oh, it was like maybe $10 million. >> Oh, wow. God, this is See, this is crazy. Today, you've got to have like 180 million, 200 million to...