How Talon Cyber Security Raised a $26M Seed Round Pre-Revenue with a Corporate Browser for Distributed Workforces (Interview with CEO Ofer Ben-Noon)

Introduction and Ofer's Background

Nathan Latka

00:00Hey folks, my guest today is Ofer Ben-Noon. He's a seasoned entrepreneur with vast cybersecurity experience and was the founder and CEO of Argus, a global leader in automotive cybersecurity, which was acquired by Continental in 2017. Following that acquisition, he served as a member of the senior management at the company and as CEO of Argus, leading it to protect over 60,000,000 vehicles globally. He served as captain in the IDF Cyber Intelligence Unit 8200 and was a team

00:22member of two Israeli Defense Prize winning projects. Ofer, are you ready to take us to the top?

Ofer Ben-Noon

00:28>> Ready.

The Israeli Cybersecurity Ecosystem

Nathan Latka

00:29Alright. Something special is happening over there in Israel. You know, I have these founders on and they're all for exit IDF. You know, we've got Ari at Coralogix, Tomer at Yotpo. What's happening over there?

Ofer Ben-Noon

00:40>> Well, I think it's two things. Right? One, is is the fact that, a lot of Israelis now are are are looking what can they do better for the world, how they can contribute a little bit more. And I think it's kind of the feeling of of the ecosystem that there are opportunities that we can bring value. And the other point is obviously the the background, right? So the fact that everything is always quite hectic, the background

01:09>> coming from 8200 is also very much helpful where we are solving significant problems on a daily basis. So yeah, the atmosphere here is quite good now.

The Corporate Browser and Distributed Workforce Security

Nathan Latka

01:19So you're tackling security in the enterprise now with this new corporate browser that you've built specifically for distributed workforces. How on earth can you get people or teams to convince their teams to switch from Safari, Chrome, or the browser they use onto your secure browser?

Ofer Ben-Noon

01:35>> I think when teams already understanding that working from everywhere, they would need to have additional security on the endpoints, especially the less managed endpoints, potentially personal devices, or if it's contractor, and then in many cases they have devices from other companies. I think it's clear for people and it's well understood that they will need to have some type of protection on this unmanaged endpoint. If you think about the alternatives, right, to install now a fully managed

02:09>> network filtering or is it to install a fully managed ADR on this device, then one of the alternatives that are having the least amount of privacy invasion is actually a browser because then in a sense your employee knows that you are only monitoring things which are corporate related, but anything else is not.

Pricing Model: Per Device Per Month

Nathan Latka

02:37Mhmm. And so walk me through pricing. Obviously, every SaaS company is different, but how do you price this thing?

Ofer Ben-Noon

02:43>> Very, very similar to to ADR. So the pricing model is is pretty much identical.

Nathan Latka

02:49Sorry. What are you pricing as number of browser installation, number of seats, feature based upselling?

Ofer Ben-Noon

02:54>> So it's number of browser installations. So it's in a sense, per device per month.

Nathan Latka

03:02Okay. Per device per month. And and so, obviously, you know, if you're signing up an SMB with two customers, that's different than an enterprise with 500 customers or licenses signing up. What's your sweet spot? What's the average customer paying you per month or per year to use this technology?

Ofer Ben-Noon

03:17>> So our target, customer would be organizations which are between 5,000 employees to about 50,000. So this would be kind of our our suites for organizations which are big enough, that have enough people working from all over the world, enough contractors, enough challenging use cases, because one of the biggest advantages that we can bring is kind of a consolidation of the different devices, different use cases.

Nathan Latka

03:51So offer five to 50,000 employees as your target audience, but where are you at today? What's the average team size on your platform using you guys today?

Ofer Ben-Noon

03:59>> We have in our organization still pretty much all ranges, some with hundreds of thousands of employees, some with, tens of employees, so in terms of the size of the customers.

Nathan Latka

04:11But but if you take all the all the devices on your platform divided by all the brands using you, you can back into an average. What's that sweet spot?

04:20Like is a thousand, maybe a thousand employees a fair sweet spot?

Ofer Ben-Noon

04:23>> Something like that. Yeah, think that would be.

Nathan Latka

04:25Okay. And walk me through how you're keeping your top of funnel wide. You mentioned people can get started with as little as just 10 devices or 10 employees. What do they get? Is it free or not?

Ofer Ben-Noon

04:35>> So initially, it's kind of... We believe kind of in the model of

04:41>> try to pay. So start, feel the value of the product, see that it brings you value. In a sense, I think that the best thing that any SaaS company give its customer is the conviction of bringing value rather than immediately charge you up upfront. So usually, we start with a small pro... With a process of a few weeks of demonstration or, call it, proof of value in which we can demonstrate the value to the customer. And

Target Customer Size and Sweet Spot

Ofer Ben-Noon

05:10>> only then when when the volume start to increase, then we will convert into a paying customer.

Nathan Latka

05:16And Ofer, before we go and give you a backstory from Argus into Talon, help me understand... Well, I mean, what... If someone listening right now and wants to start on you guys, what should they expect to pay per device on average per month?

Ofer Ben-Noon

05:27>> So usually it would be a single digit dollars per device per month.

Nathan Latka

05:32Okay. So something like 5 to $10 per month per per... Now if an employee has a cell phone, a laptop, and an iPad, is that $10, $20, $30 a month for that one employee because there's three devices?

Ofer Ben-Noon

05:45>> In use case... In in use cases like that, then usually it would be per device. So meaning, yes, three. What usually happens is that on big organizations, then obviously they they have, bundles for for this type of lease.

Nathan Latka

05:58Okay. But it's generally fair to say, just so my audience understands, you're charging sort of 5 to $10 per device, not per employee, because an employee could have three devices. Okay. Very cool. Let's get the backstory here. So did you get the idea for this at Argus? Did you see something there or at Continental?

Ofer Ben-Noon

06:16>> So if we go back kind of through the history of Argus, in a sense, wanted to bring to the world something that brings a lot of value to solve a significant problem. And if you look at the world of connected cars somewhere there in 2013, there were not many companies. Like General Motors, I think, one... Was one of the only ones or the first ones that were really focused on on bringing connectivity, and then all of

06:44>> the other manufacturers kind of march forward. So we had to understand there is a huge tectonic changes having employees or having, sorry, customers interested to connect their vehicles to the outside world in order to get them to gain to gain a lot of insights and also abilities to have more safety. And we understood that when you are bringing such capabilities into a market that wasn't dominated with security issues before that, then there will be a big

Try-Before-You-Pay Onboarding Model

Ofer Ben-Noon

07:16>> vacuum, a big issue that will come into the world. And then at the point after three years after the acquisition, I've started working with Ofer Ben- Ofer

07:30>> Ofer Ofer

Nathan Latka

07:33Lacoon Mobile Security.

Ofer Ben-Noon

07:35>> Have you heard about Lacoon?

Nathan Latka

07:36I have not, but you two got together in what year was that? When did you write the first line of code for Talon?

Ofer Ben-Noon

07:43>> So that was middle of twenty twenty.

Nathan Latka

07:47And did you guys play nice? Did you just say, oh, do you know? You're an equal partner. I love you, brother. Let's put it 5050, did you negotiate like hell?

Ofer Ben-Noon

07:55>> Well, I and I know each other from the 8200 intelligence unit days. So that was, I think, only fifteen years ago. Was It clear to us that we are equal partners, that we are going into this journey, as brothers, play super well. It wasn't even something that I think we have discussed, more than, twenty seconds, so that was one of the of the first thing that were completely clear.

Nathan Latka

08:19That's amazing. Who did you... So tell me tell me if you can name them, that would be amazing. Who was your first customer and how did you land them?

Founding Story: From Argus to Talon

Ofer Ben-Noon

08:28>> At the time that that we started with, with Argus, I think that, our our first customers were some of of the biggest car manufacturers, in in the world. I think actually at that time it was one of the biggest, tier one, manufacturers, and the logic and the reason why they came into the table

Nathan Latka

08:49Car manufacturers, you're talking Ford, these kinds of brands?

Ofer Ben-Noon

08:52>> Yes, yes, yes, yes, yes. And the logic is that all of them were coming into a relatively new world, into coming... Coming to new environment, and Cyber Security at the time wasn't a big thing for that area, right? Because cars weren't connected, now you had a cellular modem, and it was kind of the early stages. But one of the things that for us at Argus was very clear, is that the opportunity here to bring something to

09:26>> the world was unique. By the way, that's also what Ohad and I were looking at mid-2020s. So Ohad was the Founder of Lacoon Mobile Security. It was the first cyber security for smartphones. And one of the things that both of us experience is this tectonic change. So when he had started in 2011 with Lacoon, smartphones weren't connected to organizations at all, and all organizations wanted to allow this access. And then, when we started working together, June

09:58>> 2020, first point is that we knew that we wanted to work together, so that was this, brotherhood that you have mentioned. And second thing was, can we bring something dramatic to the world? And and I think that...

Nathan Latka

10:13Ofer, just to move this just to move this forward, because, again, we've got about four or five minutes left here. So your first customers come from the space you came from, which is car manufacturers, manufacturers, you you know, know, not Ford, but people maybe like Ford or maybe Ford too, but you can't comment, but those kinds of brands. That was your first group of customers. Where are at today? Obviously, you're only a year, year and a

Current Design Partners and Pre-Revenue Status

Nathan Latka

10:30half in, but how many customers today?

Ofer Ben-Noon

10:32>> So today we have about a dozen design partners getting probably by the end of this quarter to about 20, where the goal would be to bring as much value as possible.

Nathan Latka

10:48So for 12 design partners, does that mean they're paying customers or are you guys pre revenue today?

Ofer Ben-Noon

10:52>> Today, the company is pre commercialization.

Nathan Latka

10:55Okay. So pre revenue. Help me understand how you're learning right now. This is a beautiful place to be in as a founder, right? You're doing the design things, you're saying what will work, what won't, when should we launch pricing? How are you thinking about those challenges?

Ofer Ben-Noon

11:08>> I think one of the most important thing is to understand which problems are we tackling for the customers and exactly what are the biggest pain points that we are solving. Because each customer, by definition, has different issues, different challenges, and what is kind of the common denominator that most of them are having that we're able to bring that value as soon as possible. So I think that's the most important thing. The second most important thing would

11:41>> be to understand and to identify exactly how is the fastest way to present this value. I think that one of the the main challenges with a lot of security companies is how to present the value that you are bringing to the customer.

Nathan Latka

11:57Mhmm. And how many of the... I guess, how many devices are you managing across the 12 design partners right now? Like, what's your actual install rate or install base, usage rate base?

Devices Managed and Pricing Experimentation

Ofer Ben-Noon

12:08>> Now it's hundreds and going to thousands.

Nathan Latka

12:12Okay. And so when I asked you earlier about pricing per device and you said sort of five to 10, it sounds like that you're still experimenting. You're not quite sure where pricing is going to end up, but you're testing right now on these 12 design partners.

Ofer Ben-Noon

12:23>> These are usually the feedback that we are getting, but not only from the design partners. So in the sense, in many sessions, and you are touching and feeling what are the expectations.

Funding History and Seed Round Details

Nathan Latka

12:32I see. Talk to me a little bit more about the funding history, and this is unique because I believe, again, you exited to Continental back in 2017, and I think it was a fairly large it was a fairly large deal. Right? What did you exit for?

Ofer Ben-Noon

12:44>> So the exit there was for $530,000,000.

Nathan Latka

12:48Okay. And you were one of the founders there at that company. Correct?

Ofer Ben-Noon

12:51>> Correct.

Nathan Latka

12:51So it's a meaning... I imagine that was a very meaningful exit for you personally. Correct?

Ofer Ben-Noon

12:55>> Yeah.

Nathan Latka

12:56So why go raise capital? You've chosen to raise capital in this new company. Why raise capital? Why not be a little greedy? You and Ohad keep 100%, do your thing, use your own money to fund it.

Why Raise Capital and Choosing Strategic Investors

Ofer Ben-Noon

13:07>> Think the most important thing when you're starting a new company is to choose the partners that you wanna work with, along the way. And at least my view is that every new investor is actually a new a new partner, for the journey. So understanding that with this partnership, you are getting more and more friends, advisors, supporters, networks. So choosing Ride, I think, is is critical. And the opportunity to bring on board people like Lightspeed, teammates,

13:43>> well as Zohar Zisapel, George Kurtz, Mark Anderson. These are not people that, you... Any entrepreneur should, choose not to have rather than these are people that you want to attract in any way that you can. So this is the main logic in in every funding that, by the way, also I had in my previous runs.

Nathan Latka

14:06Yep. Yep. Well, mean, listen, investors would be writing you almost blank checks. How much did you raise at Argus? Was that a good return for investors?

Ofer Ben-Noon

14:14>> At Argus, we raised total of 30,000,000.

Nathan Latka

14:19Okay. So that should have been a fantastic deal then for investors. Not a 1000x, but certainly four, five, six, 10x, right, over a short period of time. So they're all going, offer whatever you do next, I'll write you a blank $10,000,000 check. Just let me in. Please let me in. And you said, Zohar, Lightspeed, teammate, you know, and Adav, we wanna let you guys in specifically for strategic reasons. How much did you choose to raise?

Ofer Ben-Noon

14:41>> Our seed round was 26,000,000.

Nathan Latka

14:44Okay. And most people in the seed round are selling sort of 10 to 20% of the business. I would argue since you're sort of a proven commodity, you've done this before. You had a bit more leverage. Were you able to get that money and sell less than 10% of the business?

Ofer Ben-Noon

14:55>> No. We sold more.

Nathan Latka

14:56Okay. So 10 to 20 is sort of the range. Were you sort of in that range?

Ofer Ben-Noon

15:00>> More than 20%.

Nathan Latka

15:02Oh, wow. Okay. Why did you... I would say that's pretty darn dilutive first seed round then. So these guys must be very strategic.

Ofer Ben-Noon

15:08>> Again, my view here wasn't around how much do I dilute, it's how much value am I getting? And for me, was just I want each one of them to have a good interest in the company, a good interest in in our success. I want them as as a partner. So it's not about how much am I am I giving from the company, but it's how much am I getting from these partnerships. That's the logic.

How Investors Help Drive Growth

Nathan Latka

15:36Mhmm. And so how do they help you grow revenue? Right? If you're raising 26,000,000 and selling more than 20% of the business that, you know, your post money valuation call maybe somewhere around a $100,000,000, you got to grow into that valuation. You've done it before. So obviously, everyone believes you can do it again, but how are they going to help you get your first paying customers?

Ofer Ben-Noon

15:53>> First point, this is the most important for anyone, is the product market fit, right? So these are people that have seen a lot, have been operators, a lot of them for significant portions of their career. Second point is exposing us faster to their network of connections, which is also super important. The third point is, in a sense, supporting us, the management, in the challenges that we are having because in a sense, a lot of the things

16:25>> even that we have done once, not everything

16:29>> are completely repetitive. These will be the most three points.

Nathan Latka

16:35Okay, Ofer. We're out of time. Let's wrap up here, though, with the famous five. Number one, what's your favorite business book?

Ofer Ben-Noon

16:45>> The tough one. I think I'll go with the The Hard Thing About Hard Things.

Nathan Latka

16:51Number two, is there a CEO you're following or studying?

Ofer Ben-Noon

16:56>> I'm trying to get a lot from many, but number one for me would be Zohar Zisapel here in Israel.

Nathan Latka

17:03What company is he with?

Ofer Ben-Noon

17:05>> Zohar was the founder of the RAD Group, probably one of the founding fathers of all of the Israeli high-tech here.

17:11>> Oh, very cool.

Nathan Latka

17:12Number three, what's your favorite online tool for building Talon?

Famous Five: Books, Sleep, and Life Lessons

Ofer Ben-Noon

17:15>> That's easy, the browser.

Nathan Latka

17:18Number four, how many hours of sleep to get every night?

Ofer Ben-Noon

17:22>> Six.

Nathan Latka

17:23Okay. And situation? Married, single, kids?

Ofer Ben-Noon

17:27>> I'm married with two kids, four years old and 2.5.

Nathan Latka

17:32Wow, busy guy. How old are you?

Ofer Ben-Noon

17:34>> I'm 35.

17:36>> 35. Last question.

Nathan Latka

17:37Something you wish you knew when you were 20.

Ofer Ben-Noon

17:40>> The importance of a team and and the fact that everything, everything, everything is about who do you surround yourself with and how to align this team to this joint vision and mission.

Nathan Latka

17:57Guys, Talon, I mentioned, a new browser specifically to help you keep your team safe from threats online. It's the first point online of defense. He's done it before, sold his last company for $450,000,000, raising just 30,000,000. A capital efficient founder, we like to say. Jumping into Talon Sek, raised $26,000,000 from strategic partners. Sold more than 20% of the business, but he loves the strategy these partners are gonna bring to the table. They're pre revenue today, but

18:19looking at getting that going here the next twelve months. We'll see what happens. Ofer, thanks for taking us to the top.

Ofer Ben-Noon

18:23>> Thank you very much, Nathan.

Nathan Latka

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