How Coro Broke $50M ARR and Raised $100M Series D at a Press-Reported $750M Valuation (Interview with Co-Founder Dror Liwer)

Introduction and $100M Series D Announcement

Nathan Latka

00:00Next speaker just closed a $100,000,000 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 gonna dive into the story, the security SaaS space today, and how he's broke $50,000,000 of ARR. Please tell me, welcome to the stage, Dror Lewer of quoro.net. Dror.

00:21It's great to have you again. Uh-huh. Thanks for being back. Come on up here. Did I get the numbers right? It was a $100,000,000 series d?

Total Raised and $750M Valuation

Dror Liwer

00:30>> The series d was a 100,000,000. Total raised so far was just north of $2.80.

Nathan Latka

00:34And the valuation on the series d was about how much?

Dror Liwer

00:38>> The press has con has stated we don't say it publicly, but the press said it was $7.50.

Nathan Latka

00:44Mhmm. And

Dror Liwer

00:45>> And they were pretty close.

Origin Story and First Line of Code in 2014

Nathan Latka

00:47Okay. Press is generally generally close to $7.50. 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 coro.net, would you say?

Dror Liwer

00:56>> Where The

Nathan Latka

00:57first line of code, like the MVP?

Dror Liwer

00:59>> 2014.

Why Revenue Was Near Zero Until 2019

Nathan Latka

01:002014. So we still see, like, pretty small revenue up to really, like it looks like 2019 here. Oh, yeah. What took so long to get to revenue?

Dror Liwer

01:07>> It's a great question.

01:10>> So we're a cybersecurity company. For those of you who don't know, we target mid market and small businesses. And initially

Nathan Latka

01:18You like that. Right?

Dror Liwer

01:19>> Oh, I love that.

Nathan Latka

01:20Grow

Dror Liwer

01:21>> 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. But basically, we started off like every other cybersecurity company trying to sell a niche product into the enterprise market. Very quickly understood that that market was not very receptive to new ideas. Started really morphing the product, got the product to be a lot more complete, continue to sell to

Original Product: Comjacking and the Enterprise Pivot

Dror Liwer

01:53>> 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.

Nathan Latka

02:03When what was there?

Dror Liwer

02:04>> This was mid market and small businesses.

Nathan Latka

02:06Mid market and small okay.

Dror Liwer

02:07>> Really love the simplicity that we created, that really love 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 mid market or a small business needs.

Nathan Latka

02:21Try 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 police

Dror Liwer

02:32>> groups? It was trying to so so the attack vector was called comjacking, which is a name I actually coined, and the whole concept was preventing a man in the middle attack 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 yep, so when we went to sell this,

03:00>> people said, oh, that's a great technology. We had patents, we won awards and everything. But people said it's too much of such a specific threat vector that it wasn't really They

Nathan Latka

03:13weren't willing to spend money to prevent it.

Dror Liwer

03:14>> It's not about just spending the money. They weren't willing to add one more thing to the stack.

Nathan Latka

03:18I see.

The SMB Epiphany and All-in-One Platform Launch

Dror Liwer

03:19>> That's a very when you look at it from the eyes of a chief information security officer or an IT person, adding something new to a stack has additional costs, which is why cybersecurity is so broken because you need to have layers and layers and different tools. An average company on the enterprise side will have 40 different cybersecurity products that they've bought. Each one of them has a massive side cost, not just the cost of the software,

03:47>> but the team, the training, the maintenance and so forth and so on.

Nathan Latka

03:52Let'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 cofounders, I think. Right?

Dror Liwer

04:01>> Three cofounders other than me.

Nathan Latka

04:02So four total. Did you guys do the easy thing, 25 each? Yep. Fair enough. He owns it. 25 each. Was it as simple as that? You're like, okay. Pizza, beer, 25, feels right. Let's go.

Dror Liwer

04:12>> It it was 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.

Nathan Latka

04:20And you're running for president soon?

Dror Liwer

04:22>> I am running for

Nathan Latka

04:23president. I'm saying very very political answer, but no. It is what it is. But okay. So anyways, you start with twenty five twenty one twenty, and then your first seed round series a $5,500,000.20 16. I mean, most people are selling 20% in their seed round. Would you fair was it around that?

Dror Liwer

04:36>> Just around that. Yeah.

Nathan Latka

04:37Okay. So that was, like, call it, like, a 20,000,000 valuation. You were still though pre a million, 2,000,000 of AR in 2016. Right?

Dror Liwer

04:43>> In 2016, we were zero.

Nathan Latka

04:45Zero. Okay. Yeah. Yeah. So you don't really do that big round until 2018, 20,000,000. And if we go 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?

Dror Liwer

04:57>> It was both the patents and the potential.

Nathan Latka

05:02Okay.

Dror Liwer

05:03>> Because we started I think we really showed that the potential was phenomenal. SMBs are the least protected animal in 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 end to end cybersecurity that you can trust covering your devices, the network, the cloud, the email and the data?

Nathan Latka

05:36Yeah. No. There's some people.

Dror Liwer

05:37>> Three people. By the way, for the rest of you, 40% off on Quora if you go to quora.net/sasopen.

Nathan Latka

05:45He's a I 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.

Dror Liwer

05:51>> Cora.net/saasopen, 40% off on our entire platform.

Capitalization History and Series C at $500M Valuation

Nathan Latka

05:55I love that. That's great. Alright. So let But

Dror Liwer

05:57>> but here's an interesting thing. Everybody in this room will spend easily $50 a user on CRM, but they won't spend $15 a month on cybersecurity.

Nathan Latka

06:07Until they get hacked

Dror Liwer

06:08>> and Until it's too late.

Nathan Latka

06:09Right. You're selling you have that's the problem with what you sell, right, is you gotta sell that pain, and no one will pay for it until they feel the pain. So Exactly. 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.

Dror Liwer

06:22>> Yes. So basically, in 2017, we created this all in one

Nathan Latka

06:26Mhmm.

Dror Liwer

06:27>> That covered basically

06:30>> extended what we've originally done. So we were very much in the network space, then we extended it to SaaS on the one end and to the device on the other end. And we launched it in 2017. We called it secure cloud. And that's really the time where we noticed that the simplicity, the concept of all in one was really attractive to the ICP that we weren't even considering. The mid market, the small business, you know, 20

07:00>> to 2,000 employee range Mhmm. Which, you know, all four founders come from the enterprise world. And to us, this was a sort of like an epiphany Mhmm. That there was a market, and they were buying, and they were interested.

Nathan Latka

07:13So keep learning from 2017, 2018, 2019. Now this is what your website looks like in 2019. Feels more enterprise y. Right? Less words, less colors, more direct. Right? Using Office three sixty five g Suite Dropbox, you know, plug us in. Let's go forward. You keep learning and keep learning. Here's what you look like now in 2021. You've expanded the industries you're serving, health care, manufacturing. Which of these six sort of industries was making up the most

07:37of your revenue in 2021? Do you remember?

Dror Liwer

07:39>> Actually, I would say pretty equally Okay. Distributed. One of the things we're super proud of is the fact that 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, and we've all had our battle scars where you sell into financial services and then 2018 happens and everything gets shut Yeah.

Nathan Latka

08:04Yeah.

Dror Liwer

08:05>> So we're very proud. Right now, we see two specific spikes This

Nathan Latka

08:10is where you're at today, right? So you're trying to brand this idea of sort of modular cybersecurity as a brand.

Dror Liwer

08:14>> Yeah.

08:15>> Correct. So right now we're seeing two spikes in education and in automotive. 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 the 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 all in one. It's $15 a month for the entire platform per user. Very easy to

08:41>> digest.

Nathan Latka

08:42I mean, a consumer perspective, I'm most concerned about automotive cybersecurity 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. One minute. If you do that times a million cars on the road at the same time, that's like

08:58a 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?

Dror Liwer

09:06>> Our security doesn't cover our IoT. It covers the what we call the workspace. The user, the device, they use the network, they're connected to the cloud services, the email, the data. Mhmm. We're not touching

09:19>> IoT. That's a totally different world of security

Revenue Growth: Five Years of 3x and the 2x Year

Nathan Latka

09:22I see.

Dror Liwer

09:23>> Which most of the people here probably don't even touch.

Nathan Latka

09:25Yep. Alright. We've got we've got three, four minutes left. I wanna jump into your capitalization history. Right? So you talked about early stages here. You do this series c 80,000,000, 500,000,000 post money valuation in 2022. The thesis around that round was what? Why do you need that that of money in 2022?

Dror Liwer

09:41>> So if if you go back to the revenue growth, you'll see that suddenly we started growing at three x. So you mentioned before three x, three x, three x, two x, So two we did five years of three x.

Nathan Latka

09:54Uh-huh.

Dror Liwer

09:55>> And then this year is gonna be our first two x year because the base number has become

Cap Table Walkthrough and Founder Dilution

Nathan Latka

09:59You gave me this projection of a 100,000,000 this year. Are you on where are you today? Like We

Dror Liwer

10:02>> are on track for that.

Nathan Latka

10:03You're on track. Okay.

10:04>> Wow. So, yeah, going from 50 to a 100,000,000 Yeah. In today's SaaS market, that's pretty incredible.

10:08So you use that to drive growth. You keep doing fundraising. Right? Because you obviously did the series d, 75,000,000 in the series e. It was a series e for a 100,000,000. Right? Or was

Dror Liwer

10:17>> it No. The series d was a 100,000,000. There is an error here. The series c was actually a 155.

Nathan Latka

10:26So it's just the two together. Yeah. It's it's sort of like a two I see. So the 80,000,000 at 500 and the 75 at 600 were actually the same round, just two different

Dror Liwer

10:34>> It's like c one, c two.

Nathan Latka

10:35I see. I see. Okay. What I wanna get into, though, and I didn't ask you for this, and it's gonna make you uncomfortable, so I apologize, but just roll with it. I I've modeled I've modeled your

10:44>> cap table.

10:45Did not ship my Kevlar vest.

10:47Yes. 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 cofounders all own 25 at the start, so you see that in the upper right. Right? You, Doron, Carmel, and Guy. And then I assumed 2020% sold

11:06in the 2014 series 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 13% 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?

Dror Liwer

11:26>> So there there were top ups along the way Okay. 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.

Nathan Latka

11:35Yes.

Dror Liwer

11:36>> That's one thing. But the second thing is I'm not really worried about dilution at all because I much rather own 8% of a $10,000,000,000 company rather than 30% of a $10,000,000 company.

Nathan Latka

11:50Yes. But this is what all the early employees at Hopkins said. And then it crashed and burned and all their options are upside down and the employee number two gets no money.

Dror Liwer

11:57>> Like It's not an option for us.

Nathan Latka

11:58Well, 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

12:07>> amount of money.

12:08Absolutely. How do you turn your your listen. You have not just be clear. He has not confirmed this. I am guessing his on paper net worth based off the percents on the top I put on the bottom, but I'm guessing on paper net worth for Quora was around $5,060,000,000 bucks. The question is for you personally, like, how do you turn this into actual cold, hard cash? Is IPO your only option? Have you done any secondaries?

Founder Philosophy: Building a $10B ARR Company

Dror Liwer

12:28>> 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. We're not all that interested in shooting for an exit. We're interested in shooting for a $10,000,000,000 revenue ARR company because the market is massive. So we're looking at a market that we the TAM is about a $110,000,000,000 in our market, and we want to be the dominant player in that market. So

13:01>> we're much more interested in building the largest, the most successful company in mid market small business cybersecurity rather than thinking about an IPO or an exit. And I think that our funders also view it that way because that exit will come if we build that massive organization.

Nathan Latka

13:23We've got about a minute left. Have you or anyone on your team talked to Google's m and a team anytime in the past twelve months?

Dror Liwer

13:30>> No. None.

Nathan Latka

13:31So they just pulled out of a massive cybersecurity acquisition.

Wiz, Google, and the M&A Landscape

Dror Liwer

13:34>> Oh, yeah.

Nathan Latka

13:35Wiz. They never talked to you guys about

Dror Liwer

13:36>> I'm not sure they pulled out.

Nathan Latka

13:38You think Wiz pulled out?

Dror Liwer

13:39>> Wiz. Wiz pulled out.

Nathan Latka

13:40Wiz is w I

Dror Liwer

13:41>> z. Yeah. I've I jokingly, I said we should Wait. Why? Rename Quora Waza because apparently Google buys WZ companies, Wiz, Waze from Israel.

Nathan Latka

13:52Yeah. But wait. Why do you think Wiz pulled I thought Google probably pulled out. Why do you think Wiz pulled out?

Dror Liwer

13:56>> So the official line is that Wiz really wants to do an IPO. Uh-huh. That's what their CEO is saying. We have no in inside information whatsoever. So what I know is what you know from the press.

Nathan Latka

14:10Mhmm. Mhmm. What do you think Wiz's revenue is?

Dror Liwer

14:13>> I think it was 230.

Nathan Latka

14:14$230,000,000.

14:15>> So, I

14:16mean, you're not you're half that size.

Dror Liwer

14:17>> Yeah. We're not that far.

Nathan Latka

14:18They were valued at Google was thinking 23,000,000,000.

Dror Liwer

14:20>> Yeah.

Nathan Latka

14:21So you think you can make a fair argument you're worth 10,000,000,000 today, the company?

Dror Liwer

14:25>> Half. If if we're half of what they are and our offering is actually much wider and our TAM is much bigger than theirs, then I'd say that would be fair.

Nathan Latka

14:35Taking a spotlight off of you for a second, you guys can see here the reason I like building these graphs when our research team does research at GitLabka is you can sort of the series a position of 5,500,000 assuming the dilution happens the way the waterfall shows. You can see they've they've effectively more than, you know, fifteen, twenty x their position to be worth effectively 91,000,000 today up up from the 5,500,000 or the series b went

14:54from 20,000,000 to now with 47,000,000 today. So it's just fun to understand sort of how this works. To your point, again, put in some ESOP top ups here. You did that pretty much in every round, some sort of ESOP top up?

TAM and Competitive Positioning

Dror Liwer

15:04>> For us and for all of the employees as well. Yeah. Yeah. Wanna keep everybody engaged. We want to make sure that people are with a view to a personal success as well.

Nathan Latka

15:15Yep. Guys, it is not easy to be this transparent, but again, launched with ugly orange and green colors back in the day into the complete They're I love the orange. They're pretty ugly.

Dror Liwer

15:23>> Orange, yellow.

Nathan Latka

15:24They're orange and yellow. Pretty ugly, but not a designer, so you get

15:27>> a pass.

ESOP Top-Ups and Keeping the Team Engaged

Nathan Latka

15:28Twenty fifteen, very little revenue. Twenty eighteen, twenty nineteen patents issued, finally pivoted the business. You grow from nothing. You three x, you three x, you three x. You're gonna double this year at scale from 50 to more than a $100,000,000 of revenue. Also, a great guy. Super transparent. Please help me give it up for Dror at Coro.

Dror Liwer

15:44>> Thank you, man.

Nathan Latka

15:45That was awesome. Thanks for letting me push you a little bit.