Speaker 1 (00:00):
Be really explicit about what your customer success is. Your sales team might think they have product market fit and they're driving initial sales, but if you are not actually making those customers successful, are you truly ready to scale?
Speaker 2 (00:13):
Welcome to Spotlight on a podcast about how companies are built from the people doing the building one messy, exhilarating decision at a time.
Speaker 3 (00:21):
Welcome to Spotlight On. I'm Eric Wilford, your host, and with me today is Brian Dye, the CEO of Core Light.
Speaker 1 (00:29):
It's fantastic to see you as always.
Speaker 3 (00:31):
Great to see you. Let's start off, Brian, by you just telling us a little bit about what the heck is core light.
Speaker 1 (00:37):
It is the right starting question. So kind of three altitudes I think. First, if you're in the cyber world, we're in network detection response and if you're fortunate enough not to be in cyber and you want to understand what that means in English, we're the ones that help you find what went bump in the night, right? So we tend to tell to sell to enterprises and governments to help them really find and disrupt the most advanced attacks that are happening. So if you look at what's in the news media, large scale ransomware attacks the vault and Salt Typhoon Attackers Nation states. That's really what we help protect so that the critical infrastructure both in the US and globally is well protected. And I guess the third altitude, especially for the audience to think about scope and scale, we're a fully funded company. We're north of a hundred million. Again, really privileged to serve some pretty elite set of customers. So all six branches of the US military selling in 15 countries globally. If you think about on the public side, not just us, D-O-D-D-O-E-D-H-S, but also kind of five eyes and even NATO and some of the NATO member countries or customers. And then on the commercial side, many of the big utility providers, we protect about 10 trillion worth of banking assets, customers with 10 trillion worth of banking assets. It's organizations like that that we do a lot of work with.
Speaker 3 (01:50):
Wow, that's pretty. And how many people in the company?
Speaker 1 (01:53):
We're at about 350 right now and actually hiring pretty aggressively. So we still see a lot of top line growth. That's going to be a number that changes every week.
Speaker 3 (01:59):
Let's start with its origin story. How'd this thing get started?
Speaker 1 (02:03):
It's actually a really fascinating story because Core Light is a rare breed in SaaS companies and it's a very rare breed in cyber companies. It's an open source based company. It's an open core company. So the project got started as a postdoc project in the mid nineties by a guy named Vern Paxton, the
Speaker 3 (02:19):
Mid nineties.
Speaker 1 (02:20):
Today's word is tenure, right? Absolutely tenure. And so it evolved over the next 30 years because it turns up that actually understanding ground truth of what's happening on the network is super useful to a lot of folks, not just cyber people, network operations people, all sorts of folks love this. So the project extended through universities, through the Department of Energy into D-O-D-D-H-S, the base.
Speaker 3 (02:42):
What was the name of the project?
Speaker 1 (02:43):
It was originally called Bro,
Speaker 3 (02:45):
Bro,
Speaker 1 (02:46):
Which is a very noble name at the time. It was a reference to George Orwell's big brother in the dual-edged nature of network monitoring, all very intellectual and then call it plus or minus twenty eighteen, twenty twenty. Honey, I'm going to Vegas for broon was no longer an acceptable sentence. Got it. Project got renamed to
Speaker 4 (03:04):
Zeke,
Speaker 1 (03:05):
Which is much more politically acceptable for all the right reasons by the way. So what essentially happened was this open source project had 25 years of NSF funding and then eventually the NSF decided, wait, we're not in the business of funding ongoing software projects. And so then the project had to decide what do we do? And they started being kind of on the Red Hat model. They said, look, we've got these really elite organizations that are using us all the way through the world. We can just offer them professional services. We can make a nice kind of lifestyle company. We can actually support these customers really well. We can support the life of the project. What they realized was 90% of their work was actually troubleshooting Linux issues. 10% of what they were doing was working on the software and they realized the only way to make a good customer experience here was to become a product company and to become a product company, they need to go and get proper investment and really try to scale the organization, hence working with you. Thank you so much for leading the series A, by the way, on everyone's behalf. So it was really a story of a project that then became a bootstrap small business that then became a venture company over a period of 25 years.
Speaker 3 (04:09):
So academics can become commercial, is that what you're saying?
Speaker 1 (04:12):
They can absolutely do it well, in fact, we have a running joke with Vern Paxon who is the original author of the open source software that he keeps saying that I'll never do whatever it is, and then he goes and does it. He said, I'll never be a postdoc. He was a postdoc. I'll never be a professor. He's a professor. So now he's saying, I will never IPO. And we've encouraged him to say that many, many times.
Speaker 3 (04:34):
That's pretty good. So when they decided to start the company, how did they change their mindset? What did they do differently?
Speaker 1 (04:43):
The really big mindset change was to go from a services company to a product company. The fascinating thing about that, and I give all the founders huge credit for this, was they made customer sat the number one focus of the company. And to think about how extreme that is. First they hired a head of customer success before they hired a head of product. That's a statement of priority. And then second, because again, the initial customers for correlate were Fortune 100 government entities. I mean these are enormous organizations
Speaker 3 (05:13):
Who were the open source users
Speaker 1 (05:14):
That
Speaker 3 (05:15):
Had an interest in the product, I
Speaker 1 (05:16):
Assume. Yes. And they wanted performance, scale and reliability. So the first thing they did when they productized was to turn off a bunch of things you could get in the open source because they made it harder to secure, harder to run with high performance, harder to make more reliable. So it's a lot of open source business models. You think about how do you extend functionality to make that open source to paid conversion happen. It's another wonderful anti-pattern with this company. The first thing they did was actually limit the functionality because what the customer really cared about was performance and reliability. And the way to do that is to actually take away some of the things that could impede that.
Speaker 3 (05:53):
I want to weave in your story. How did you come to know Correlate and how did Correlate find you and what was your origin with Light?
Speaker 1 (06:01):
Yeah, it's hopefully a fun one because I'm a very unusual person to be at a company of this stage and certainly was an unusual hire. Thank you for helping bet on me when I came over, by the way, because I had spent the previous 15 years of my career in the larger cyber company. So I was at Symantec for 11 years. I now jokingly say I was there when they were cool. There was a time that was actually true.
(06:21):
I was at McAfee for a couple years helping get them spun out of Intel. And in both of those cases running reasonable sized teams. So these are two and a half thousand person organizations, kind of broad-based RD teams, product management, engineering support, SaaS operations. And then I get a call. What I decided to do is to say, look, I've been in these big companies but so much about cyber. It's a wonderfully resilient budget. It's a super innovative kind of world, a tremendous amount of values created in the early stage of a company's life cycle. So I said, look, I want to go into a startup. I want to go to something early stage. I was pretty simple. I went on Crunchbase and looked at all the cyber startups from the commuting distance of my house. I live in the mid peninsula here in San Francisco. So if you just look San Jose to San Francisco in 2018, real number, there were 200 cyber startups.
Speaker 3 (07:09):
Wow. 200, 200. So you went to each one of 'em, I take it,
Speaker 1 (07:13):
I actually talked to almost all of them and it helped me understand the customer problem by the way, because like, oh my gosh. But in my professional opinion, 180 of those 200 were either an outright bad idea, a feature, not a market or a small company. And look, you have to sift through these as an investor. And what I really saw when I saw the Core Light team was, and they were super early, this is a company of 30 people. When I joined, I had a team of one, we had 2 million of revenue. We had just moved into our first actual office
Speaker 3 (07:41):
When you joined. They had 2 million of revenue,
Speaker 1 (07:42):
2 million of revenue when I joined. So again, 2000 plus person organization to a company of 30. And for me, what I saw was this open source heritage was incredible proof of product market fit. There was a bunch of adjacent markets that I knew we could get into. So it felt like it wasn't a one hit wonder. There was a lot that we could go do. There was real proof in terms of the customer base that they already had, even though it was 2 million, there were incredibly elite customers, but the big one was the people. They had a really novel culture even at the time, and I'm sure we're going to talk more about that, so I won't wax poetic there. But between that Greg Bell, who's the founding CEO, great investors like yourself, I was really excited to take the plunge.
Speaker 3 (08:21):
I think that makes a ton of sense. I would love to go naturally to that relationship as you're coming in kind of new and as a professional hire, you interact with these four founders. What was that like guys with a lot of academic background? I mean, was there a meaning of the minds or was there some clashing or how did you articulate with each other?
Speaker 1 (08:42):
It was wonderful on a couple of levels. I think they liked the fact that I had a very structured decision-making process. They knew I understood the job. They didn't feel like they were taking a risk from that perspective because none of them actually understood what a product leader did. And they were very upfront about that. They're like, why do we need you at all? Let's start there. We have a product, so why do we need a product manager? This seems paradoxical. So we could get through the definition of the role, but second, the group, and I think it is a lot of the academic heritage, very curious, very humble, very low ego. And so there was a lot of, Hey, we could do this. We could do that. Very comfortable with the meeting of the minds, very egalitarian, kind of meritocratic kind of discussion. And then from my side, there's a great point of humility there where I showed up and I think my second week on the job, we sat down and said, okay, Brian, we need to start raising the series B in about six or eight weeks.
(09:33):
So you have six weeks to figure out the product strategy that we're going to go pitch, which is nothing like a compelling timeline to go get your job done and do some driving research. But as I drove into that, I did a bunch of work, came up with all these options, great whiteboarding with the founders and some customers and everything else, and I was like, great, here's the menu and here's a couple of things I think could be passed through it. And I remember one of the founders pulled out a sheet of paper and he looked at his sheet of paper and he looked at my whiteboard and he said, yep, those were the same options we thought we had. So which one should we do? And that's when I realized the point. They had a very classic early stage company problem, which is just a wonderful wealth of opportunity. So the hard part was not finding where we could go. The hard part was picking the path through it and really having the bets to believe in the logic that we could drive.
Speaker 3 (10:21):
And did they welcome this effort at prioritization and sequencing or was there an apprehension to narrow?
Speaker 1 (10:29):
That was the great news. They welcomed it with open arms because what I realized then eventually was that was why they had hired the role. They knew the options, where do I start was the problem. And it's kind of a function of correlates a business in the data business. We give you ground truth of what's happening on the network. It turns up that when you've got great foundational data asking what that's for is asking what the use case is for plastic. It's all of them. And so there really is a question here of which customer segments which use cases, how do you prioritize within this? And that's where the discipline of product management becomes very, very helpful to an organization when the choice is a big part of the problem.
Speaker 3 (11:11):
As we progress along in core light story, there was an opportunity for you to consider moving from the chief product role to becoming the CEO. Talk to me about that dynamic and what led the founders to believe or the founding CEO to believe that they needed to bring in someone to be A CEO?
Speaker 1 (11:33):
Yeah, it's a great story, especially as a bit of a sidebar. Before I joined Core Light, when I was leaving these big companies, I spent three months talking to other CEOs, other founders to kind of learn what was going on, what are the battle stories, what are the battle scars? And I heard a lot of cautionary tales around founder relationships. And I'm happy to say that with the right founders, it can be a wonderfully productive relationship and still is to this day. And I give all the credit to the founders, by the way, zero credit to me, all the credit to the founders because what actually happened in our case was Greg Bell, who's our founding CEO, still with the company still making a huge impact. We were at that point, and by the way for context is we're still growing super fast. This is mid Covid company loves him.
(12:21):
He's a great human being, just really intellectually and emotionally a great human being. And we're at that evolution where we're moving from fly by site to fly by numbers. We're just hitting that natural scale trajectory. And Greg decided, look, I'm a fly byside guy. I want to be in the fight. I don't want to be designing systems and engineering for scale. I want to be working with customers. I want to be working with the community. I don't want to do the next phase of this job. So as his initiation, and even though I definitely had aspirations to be CEO, the first thing I tried to do with Greg was to talk him out of that decision in the middle of Covid and we're growing fast and the company loves you. I tried, my pitch to Greg was, look, I can tell you everything you might need to know about scaling this company for the next couple of years.
(13:05):
Don't change roles. And I'm pretty sure we've never had this conversation. I'm pretty sure you had the same discussion with him, Greg, why would you change Seek? You're doing so well. And I think what he recognized was, A, this is what I want to do. It's what makes me happy. And B, he recognized that look, to really be an open core company and work with an open source community, that is a much harder role to fill than a CEO. You can go hire a search firm to go look for a CEO and you can screen a bunch of candidates and you can let 'em dog fight it out in the ring and see who wins. You can't do that for who's leading your open source efforts. You really need to be in credibly part of that community and have a unique view of what their authentic interests are and how you can support them. So I give Greg a lot of credit for the emotional awareness of understanding what he wants, the low ego and selflessness to kind make that move and initiate it himself and to stick with his guns when we were all selling against him and to recognize which of these two jobs was actually harder to fill. His job was harder to fill, not the CEO job.
(14:02):
Right. And it says a lot about him. It says a lot about the kind of founding principles of the company when that kind of ethos is in your founding team.
Speaker 3 (14:09):
So the attitude and the disposition of the founders themselves were a very attractive part of your consideration in doing the job. So tell me about your interest in moving into that job and how did it work for you?
Speaker 1 (14:26):
For me, it's a journey of maturity and self-awareness. And that sounds a little highfalutin, maybe a little yogi bearish, so I'll try to unwind that a bit. But from an early in my career, I had this aspiration wanting to be a CEO, and it was only until I started working for CEOs and I really actually understood the job that I started really asking myself completely different questions. And the first question I asked myself was, am I actually the best person for this job at this company right now? If I'm not, I shouldn't take the job. I'm not going to be as successful as someone else, and I've got an equity stake here if someone else can do the job better and that equity is going to be more valuable, I shouldn't take the job. This is actually part of a realization I had when I came to, I was originally looking at CEO jobs and I was looking at startups and I realized, wait, if I'm not actually the right person for the job, am I paying myself in equity or in ego?
(15:22):
I can't spend ego. I can't send my college my kids to college on ego. And so step one is, am I actually the right person for the job? And step two is really consciously evaluating what does the organization need? What are my strengths, what are my weaknesses? And then how do I go compliment those weaknesses? And so for example, for me as a first time CEO, I've got very deep product in RD roots. I did not have a deep background managing sales. Now I'd done a ton of work with salespeople and I would love to sidebar and come back to that, but I didn't have that background. So one of the things we did when I came on board was we also brought in a board chair. We kind of got lucky on this one.
(15:59):
All good companies have lots of times they get lucky, but we needed a new independent that time. And we brought on this woman, Michelle Bettencourt, who was not just a multi-time CEO, but her roots went deep sales all the way in her career before being a CEO. So she was kind of my wing woman, if you will, to not just look over my shoulder and help me and be a sounding board on the sales and sales management side of it. As I really understood that discipline in that half of the job because fundraising, Greg and I had done a bunch of together the products and RD side, that was my wheelhouse. And then I got the kind of coaching and mentorship I needed to really be successful in the sales and marketing side. And I think that only works if you can be really just thoughtfully of where your gaps are and just stare at 'em in the mirror and be comfortable filling them.
Speaker 3 (16:43):
So I guess if I were to ask you what your challenges early on, would it be the go-to-market and the sales part that was the most challenging or was there some other aspect of becoming CEO of core light that was particularly challenging for you? At that time?
Speaker 1 (16:57):
I would've thought that it would've been learning sales, but that actually didn't wind up being it because a lot of what the company needed, we were in and still are in a great scaling run. So a lot of this is setting up the instrumentation, the metrics, the goals, the systems to help a company scale. So I knew how to do that. We already had a great culture, so it was about really reinforcing and kind of deepening the rituals to help that culture scale. We understood how to do that, and that was a big passion area of Greg's as well. And he and I continue to work super closely together. So that felt really good. We knew at that point we were actually expanding the product portfolio. So we actually did our first acquisition shortly after I became CEO. I understood that I had done acquisitions previously in my career. And on the sales side, Michelle, she goes by MB was such a great coach, and we actually hired a new CRO right after I joined. So I was getting a crash course there, and that was all learning. The hardest thing was actually a combination of factors that resulted in me having to hire four of my direct reports at the same time.
Speaker 3 (17:55):
Okay, tell me about that. That does not sound like an enviable position.
Speaker 1 (17:58):
I would not advise anyone to tackle this problem. Right. And
Speaker 3 (18:02):
Why was that
Speaker 1 (18:02):
A, I was trying to backfill myself. Okay. B, one of the first moves we did was to kind of bring in a new head of sales, which is unfortunately something you have to do as you scale relatively often. And then my head of marketing and head of people independently of each other decided to retire and let me know within the same five calendar days.
Speaker 3 (18:21):
Got it.
Speaker 1 (18:22):
And so I find myself,
Speaker 3 (18:23):
So it was just an unfortunate set of events,
Speaker 1 (18:24):
Unfortunate set of events. So I literally was recruiting for four of my direct reports at the same time, and that
Speaker 3 (18:30):
Was the biggest challenge.
Speaker 1 (18:31):
Plus doing the acquisition integration and especially when now you're in triage mode, how fast can you actually get these folks hired because now they've got to be great hires by the way. You don't want to screw that up. And what are your interim management approaches for each of those four functions all at the same time? It was just a lot more triage and a lot more hiring than I thought I was going to be doing during that first essentially nine months on the job.
Speaker 3 (18:54):
And did you parallel process that or did you end up having to sequence it in order to manage it appropriately?
Speaker 1 (19:02):
Yeah, I had to sequence it at least to a certain level. So we put all the focus early on the head of sales role, and then I was parallel pathing. The head of people role was probably the fastest recruitment. We had a pretty novel pitch for that role and it wound up being super effective. And then the head of marketing was next. And ironically the one that I didn't push as hard on because I felt like I could bridge the team was my own backfill. That wound up being the hardest role to fill actually. And maybe I was being too picky. Maybe I had deeper standards, but it was just the hardest role for us to fill. And actually I had a false hire the first time I did it. So it was definitely a learning experience on what I thought would've been my easiest hire actually.
Speaker 3 (19:45):
Got it. As correlates going through a scale phase of its life and you're growing, you're adding, talk to me about some of the challenges in growing and scaling during the steep part of the curve.
Speaker 1 (20:01):
Yeah, I think the biggest ones I would call out number one was about getting really clear on hiring and hiring load. One of the things that, and again, credit to you for this advice, we brought on a full-time recruiter super early as a company, right when I joined at 30 people, we had a full-time recruiter. And I think when you're trying to go from 30 to 60 to one 20, when you're staffing that fast, having a full-time person in-house, not just from a staffing standpoint, but someone who can help be the front end culture screen to make sure that you're bringing the right kinds of people on board independent of the role they're playing, I never would've understood how important that was because otherwise it puts a tremendous amount of pressure on the founding team and the CEO to be that checkpoint at the very end of the process. Having that recruiter at the front that is just a trusted advisor on your culture side is incredibly, incredibly important. So I think that was really, really big. The second piece that was a huge challenge for us, and I think that one was a best practice. This one's much more of a challenge. We had to get really crisp on where are you playing and where are you not playing?
(21:08):
I remember shortly after I joined, one of our salespeople, a brilliant guy named Kevin, he had done 200 customer calls in the last 12 months and he had a horrendously bad pipeline. And I was like, this doesn't make any sense. Went on a few customer calls with him and I immediately realized what was going on. He was talking to the wrong customers.
(21:28):
I see. We needed a clear customer segmentation model because there was a segment of the market that we were designed for, and there was a whole bunch of the market that we should not be talking to. And unfortunately, that section of the market that we shouldn't be talking to, we're hitting the front end of our marketing pipeline every single day, day in, day out. And so you can waste a tremendous amount of cycles on customers that you shouldn't be selling to because you're not ultimately going to win those deals. So customer segmentation and getting the idea of focus, and not just focus, but getting that language from the exec team or the product team and the sales team that all need to think about it. They're all solving a customer segmentation problem, but they use different words, different language to understand that. So getting that into words that everyone in the organization can understand, that was really, really, really critical.
(22:14):
So hiring was really, really critical. A customer segmentation really, really critical. And the third thing that we actually did quite early was we invested time in really crisping up the definition of the culture, not in an aspirational sense of the word, not in who we'd like to be, but who are we, what makes us authentically novel so that we could effectively screen for it, not just kind of gut feel, and we could really think about how to encode it, how to tell the stories and the rituals and reinforce it. Because credit to Nick met at Gainsight who gave me this line. He said, look, in the short term, your ability to scale is a function of a spreadsheet. It's your sales coverage models, your investments, your balance between growth and profitability, all the things that we think about in the annual plan, the multi-year financial plan. He said, in the medium and long term, your ability to scale is a function of your culture that will dictate how you communicate, how you make decisions, and how you trust each other. And if you don't get that right,
Speaker 3 (23:07):
You're done. That's a very good point,
Speaker 1 (23:08):
Right? You're done.
Speaker 3 (23:09):
That's a very good point. Hey, going back to segmentation, one of the temptations for so many early stage companies is you have an innovation and you believe that it applies to everyone. And as you go to segment, you're like, well, yeah, everybody should have it. How is it that you work through the discipline of segmenting and then saying no to some segments? And how did you guys do
Speaker 1 (23:34):
That? And
Speaker 3 (23:35):
Did you do that?
Speaker 1 (23:36):
No, we absolutely did do that. It's actually, and we had a compelling pain point staring us to the face, which is sales folks doing a super wide exploration and then getting a relatively low yield early on. That is your signal that you have a problem. That means, oh wait, I do need customer segmentation. And by the way, even if you don't see that, I would actually argue you still need customer segmentation because the route to market that you're going to build and the company you're going to build, if you're serving some of the largest organizations in the world versus the mid enterprise versus the small medium enterprise versus the small medium business, those have different systems you're going to build as a scaling organization. So even if you're not seeing that compelling pain, anyone watching this, I would encourage them to think a lot about segmentation.
(24:16):
So what we did was to think first off customer segmentation, the important word is customer. And so for a lot of what we thought about was A, what is the organization that we're selling to and how does that organizational structure change? Because as that organizational structure changes from a very large enterprise to a small business, the org structure has different roles and responsibilities. It literally has a different org structure within it. They actually happen to have a different defensive technology stack. So their architectures, the tools they buy and the structure of those tools actually look differently. And then third, the set of adjacent or precursor technologies actually change. And when we got that segmentation built out, it allowed us to do a whole bunch of things. Number one, it helped us realize that we needed a different product form factor for different segments that we actually needed a different, in fact, different route to market for some of these different segments.
(25:06):
So it helped us say, Hey, for example, there's channels that we don't need to build now because we only need them for that segment. We don't need them for this segment. So it really floated into the route to market. And then when it came to the sales and marketing side, when you're really doing your territory build and your ideal customer profile definition in sales ops, which is an art form that is deep and technically savvy and super important, by the way, we could get really granular with identifying account profiles, scoring technologies to do a really mathematical waiting. So we can now do TAM estimates per territory that are actually not waving your thumb in the air. There's actually math behind that, and that has been incredibly durably valuable for us as we think about how do you scale split territories, keep them fair, make sure you've got lots of opportunity for every territory that you build, but you're still really being efficient and you're thinking about where's their yield in that territory? Because we certainly did experiments early on to test that segmentation because we had a theory, but then we're like, Hey, we don't think this channel makes sense for us, but this one rep has actually built up a half a million dollars in a channel function that we don't think makes any sense. Let's put them full-time on that channel.
(26:13):
We did that, and the good news is we proved to ourselves that in fact, we had found the most valuable, easiest to find first half million. And then when you start trying to replicate that and run with it, yeah, it turns out that's actually not very attractive or not ready for it for all the reasons
Speaker 3 (26:26):
We actually thought a false positive,
Speaker 1 (26:30):
But well, we don't even think of it as a false positive. We think of it as a great experiment.
Speaker 3 (26:33):
Okay, got it.
Speaker 1 (26:34):
Because you're always going to be as a scaling company, that's a muscle. You've got to keep alive. You've got your standard practice, you've got your bets to believe the things that are known. Good. We've got a segmentation, we have a strategy, we've got a theory, we've got a territory build. We're always running experiments. That's test where we've
Speaker 3 (26:50):
Got wrong. That's good. Follow up on that. So you've got some notion of ERGs of energy for a company and you put about how much on what works versus how much do you put on experimentation?
Speaker 1 (27:01):
Look,
Speaker 3 (27:02):
I know it's a conceptual thought.
Speaker 1 (27:03):
It is, but it's super important. And the interesting thing is that has changed over time. So if you look at a more scaled company right now, I'd say we're a private company. It's hard to call us a startup at this point in all candor, right? We're very much a classic. I think McKinsey gets credit for this, the three horizon strategy where you're 70% in horizon one, your flagship customers,
Speaker 3 (27:26):
What does the horizon one mean?
Speaker 1 (27:27):
Oh, yeah, benefit of our audience majority. That is your bread and butter, that's your biggest flagship products that are established. They have established sales plays, they've got established products, you've got a well-built out roadmap. You know what you're doing, the bread and butter, right? Then you've got 20% on horizon two, which is your up and comer, the thing that used to be an experiment and now you're actually investing big in, so you're probably driving much more aggressive growth than you are in your flagship. For us, for example, we have one customer segment that is 70% of our business. We have a second customer segment that is that next 20% of our business that's growing well above and beyond everything else. And then we're driving another 10% and call it raw experimentation.
Speaker 4 (28:06):
Got it.
Speaker 1 (28:06):
Right? Where there's a Jim Collins quote and good to great fire bullets, then fire cannonballs, right? These are the bullets, right, where you're trying to experiment, right?
Speaker 3 (28:14):
That's very helpful.
Speaker 1 (28:15):
If you would've backed up and said, gee, what are we doing much earlier stage, I would've said it would've been in the very early stages, it was 90 10 because your core flagship, you're trying to build the flagship, so you don't even have, it's almost a false comparison, right? It's almost 0, 90 10 is actually what you're doing. You're trying to create that flagship. And so as you fill in that flagship, then you can start to build those experiments. But by definition, we were smaller. It was hard to do a 10% experiment. Think of us as a 30% company. What does a 10% experiment look like
Speaker 3 (28:48):
Lot?
Speaker 1 (28:48):
That's a third of someone's time. What is that even? So we would actually have to do bigger experiments, and it was only after we got scale that you could actually start to chunk out and have more of these 10% experiments actually happening
Speaker 3 (28:59):
Culture wise for all the different functions in the company. Do you encourage that type of behavior, not just for product or for segments we're going to go after, not for those big strategies, but customer success marketing, do you encourage them to take 10% of their ERGs of energy and experiment or 20% in experiment?
Speaker 1 (29:21):
We encourage experimentation. We haven't gotten to the 3M level of putting a number behind it, and it starts actually all the way at the board meetings. So if you look at the lead off slide that I use in our board meeting highlights, low lights, best experiment and best mistake
(29:37):
Because we are not going to be perfect out of the gate. And if you're going to support experimentation, you have to celebrate the experiment even when it doesn't work. And that risk tolerance and that support is really important to drive top line. And that's the same slide that I share with the whole company. Every quarter we reinforce that message. I think that's incredibly important as a scaling company to keep that level of experimentation alive. And then back to the root of your question, absolutely, we want this to be happening at every level of the company. So think about sales. You've got your sales playbook, right? The playbook has the encoded wisdom of the last X number of years of a company. That wisdom is incomplete,
(30:15):
Right? It doesn't have new ideas from some of the new talent you brought on board. It probably doesn't account for some new products that you've launched or some new segments that you're driving. It certainly in the cyber world doesn't account for some new threat actor, new threat headline that's kind of roving through the world. So you need to continue driving that experimentation in marketing as we've experiment expanded segments, right? You've got new customer segments that need new routes to their ear and their eye. So new experiments there, new technologies. Right now we're in the middle of this gen AI revolution. Congratulations for us for getting this far and not saying that word, by the way,
Speaker 3 (30:48):
That was my next question.
Speaker 1 (30:49):
Exactly. Exactly. But SEO is becoming GEO. So how do you use a marketing team experiment with rad, right? In our customer success world where we're doing a ton of tooling to think about how as we get more and more customers, how do we get more insight algorithmically and technically not just in one-to-one conversations, right? So again, the expansion of the company, your portfolio expansion, your customer segments expansion and your sale expansion, your sales expansion, your size, expansion are convenient excuses to drive experimentation everywhere. Because if you're not experimenting, if you're not even, and this is something I still say to new hires at Correlate, I want them to think about the company, them joining the company not just to have a great experience and have a great impact for our customers, but to build the company. And if you're building the company, that means you're changing it. And the rule of thumb we have is every process of the company has a shelf life of 18 months at best. And so you should be thinking about everything you're doing right now and saying when it ages out, if it hasn't already, what am I going to do differently? And you notice the I in that it's not someone else I, we've got the pickax and the shovel to go make this thing happen.
Speaker 3 (32:01):
Well, you led me there, so I'm going to go to the dreaded two letters, but certainly seminal and relevant for everyone. And I know there's lots of ways you can take this either AI's impact within your own product and how it's incorporated, how your product can contribute to your customer's experimentation with AI and how you are taking advantage of AI to make your business processes more efficient. So let's just take those three.
Speaker 1 (32:28):
Yeah, and look, we could wax poetic on this, but I'm sure we'll be boring people to tears. So let me skip the easy ones, the easy ones. Are we using Gen AI internally to accelerate a bunch of workflows? Of course, absolutely. Everything from coding automation to automating RFPs, and of course we built a bunch of Gen AI into the product itself because in security in a lot of other sectors, everything you can do to automate a workflow is absolutely high yield. And in security, most of our customers, even though many of them are quite large, are still underwater. So anything you can do to help them automate, that's a no-brainer. But I think in terms of how we help our customers, there's a really interesting Discovery Nirvana kind of aha epiphany. I can speak on other days that we actually had, which was about three weeks after GPT-3 five came out, we were in this customer advisory board with, again, some of these very big, very sophisticated organizations.
(33:22):
We're trying to talk about the other parts of ai, machine learning, neural nets, false positive rates, all this good stuff. And one of our customers stopped us and she said, I thought you folks would like to know that my analysts are using GPT right now to automate security investigations using Correlate. I thought that was cool. I thought you guys should know about that. The entire rest of that advisory board conversation stopped to the original agenda, pivoted to what was going on. The other customers there were super interested in what she had to say. And we of course, as a company were very interested because speaking personally, I had seen the press release and I knew it was exciting. I hadn't actually opened it yet. I didn't know what was going on. And wait a minute, I've got a customer using our product with that right now. What on earth is going on as we unpacked it? There are all these gifts that come with being an open source based company that you
Speaker 3 (34:14):
Can't back to being an open source company.
Speaker 1 (34:16):
Exactly. So what had happened was all the flagship large language models are all trained on the public internet. If you are an open source based company, they've already been trained on you.
Speaker 3 (34:26):
So got it.
Speaker 1 (34:27):
All the data, all that
Speaker 3 (34:29):
Bro ze, all that goodness was already in and all the GPUs paid for to train up on this data format.
Speaker 1 (34:40):
Yes. And so what happened over the next two months was we had customers doing their own experiments and self nominating into this. We actually had our tech marketing lead, a guy named James, wonderful guy was at RSA, which is a big cybersecurity conference. He was supposed to be holding a training session. There was this massive logistical issue where all the laptops failed. So he just off the cuff, turned it into a let's go use GPT to do security investigations using Correlate and Zeke. And that became the entire class. People were hearing it from the outside and walking in because it was so interesting. So the interesting to net this out, what's so interesting for us is we have this gift that's the combination of the open source world and the gen AI world where if you as a customer want to buy your Gen AI package from core light, then we can do that for you and we can put all the protection and controls and prompt engineering and rag and tuning and data privacy and security and all this jazz. We'll bake that in the product for you. If you're the type of customer that wants to roll your own and you're building that into your workflows and you're cutting across all of security and you want to use us as part of that overall solution, we've now have this great gift for those customers where they can use that with no dependence on us.
(35:53):
They get this out of the box capability.
Speaker 3 (35:55):
And
Speaker 1 (35:56):
If I think about what the punchline is for
Speaker 3 (35:58):
Folks, better to be lucky than good right there,
Speaker 1 (35:59):
It's absolutely better to be lucky than good because look, this, every company has these moments where they just got lucky and this is absolutely one of those for us. It's a great thing for customers. It's a great thing for the company.
Speaker 3 (36:09):
Yeah, that's a pretty good one. So Brian, open source is tricky. It's a wonderful thing. There's so many great things about it,
Speaker 1 (36:18):
Right? Until
Speaker 3 (36:18):
It isn't, and there's so many challenging things about
Speaker 1 (36:21):
It.
Speaker 3 (36:22):
What is it that will be in the product that you charge for and what is it that is available to everybody, to the community? And there is some friction in deciding how one does that. How do you maintain and serve your commercial customers and give them advantage and value while at the same time, how do you serve your open source community and give them value? Talk a little bit about how you balance those two things.
Speaker 1 (36:48):
It's a super important topic, and actually this was the biggest point of friction and contention. When I joined the company. I kind of represented the blood thirsty capitalists, so I tended to err a little bit too much, and I'll be very candid, too much to the conservative side of this. And of course, the founding team came from that community and absolutely wanted to make sure that we preserved and supported them. And what we realized was we came to an understanding of there was a simple rule that we could apply here, which was under the National Science Foundation grants, what would we have done? Anything that we would've done under that granting process, we should absolutely still continue to do. So that's the baseline minimum,
(37:26):
Right above that, we felt like we would not be serving our community if we weren't investing more than we had in the past. So that means investing more, not just in the technology through RD, but also investing in the community capabilities itself. For example, we completely overhauled the website. The website was a great reference material, but it was great for folks that love reading encyclopedias or your VCR manual, dating myself a bit there. So really think community building, not just technology building. And then we also had to be really aware that in cyber, because open source business models are so rare and there is a pattern of companies closed sourcing them, we knew that we would have skepticism from the community a concern that is correlate the evil monster that is going to eventually close source this thing. So we were really committed to not changing the licensing model.
(38:13):
We are BSD license, which is the most anarchic of the licensing models and committed to the community for the licensing model to the investment and to providing the net new capability and value. So anything in the underlying infrastructure, we absolutely continue to make available for the community. We do not fork the code internally. And I think when we got to that realization that there is a philosophy here, we can apply, we can communicate, we can hold ourselves accountable for and clearly communicate to the community, we could set expectations. It was deemed as very fair and we've been able to live up to that.
Speaker 3 (38:45):
And how's that working?
Speaker 1 (38:46):
Earn your way to it. You got to earn your way to it, but we have,
Speaker 3 (38:48):
Okay, so it's working.
Speaker 1 (38:49):
It absolutely
Speaker 3 (38:50):
Is. You feel like you have good relationships with both the commercial customers and the open source community.
Speaker 1 (38:55):
Absolutely. And we view it as something we must continue to earn. And I think that's the key thing, right? It's not something we take for granted.
Speaker 3 (39:03):
Your biggest learning as CEO, you've now done this for a while, reflect back on it has been four years,
Speaker 1 (39:09):
It has been four years, four.
Speaker 3 (39:10):
Let's reflect back on that and biggest learning and biggest thing you most enjoyed so far?
Speaker 1 (39:17):
The thing I enjoy is seeing the incredible things that people are doing and the bets we've made on people that were stepping up into new roles, into new leadership opportunities. I think the best example of that at Correlate, we brought in a guy named Bernard as our ciso. And when you think about ciso, it's kind of like when I joined the company, he was the ciso, he joined with a team of one. So we had to really build out the entire function. And that's no small task when you are part of the supply chain to some of the most critical organizations in the world. So we take our cyber super seriously and for reference, our cyber team staffing is about five to seven times our IT team.
(39:58):
Most folks are the reverse. Your IT team is five to seven times the size of your cyber team. So it's a really important thing for us. And he has a great technical background and the bet was that he could leap up to the leadership team level, the executive team level, and really build great teams and hire super well, and he's just done incredibly well. So it's been thrilling to see step up candidates, take a career opportunity and really hit it out of the park. That's been the most gratifying piece of the entire journey. The thing that's been most sobering for me is realizing, and as a quick sidebar, it was maybe 15 years ago that I got the first feedback that I was intimidating, which being all of five foot eight and 150 pounds you might imagine was a little bit of an unusual piece of feedback.
(40:44):
And I realized at the time there's a combination of things that result in that rank is intimidating. Unfortunately, I tend to ask a lot of questions and unpack things. So that can be intimidating, especially if you haven't met me before. You're like, wait, is this Proctology exam? What's going on here? And I learned that I had to kind of compensate for that. As organizations scale, you've got to be aware of this, you've got to make sure that you're not threatening as a leader because you want information to flow super well. And so the most humbling thing for me is to realize that as you scale, you scale back into these problems. And so when you're a very small company, all the decision makings concentrate in a relatively small number of people. It's the founders and the exec team that make a bunch of these decisions.
(41:24):
And as you scale, you must relearn all the important things about how to actually not just let go because we as a leadership team let go a long time ago. We now have to convince the company of how much we've let go. We have to convince them that they have the authority that we want them to have and that we're going to celebrate their initiative and celebrate their drive, and that we're going to be okay with the occasional mistake because we make mistakes. Who are we kidding? And so that's been the most humbling piece of the journey is to realize that you've got the techniques you have to use, the leadership techniques at different levels of scale are absolutely still there. And the tricky part is to realize when you've tripped over one of those invisible lines and you actually have to change your own style to account for what that scale needs. The aha for me was when I was getting this concern that, look, people are worried which decisions the executive team needs to have. And I was listening for what the types of examples they were highlighting. I was like, none of those should come to us.
(42:24):
That's just slowing us down. And again, one of your great lines, which I love repeating is we can raise more money. We can't raise more time. I don't want that decision floating up to us. Take that authority. And so that's been the hard part is realizing when I have to do it, the moment I realize I have to do it, I'm there. I am very happy to let folks run. Right. I got other stuff I can do with my day. It's all good. I'm not running out of things.
Speaker 3 (42:49):
We have one last question for you and then we can wrap up Ryan and that centers on advice you would have specifically for founders who are early in their project, early in their company's life. So maybe it's after a year or two you've gotten going, you have some product market fit. What advice would you give them as they started to think about from that point, the next four years of their experience, their entrepreneurial experience?
Speaker 1 (43:18):
It's a great question. I would think about a couple things. Number one, a lot of folks talk about product market fit. And of course that's important and you got to be super disciplined about it. And there's an art, not a science when you don't have that many data points. So you figure that out. But I would also look at how be really explicit about what your customer success is. If you think you're seeing product market fit, but you don't have great time to value really high customer sat feedback and the fuel of what will hopefully become great net dollar retention, right? Which is customer expansion,
Speaker 3 (43:52):
People buying more,
Speaker 1 (43:53):
People buying more, then I would ask, do you really have product market fit? Your sales team might think they have product market fit and they are driving initial sales, but if you are not actually making those customers successful, are you truly ready to scale? Because you can put a lot of fuel on the sales and marketing side and crush the rest of the company. If you're not really ready to scale
Speaker 3 (44:13):
Obsessing over the customer's delight or happiness,
Speaker 1 (44:16):
Yes is
Speaker 3 (44:17):
Worth obsessing over.
Speaker 1 (44:18):
It is worth obsessing over. Even though it's a lagging data point, it forces you to slow down a little bit. And that's a bad thing. We could all agree on that. But if you don't have clear leading indicators of customer stat, I would really challenge whether you're ready to scale. And then second, do you really know how to hire the right cultural fit? Because if you decide to pour the fuel on the fire and you are not amplifying your culture, you are diluting it. There's nothing in between. It's either you're living or you're dying. And if you can't really encode that culture, then you'll force yourself as the founder to be the backstop. And you'll put a tremendous amount of friction in all of the hiring process because let's play this out for a second. You're trying to double your company. Probably only half your company is going to be really great at interviewing.
(45:04):
So the half that can interview is probably going to be doing 10, 15 interviews a week. They're going to be working super hard trying to find these great people, and then they get to you and now you're going to be the bad cop at the very end of this process that's actually screening for the cultural mismatches. There's a lot of way to drive growth through a halt and put a ton of irritation in your own team. So just be really clear on what front end screening for cultural fit looks like, because otherwise you're going to be the bad cop.
Speaker 3 (45:32):
Brian, thank you very much for your time and sharing it with us and our audience.
Speaker 1 (45:36):
Eric, it's always been a pleasure and thank you for your support and guidance over the years. Super, super. Appreciate it.
Speaker 3 (45:41):
You betcha. Glad to have you
