SaaS Interviews with CEOs, Startups, Founders
716: Putin is Making This Man $50 Million Per Year
10 Jul 2017
Chapter 1: What is KnowBe4 and how does it generate revenue?
his current company know before. Just recently, after walking away with $10 million from his last exit, he's really financially free for life. So now he can truly swing for the fences. He shared with us some of these revenue numbers. Again, $7 million in 2015. Went up to $24 million in 2016. On pace to do $50 million here in 2017.
Last month, or two months ago in March, did about $5 million in monthly recurring revenue. Growing very fast. Over 9,500 enterprises paying them. On average, call it 300, 400, 500 seats per enterprise. And each of those seats costs anywhere between, call it, $10 and $15 annually. They're on a tear. He wants to go public. He's taking down Panda, Bear, and all these other phishing attacks.
Chapter 2: How did Stu Sjouwerman build his customer base?
This is episode 716. Coming up tomorrow morning, you'll learn from Emilia Chagas and why moving her team to Brazil was absolutely genius. But first, here's today's episode. This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base.
You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark. And I'm your host, Nathan Latka. Hello, everybody. My guest today is Stu Showerman.
He's a serial entrepreneur and currently the founder and CEO of a company called NoB4.com. He's a big Shark Tank fan. He studies Sun Tzu, so this will be a good one.
Chapter 3: What growth milestones has KnowBe4 achieved?
Based in Tampa, Florida. Stu, are you ready to take us to the top? Yes, sir. Let's go. All right. What is KnowBe4, and how do you make money?
We are a, what you call, new school IT security company. We focus on the human, meaning we do security awareness training, but not the old style. The old style is hurt them in the break room, keep them awake with coffee and donuts, and death by PowerPoint.
And so how are you doing it? What's your business model? How do you make money?
We are a SaaS company, and customers subscribe to our platform. And the platform allows you to do three things. First, a baseline phishing test.
Chapter 4: What is the significance of the SaaS business model for KnowBe4?
So you see how many people are actually the people that click, the click-happy people. We call them phish-prone. Second, we train them online through the browser, engaging interactive online training on demand. And third, frequent simulated phishing attacks to keep them on their toes with security top of mind.
And so what's the average customer paying you per month?
It's not per month. It's per year. The average user is about $15 per user per year, not per month.
Okay. So how's the average? And do you only have people pay you on an annual or can they pay a dollar or two bucks per month?
No, we do an annual upfront. It's much easier. Most people prefer that because they just... get it budgeted, they get an invoice, they pay, and they're off to the races.
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Chapter 5: How does KnowBe4 handle cybersecurity threats?
And is this, is the 15 per year, is that the actual person you're selling to, or are you selling to an organization buying 100 seats so it's 1,500 per year?
Yeah, yeah, yeah. We are strictly B2B. We are focusing on organizations of 50 users and up, up until the largest organizations in the world. And so they buy a contract for, let's say, 500 users.
Okay. What's the average company have in terms of seats?
You know, you have SMB and enterprise, so that varies wildly.
If you average across your customer base, are we talking 10 seats or 1,000 seats?
No, no, no. If you look at for small-medium business, the average seats is about 200, 300. That is for small-medium business. For enterprise, you're quickly thinking 1,500, 2,000, 3,000 seats.
Okay. And again, that's good to kind of understand the whole market.
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Chapter 6: What strategies does Stu use for marketing and customer acquisition?
But for your specific tool, if we took an average, I mean, would we have 500 seats per paying customer? Four to 500 seats. Okay. Got it. Okay, good. And then give us some more history here. So when did you launch the company?
I sold my last company, which was an antivirus company in 2010. Okay. I started five days later with Novi4. We got our product on the market in April 2011.
Okay.
April 2011. What was your first company called?
That was a company called Sunbelt.
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Chapter 7: Why does Stu want to take KnowBe4 public?
This was actually company number four. This is my fifth startup. Company number four was called Sunbelt Software. And we had an antivirus product called Viper Antivirus.
Many people would go, what is wrong with this guy? It's such an unsexy space. And here he is on this interview, smiling, having a lot of fun. We are growing like crazy. Define that in terms of a number.
We did $7 million in 2015. We did $4 million in 2016. We're going to do $50 million in this year, 2017.
You said $24 million last year? Yeah. And $7 million in 2015?
Chapter 8: What lessons has Stu learned from his entrepreneurial journey?
Yeah. We're in the Inc. 500 in slot 139. We're growing like crazy.
That's great. What is driving most of this growth? How are you acquiring new customers?
It's called inbound marketing. So we provide white papers. I write a newsletter that goes to a boatload of people. How many? 1.2 million.
And those are all just people on your list? Yeah. How did you build the list?
It was a matter of building it up slowly over the years. So we're talking providing free tools, white papers, free downloads, that sort of thing.
All since 2011? Yeah. Yeah. That's great. And then fast forward to today, have you raised capital or are you bootstrapped?
No, we bootstrapped for the first five years. I basically spent a million bucks building this company. And late, this was December 2015, we took 8 mil in venture capital because we wanted basically support and help to go public. We didn't really need the money. And we used some of it recently to acquire a competitor. But, yeah, we have a 3A company.
So you raised a total of, what, about $8 or $9 million, including your million?
Well, the raise was my own money, so you can't really count that. We had a Series A, to begin with, of $8 million. And a year later, the VCs basically re-upped, and they bought another 4%. It was a different valuation.
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