SaaS Interviews with CEOs, Startups, Founders
938 Will 28 Year King of Malware IPO with $130m in ARR in Next 12 months?
17 Feb 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is none other than Marcin Klasinski.
He is the founder and CEO of a company called Malwarebytes, or co-founder. He founded the company back in 2008, and by 2014, they'd treated over 250 million computers worldwide. He was named one of Forbes Magazine's 30 Under 30 Rising Stars of Enterprise Technology in 2015. Marcin, are you ready to take us to the top?
I am. How are you today?
I'm doing very well. Okay, let's jump right in. Tell us what Malwarebytes does, and how do you make money? What's your business model?
How do we make money? That's a good question. So I started the company back in 2003 now. I was having an issue with my computer back home. Didn't really know what to do. Started playing around with some stuff online and decided to build this remediation tool, an antivirus, back in 2003. Who knew? By 2008, me and a co-founder launched the first version of the product.
The whole idea was really, we're going to clean up your computer for free. It sucks that you got infected. It sucks that you got a virus. And for 40 bucks, you can protect yourself going forward. So that's really what we do. We do that for consumers and we do that for businesses. 40 bucks one time or 40 bucks every year? Yeah, it used to be one time.
Turns out if you want to run a business, it really needs to be a subscription business in software. That's something that's really changed since we actually got started. So it's 40 bucks a year? 40 bucks a year.
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Chapter 2: How did Marcin Kleczynski start Malwarebytes?
You go to the IT guy and you go, hey, you got to install Malwarebytes on this thing.
So can you give us an update? What did you do last year and what are you at now in terms of run rate?
Yeah, obviously something sensitive to talk about, but we're in triple digits revenue, which is a phenomenal place to be.
Chapter 3: What is the business model of Malwarebytes?
We're about 700 employees. You mean, sorry, nine figures? Nine figures, triple hundred figures.
Yeah.
Good point. Yeah. 300 bucks last year.
I was going to say 200 bucks last year does not cover payroll.
Yeah. 700 people working for free.
Yep. So just to be clear, you know, that's a hundred million. You've passed the a hundred million dollar ARR mark.
We did. We did just last year, actually. And again, it's been a rollercoaster of a ride. You know, we started the company with a different thesis in mind. Although we're in the Bay Area, I'm a good old Chicago and Midwest boy. We we don't start companies that lose money. So we've been profitable pretty much since day one.
And that puts you in a really great position to raise money because you don't need it, right? So when you're raising money, you've got the leverage at that point. And we were able to give a little bit to employees as kind of like an incentive program midway through the company's life. So, you know, it's a different kind of company for us.
Was that a case of where the round of investors said, hey, before we invest, you need to set up a 10% equity option pool and employee option pool, and that's how it got created?
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Chapter 4: How did Malwarebytes grow its customer base?
And all based there in San Fran or no?
Oh, no. So when we started the company in Chicago, we just started hiring people from these communities, right? So You look at somebody that's already active in a forum, for example, community of people, and you go, hey, let me just pay you for the work you're doing. And they go, OK, that sounds good. So our first 30 or so employees, including me, were remote.
We didn't put an office on the ground here in San Jose until we were about 50 employees. So I'd say a third of the employees are here, a third in Europe, and then a third all over the world, basically.
So San Jose, Europe, and then a third remote kind of all over. Yeah. Very cool. So 650 total. Okay. That makes a lot of sense. And then what do you get today in terms of total customers that are paying you?
Yeah. So we've got about, uh, 3 million paying consumer subscribers, uh, and about 50,000 businesses. Now businesses is such a loose term, right? We're talking about that one person dentist's office all the way to the, the fortune 500, a fortune 100 in the, in the world. So we go after the SMB in the mid market. We're not closing a lot of big deals.
I like to, I want to be the Zen desk or the slack of security where, uh, We're going after customers. They love to buy online directly. We try to upsell them into bigger accounts, basically.
Yep, and no touch because the price point's too low.
It's too low on that entry point, that landing part. We have a pretty big sales team, about 70 to 80 people, and their job is to really take that Coca-Cola account that bought a small little department, bought some licenses, and really grow that account into all of Coca-Cola.
And they're not a customer, we're coming after them. Awesome, I love that. I love the aggressiveness. And break down the revenue for me today. So in 2017, what percent of revenue will come through consumers versus businesses?
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Chapter 5: What revenue milestones has Malwarebytes achieved?
So let me ask you a different question. Do you think you'll break 120 or 130 million bucks in ARR this year?
Oh, we're right around there and breaking it right now.
You guys would say you got 60 more days. So fair to say you'll break 130, right?
Well, no, no, no.
We changed our quarter end to January, so I've got 90 more days. You've got 90 days. And is it 120 or 130 you think you'll break?
I think this year we'll go north of 130.
130, good. And then just to break that down again, you think about 60, 70 million of that is consumer and the rest is business.
Yep, pretty much.
Which one's growing faster?
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