Sramana Mitra: How long did it take you to launch the SaaS version of this product? When did you start selling that product?
J. Paul Haynes: A year.
Sramana Mitra: We are talking 2011.
J. Paul Haynes: Yes.
Sramana Mitra: So in 2012, you were a SaaS company?
J. Paul Haynes: Yes.
Sramana Mitra: What was the customer acquisition strategy that helped you penetrate the mid-market? How did you define mid-market? It could be $2 million to $5 million companies or, $20 million to $200 million.
J. Paul Haynes: Our definition was the 50 to 2,000 employee firms. That was the sweet spot. We have customers with as high as 25,000 employees. We were also targeting a subset of one vertical in financial services. Our initial targeting was to be the market-dominating firm in the mid-market financial services. We are that. I remember saying to the team, “I’d rather be 40% of that sub-market than 0.3% of overall financial services.”
Sramana Mitra: What was the customer acquisition strategy?
J. Paul Haynes: It was a combination of in-person events. You call this field marketing. We do some thought leadership in terms of developing content that would either be published by us or the people within the industry. We use referential selling by using the circle of influence in that community. I don’t know if you’ve heard of prime brokers but this would be the very large Goldman Sachs of the world. They would be highly influential in this ecosystem.
Even though we didn’t have a commercial relationship with them, we always made sure that they were kept well-aware of what we were doing. Since we performed well and kept them well in the loop, when someone would ask them, “Who should I use for cyber security?”, they would often refer the customers directly to us. That has worked phenomenally well.
Sramana Mitra: What does that mean that you have Goldman Sachs referring you? Goldman Sachs is a huge organization. How do you make that happen inside of Goldman? Whom do you go to? How do you navigate that organization?
J. Paul Haynes: Within Goldman Sachs are certain enclaves. The group that we learned are highly influential are the prime brokers. The prime brokers are used by hedge funds to complete the trades when they’re buying and selling stocks. The prime brokers make all of their money through relationships with the hedge funds. They also offer them consulting services. Those prime broker consulting services is where we focus on.
It’s not all of Goldman Sachs. It’s a tiny little corner of Goldman Sachs that has a consulting practice that helps all of the hedge funds design their businesses. We focus on those guys’ influencers. We pay a lot of attention to them. We share with them pre-public strategy. We would test ideas with them. We would bring them to customer advisory board meetings. We still do that to this day. In fact, I have investors speaking to them. We have no commercial relationship with them. They are just in the business of making the best recommendations based on all of the information available to them.
It has been a highly-effective strategy. Is that available on every ecosystem? No, but what you can find is we’ve repeated this in another vertical market, legal. The American Bar Association is highly influential. All the lawyers tend to know American Bar Association. A subset of them know the technology associations for lawyers. We focused on the Bar Association so we get a macro-level coverage.
Then we picked some of the thought leaders within that group and partnered with them. It’s sort of a rinse and repeat. You just have to figure out who the influencers are and be patient. I’m not a very patient person. As much as you want to get it immediately, you need to invest six to nine months before it starts to hunt.