Sramana Mitra: Which segment of the customer base did you go out to sell it to?
Andrew Plato: One of the things we learned very early on is that our product is very appealing at the enterprise SaaS level. Admittedly, it wasn’t what I originally thought. I thought we were going to be more mid-market. As soon as we hit the market, we resonated the most at the enterprise level, particularly, enterprise SaaS.
Sramana Mitra: As in enterprises selling SaaS or SaaS vendors selling to enterprises?
Andrew Plato: Enterprise companies that had SaaS products and companies that have SaaS products selling to the enterprise. Both of those.
Sramana Mitra: Interesting.
Andrew Plato: One of the interesting things I heard said about us is, we’re selling ice to eskimos. We make a security product that sells to security companies. While the product embodies a lot of automation, cloud, and digital transformation, it is an elegantly-designed technology that is extremely appealing to savvy security people because it’s born out of decades of experience in the information security industry.
Sramana Mitra: I imagine the business model is SaaS. How did you price it?
Andrew Plato: That was another innovation that I think I had from my VAR days. I understood the model and how to build the complex pricing model. Part of the secret sauce for our product is our intricate pricing and licensing model.
Without giving too much away, it’s an abstraction kind of model, which allows us to plug tech in and it spits out these baseline prices based upon which we can price the product and its add-on components. The key to product and pricing then became a matter of what is a baseline price, what are the service add-on components, and what’s a recurring component.
Another innovation of our platform is we’re selling, what is fundamentally a services style of engagement, as a product subscription or as a managed service. By doing it that way, we can take all of this and turn it into an OPEX versus CAPEX.
Sramana Mitra: OPEX versus CAPEX has been the selling point of SaaS all along. The entire industry came out of that positioning.
Andrew Plato: Back when we were still a professional services company, one of the things I implemented back in 2013 was a subscription model for all of our customers. Rather than buying individual security services from us, they just buy a subscription. Then they’d have access to all of these services on-demand.
That’s the thing that took us into an extremely profitable position. I was able to use the additional cash to fund our development. Getting our cash flow situation resolved through the use of subscriptions was part and parcel of getting to the development that we needed to do.