Sramana Mitra: Did you get the funding first before building the product or vice versa?
Ben Hodson: We built the product for the funding. It would not have gotten the funding if it weren’t for the product and the first customer. We had been raising money for a year and a half. I have probably done 30 to 40 pitches to venture capitalists and angels. No one was biting. They would say, “It sounds interesting, but I don’t understand encryption. Call me when you guys have something going on. I will be really interested.”
As soon as we closed that Verizon deal, that was when everything started to heat up. Everyone wanted to talk to us. It was easy to get meetings and we got much for favorable terms. We were able to pull a deal together about six months later.
Sramana Mitra: What year are we talking about?
Ben Hodson: 2002.
Sramana Mitra: What happens next? You got your funding. How does the customer situation evolve? You have Verizon under your belt. How do you go about getting the next set of customers?
Ben Hodson: We had to put together a go-to-market. That was a seed round in a lot of ways. We didn’t have a product-market fit yet. We just had a product and a couple of interested early adopters. We were able to close a bank and FBC communications within a few months. That gave us a few early adopter customers, but we were building the products in real-time.
I vividly remember that to get FBC to close, I had to live out of a hotel for a month and go into their data centers every day. At the time, it was not cloud-based. You had to have it running in your data center. We had hardware that we were installing. We bought the servers and branded them as our hardware and put the software on them. I was coding real-time updates to solve the problem and the bug so that we can deliver the outcome that we had promised within the timeline.
It was the night before our deadline that I finally made the breakthrough, and had all of their certificates rekeyed correctly. They were super excited about it. We still have them as long-term customers. It was very much an early-stage product. Once we had funding, we started scaling up. We hired a bunch of developers. We built out a C suite. This is where I went sideways for that company for a little while. We were so young. It was our first company. We just have been out of school for a year or two.
Although we were smart and energized, we didn’t have a lot of knowledge of how to scale a company. The venture capitalists asked if they could bring in a CEO. That made sense to us because we don’t know how to be a CEO right now. They left me as the CPO. I ran all the products and technology at the time. I had about 40 developers and some Q&A people. I also had support reporting to me at that time.
We hired a CEO. That demotivated Russ because he didn’t like the culture built around that new CEO. I lost the motivation as well. I felt that they didn’t care as much about the customers as we did. It was also probably because we weren’t good at communicating. In hindsight, we could have done a lot better with that. It ended up getting to the point that Russ decided to leave in 2003.
About six months later, I realized that I didn’t love the situation either, but I wanted the company to succeed. I helped to find my replacement and trained that person for the next year and exited the company in 2004. I am still a shareholder. Venafi just got bought for $1.15 billion last year. It was a 20-year journey to get to a $1 billion company.
It ended up being a great success. It defined the entire space of encryption management that did not exist. The company is still based in Salt Lake. They have several hundred employees. It really is a success story. I have learned a lot from it. I learned how I could work with investors better. I learned a lot about what to do differently in the next company. It was a great learning experience.
Sramana Mitra: Who bought that company?
Ben Hodson: A private equity firm bought it. They were looking to go public and then private equity firms ended up buying them instead to keep them private to grow organically that way.