“Building a Channel-Driven Go-To Market”
Given the current climate in the world, cybersecurity is more important than ever. Learning about security threats and being able to remediate them is critical for all organizations. Needless to say, the sooner you know about security threats, the better. That’s Cybersixgill is changing the game for organizations throughout the private and public sectors. Cybersixgill has technology that collects real-time data related to security threats and turns it into actionable intelligence that can help security professionals remediate threats sooner.
Cybersixgill CEO Sharon Wagner has already led one startup that was sold to Microsoft and he has Cybersixgill heading in a similar direction. Sharon joined the Midstage Startup Momentum Podcast this week to talk to startup coach Roland Siebelink about what Cybersixgill does and the startup’s journey thus far. He shared insight about what has worked for Cybersixgill and what other startup leaders can do to find similar success.
- What it’s been like for Cybersixgill to address both the private and public sectors.
- How to fine-tune the lead generation process.
- The importance of diversifying lead sources.
- How Cybersixgill has been able to use sales channels, digital marketing, and references at the same time.
- The key to aligning direct sales and indirect sales with one another.
- Defining product-market-fit and why it isn’t just about your company’s product.
Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I’m an ally and advisor to many of the fastest growing startups in the world, and we have one of them in the studio with us today. We are talking to Sharon Wagner, the CEO of Cybersixgill. Hello, Sharon.
Sharon Wagner: Hello, Roland, and good morning, good afternoon, and good evening for the folks who are listening to us today.
Roland Siebelink: It’s such an honor to have you here, Sharon. Let’s talk about Cybersixgill. What do you do? Who do you serve? And what impact do you make in the world?
Sharon Wagner: There are two different types of security methods, the preventing technologies and the detecting technologies. Preventing would be the firewalls of the world and the end points of the world. And detecting technology would be any technology that helps security professionals detect threats in their emerging stage. The second part, that’s where we play. We help security professionals get the preemptive view of their potential threats. And once they get this preemptive view of the potential threats, we help them to shorten the time for protection, shorten the time for remediation by prioritizing their security tasks that they have to do, almost 24/7.
The differentiator that we provide to the market is simple. The CTI market is a 10-year-old market and originally was built based on manual work that threat intelligence analysts used to collect manual data and connect the dots. If you will take a look at today’s security risks, looking at threat intelligence that has been composed by an intelligence analyst, it’s almost like looking at yesterday’s newspaper. It has little or no value. What we do is we collect the data from its real-time state, take it through a data backbone, turn it into actionable intelligence, and provide a preemptive view of the threats in their emerging state and streamline the intelligence directly to your security operations so you can take a remediation step much faster.
Roland Siebelink: And it’s that real-time aspect that makes it so differentiated compared to traditional technologies in your field, correct?
Sharon Wagner: Correct
Roland Siebelink: Excellent. Very good. Okay, so your target group is enterprise-sized customers?
Sharon Wagner: Correct. If we look at the addressable market for the threat intelligence market in general, you’ve got the global 5,000. These will be the enterprises that have large IT organizations, as well as large security groups. And the security professionals are in-house security employees that have different skills and work to protect the enterprise, network, or parameter. This is gonna be the target market for us in the private sector. In addition to that, there is another sector, which is the public sector. Some of the analysts refer to it like the homeland security law enforcement agencies that also in today’s world are having responsibility for putting together security regulations, as well as protecting federal agencies. That’s gonna be the second target market for us. The majority of our business comes from the private sector and some accounts come from the public sector.
Roland Siebelink: Sharon, how do you actually get in contact with these security teams, even in the public sector with these homeland security teams? Many of the companies that we talk to are particularly concerned with how do I actually build my go-to market? How do I actually get to those prospects? What has been your experience in that field?
Sharon Wagner: There definitely has been a change recently in the last two to three years. But from my experience - and this is not my first startup, taking raw products into the market - I’ve learned that diversification in the lead sources is critical for your ability to move fast and fine tune your lead generation processes. Specifically, in the cybersecurity space - and in particular in the threat intelligence landscape - the leads will typically come from partners or trusted advisors for these enterprises or homeland security agencies that demand a solution like ours. It will drive a direct contact to the decision maker and will increase your time to a potential evaluation of your technology.
In addition to that, which is the traditional channel approach, either through VARs or resellers, GSIs or even MSPs, you have to have in parallel a lead generation engine that is built on digital campaigns. And the digital campaigns will typically serve the company’s brand awareness needs. If a channel of contact is providing you an access to a CISO level and the CISO would like to go out and check who you are, who Cybersixgill is, you want to have a very good brand and brand awareness campaigns out there that will turn your company to be mature, relevant, and with the right messages that address the system needs. There are two sources that we have already discussed. One is the channels. The second one is the lead generation that is coming from digital marketing.
The third one would be references. In our space, and especially in the public sector, you often get a call from an agency that tells you, “Hey, I’ve heard about you from whoever other agency who is using your technology, can you tell me a little bit more about what you do?”
You have to have all three working in parallel. And you have to have the foundation in place to support, streamline these leads into what we call the POVs. And from POVs into a deal. We have an in-house business development organization who knows how to work with the channels and support the channel during the life cycle of the opportunity. But the same BDR organization is also responsible for the inbound calls and turn these inbound calls into an opportunity and associate one of our account executives to work with the inbound calls.
Roland Siebelink: Excellent. Follow up question on that, and this may be a little bit deep but some people really do understand how to work with channels and inbound in combination. Do you face any channel conflict there? Is it clear where the lead came from and which partner should get the credit for it or whether it could be inbound?
Sharon Wagner: In most cases, yes. If I’m getting an inbound call from a partner, it’s easy to classify the opportunity has come from a channel. But if your channel manager is participating in a marketing event and got a reference to an end client who is interested in your solution, then what is the lead source? In this case, what we do is we do something very simple. We simply align our channel organization and our AEs to the same target. And the target is to get the deal done. And should you get the deal done, I would compensate you both.
And what do you get out of it? You get out of it a full alignment of the channel manager together with the AE. And many, many companies are hesitating on making this what we call double dip, compensating both parties. But if your direct sales organization and your indirect sales organization are working toward the same goal, the force multiplier in the following year would be very high because all of a sudden your channel organization, as soon as they get the lead, they get the sales team involved quickly. And when the sales organization is getting the lead and says: “The first thing I’m gonna do, I’m going to talk to the channel team. Maybe they have a better channel that has access to the right resources within the account that can help me accelerate the sales process.” This alignment of interest is, to my humble opinion, crucial when you build direct and indirect go-to-market strategy.
It’s a full alignment of the company. And it’s not only channels, not only sales. It’s the way marketing operates. It’s the way your development organization is building a channel-first product. It has to be friendly. It has to be multi-tenant from a technology perspective that can serve multiple clients by a single vendor.
Be advised, it’s not something that takes three months to build. Something I told my board when we talked about channel-first mentality, I said it’s gonna take us between 12 months to 18 months to realize the results of being a channel-driven go-to-market. And channel first will come when at a certain point in time, the channel will not only bring opportunities to you but it will also do the heavy lifting of the sales itself, and the heavy lifting of the support and the customer success. We’re not there yet. But already today, 60% of the business transact through the channels.
Roland Siebelink: I love this vision and this description. Thank you so much, Sharon. I think many founders for their businesses would see the benefit of scaling through channels. But they always seem to stumble upon these hurdles. In order to work well with channels, you need to be quite scalable, you need to be standardized. I like how you resolve that dilemma by saying, “Well, the future is channels, we’re just not there yet but we’re working towards it.”
Sharon Wagner: If you think about the atmosphere, today we are November, 2022, nobody argues that we are not in a recession mode. The question is whether we are in the beginning of the recession, in the middle of the recession, but we’re definitely not in the end of the recession. And having that said, when I’m looking at the company KPIs, I need to think about customer acquisition cost. You can get low customer acquisition cost by implementing and executing channel-first methodology. When we will get to our C Round, our KPIs from the customer acquisition cost would be - I wouldn’t say optimal but definitely suboptimal. And this is a metric that many, many CEOs have to think about because the market recession has changed the way VCs think. Not only grow your ARR at any cost but grow your ARR in optimal metrics. And channels can definitely help to address this concern.
Roland Siebelink: I wanted to move back to the numbers you mentioned about how big the company is now. You’re saying 125 employees, about 500 clients. How quickly have you grown to that level and what have you learned in the process as to what starts changing, how your own mindset needs to change? What happens in that growth phase?
Sharon Wagner: We’ve learned many things. In the first year, we’ve learned the importance of a product-market fit. The company has been developing its technology for two years, and the preliminary initial sales went through Homeland Security. And when I joined on board, we looked at the total addressable market and thought the private sector is much bigger. And stateside is a mandatory revenue stream for us. You have to sell in North America.
We took the product immediately to banks and insurance companies in the United States. And we came back with a list of technical requirements and product requirements that we had to fix because there’s one thing of selling real-time threat intelligence to homeland security in Europe and selling similar solutions to a bank in New York; different requirements.
It took us a year to reiterate and improve the product, take the strength of the technology that we have and turn it into the private sector requirements. Including the interface, the documentation, the way the product interacts with the roles that we’ve been selling to. And I think it’s a mandatory step that every company has to do when it goes from a single digit million dollars into double digit. Some of the CEOs think that if they’ve managed to sell $3 million, they have a product-market fit. But it’s not true.
Roland Siebelink: How would you define product-market fit? Or when you talk to founders that are a few years behind you, how do you help them assess if they truly have product-market fit?
Sharon Wagner: When you see a consistent trend of improvement in your opportunity to close ratio. To me it’s the strongest evidence that if you have an opportunity - an opportunity would be something that has been qualified already. I’m not talking about leads. I’m talking about an opportunity. Someone has a budget, authority, need, and timeline to close business until it’s getting closed. If your original close rate was five points, then it’s become 10, then it’s become 15, then it means that your product strategy really fulfills the pain in a market and there is a fit.
Roland Siebelink: That’s right. I like that a lot. And unqualified leads, so that you take those factors out. The other thing that I noticed when you described all the additional requirements you got out of North America, almost none of these requirements seem to be purely technical product features. It seems it’s more the stuff surrounding the product, as what Geoffrey Moore would call the whole product.
Sharon Wagner: Exactly. As someone who ran a company, a startup, and sold it to Microsoft, in my previous company, I thought that a good technology and a disrupting technology will guarantee a purchase by a client. And this is not true. Sometimes we think that if we have a good product and we have good technology, two things are gonna happen. One, someone will send us a check right away. And second, nobody else can build a product like ours. And both are wrong because when you go to market, there is a full set of capabilities you have to have around your product. How you position your company, how you position your values, how you approach an opportunity, how you communicate with a decision maker. Don’t rush into the deal. Become a trusted advisor. How you conduct a POV, how you engage and react when someone tells you no because they will tell you no today but if you will act professionally and you will provide the value, they will buy from you, if not today, then in a year’s time frame.
Roland Siebelink: Right. Exactly. It’s all about building that trust.
Sharon Wagner: Exactly. It’s building trust. It’s building the relationship. It’s wrapping the technology, which has to be good, with a set of capabilities that will turn you from a software seller into a trusted advisor that sells solutions. And that’s what happened to us in year two. After we realized that we have a product-market fit, we have to start building all these components around the technology.
Roland Siebelink: Just one follow up question on that. I’m sure that when you talk to your product and engineering people, a lot of them will argue that this is edge cases, this is not the core, this is destractive from the real roadmap. Have you had those discussions and how would you respond to them?
Sharon Wagner: We had these discussions. And what we did, instead of responding, we got our engineering and product people together in front of a client. In front means over zoom. And all of a sudden, when the engineering team is listening to the client and he’s telling you, “Well, the interface is great, the data that you provide is superior, but I don’t know how to do that by myself. I need help.” Then two things happen. One, someone in the customer success or product go ahead and advance their training materials and help collateral. And the engineers get back to the drawing board and think about how to make the product much more usable.
Roland Siebelink: How big could this become? Where do you see Cybersixgill being in 2030?
Sharon Wagner: We believe that there is room for a threat intelligence company that will know how to streamline threat intelligence from the sources where we collect to the end client without any manual intervention. That’s our vision. And by the way, that’s what our technology already does today. Our competitive advantage is the ability to collect real-time threat intelligence and take it through a very fast and sophisticated data backbone - that index data, classified data - and turn it into actionable intelligence in almost the blink of an eye.
And that helps us build very strong, scalable technology with very high gross margins. And we believe that this backbone can become the single source of truth for any piece of threat intelligence that you need. And if you want to become the last threat intelligence feed that you will ever need, that’s our vision. Become the Google for the external threat landscape.
Roland Siebelink: I love it. A very good way to close the interview, Sharon. If people want to hear more about Cybersixgill - and of course we could be talking for another hour or two, this has been very interesting but we are also running out of time - people who want to hear more about Cybersixgill, maybe apply for one of the jobs you have open, where should they go? And what’s a typical piece to focus on or to download?
Sharon Wagner: Www dot cybersixgill dot com. We’ve got our solution briefs, our technology briefs, career page, as well as everything that everyone should have if they want to reach out to us. We are also very accessible and available people. We’re all listed on LinkedIn. We promise an answer to everybody. Through social media and website, that would be the best way to reach out to us.
Roland Siebelink: Okay, perfect. And we’ll put the handles in the show notes, of course. Also if any investor or other interested partner knows me and doesn’t know Sharon yet, I’m happy to provide an introduction, so please be in touch in that case.
Sharon Wagner, the CEO of Cybersixgill, thank you so much for your time and for your very valuable insights.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.