The following interview is a conversation we had with Travis Howerton, Co-Founder and CEO of RegScale, on our podcast Category Visionaries. You can view the full episode here: Over $21 Million Raised to Create the Future of Continuous Compliance.
Travis Howerton
Thanks for having me. It’s a pleasure to be here.
Brett
Not a problem. So, to kick things off, could we just start with a quick summary of who you are and a bit more about your background?
Travis Howerton
End. Sure thing. So, as you mentioned, I’m Travis Howerton, one of the co founders at Recscale. But by way of background and training, I spent 20 plus years in the US nuclear weapons program, where I became their first chief technology officer, responsible for safety, security and reliability of the US nuclear weapons stockpile, where I got to see firsthand some of the challenges with compliance, where were very risk adverse and you want us to be with weapons that could end the world. And then I got into the private sector. Once I ate in my federal career and found that the other areas I was working in were maybe not equally, but also very risk adverse and hindered by compliance. And we could never find a good product to solve the problem. And it was a major pain point everywhere I’d been.
Travis Howerton
And so we decided to start our own business and try to build our own, and that’s how we got to here. Wow.
Brett
So some follow up questions, then. What was that like, making that transition from working in the government to the private sector?
Travis Howerton
That was interesting. So I went to Oak Ridge National Lab first, which I would describe as an excellent hybrid. So it’s funded by the government, but it’s run by the University of Tennessee and Patel Corporation, so it runs like a private sector business. And so it was a great bridge for me because there were a lot of familiar things in terms of how you get your funding from the government and regulations and other things, but it was very bottom line, private sector driven as well. And so that was a good bridge for me. So I didn’t get dropped immediately into the deep end. I got some great mentorship by a guy named Jeff Smith, and Mike Bartella at the lab, who kind of broke me in a little bit as I eased into the private sector and then later, obviously made a full transition.
Brett
And this is just my own personal curiosity, but when it comes to nuclear, what’s, like, the number one misconception that you hear out there that people seem.
Travis Howerton
To have, that it’s dangerous, and it obviously is if you just look at the pure physics of it. But a lot of the danger of it been engineered out, if you look at where we are today and reactors that are inherently secure, our nuclear stockpile was inherently safe, well protected. Now, there’s different issues with other materials around the world, but the fear factor from the movies and other things is overplayed versus the benefits against global warming and world safety and other things that nuclear offers. So I think it always gives it sort of a bad light, understandably from how it’s portrayed. But if you look at the actual technology and science behind it, there’s an understated amount of benefits.
Brett
A few other questions we’d like to ask, and the goal here is really just to better understand what makes you tick as a founder. First one, what founder do you admire the most, and what do you admire about them?
Travis Howerton
I really like Ray Dalio. Started the largest hedge fund, became the largest hedge fund in the world, and just the way he thinks. So his business principles book, and how you think through making decisions and radical transparency, and just unthinking a lot of how businesses operate today in large bureaucracies, which is where I came from. And I think he did a good job of summarizing a lot of things I’ve always hated but didn’t know why and getting to sort of the cause of why they don’t work and what does. I learned a ton from following him, and I pretty religiously followed him. I think he’s brilliant. And his ability to understand deeply problems in different domains and study them and systematically be able to do that is pretty amazing. So that’s the one I think I would pick.
Brett
Yeah, I’m a big Ray Dalio fan as well. And one thing that I just find really fascinating about him is I think it’s very uncommon to have someone who’s reached that level of wealth and that level of success, who’s now just giving back all of their knowledge, everything that they’ve learned. And he doesn’t seem to have a new product to sell, or there’s no catch. I think he’s really just said, okay, I’m the tail end of my life. I’m going to dedicate myself to spreading what I’ve learned to the world. And I just think that’s really cool to see. And it comes across very authentic. When you’re reading his books or consuming his content, you don’t feel like there’s like a gotcha or an offer or something like that, which I think is.
Travis Howerton
Really sort of, I’m a software guy, but it’s kind of like open sourcing everything that made you a billionaire. Right. And so I think it’s really cool to see, and I’ve certainly benefited and learned a great deal from it when.
Brett
It comes to books. And we got this from an author named Ryan Holiday. He calls him quake books. So a quake book is a book that rocks you to your core, really influences how you think about the world and how you approach life. I know we touched on principles there, so we have to remove that from the list of options. Outside of what would you say is a quick book for you?
Travis Howerton
I really like James Collins. If I had to pick one, I good to great. That was one of those that when I first read it really just helped me understand how you differentiate things. And it’s not what you think it is where you’re the smartest, you have the biggest, best idea. It’s how you execute a lot of things well consistently at scale and continue to do that in the face of pressure, competitive pressures and market dynamics. I thought it was a master class, and I’m a bit of a data nerd. So the fact that he’s got all these statistics and it’s well researched by these Stanford folks, I thought it was brilliant. And so I’d highly recommend that when anyone is trying to grow and scale a business, I think that’s one of the best books out there.
Brett
Yeah, that’s definitely one of the classics. I read that for the first time in 2015, and as we speak, I am rereading it again for the second time. And it’s been fun to see the different areas that I highlighted when I first read it that don’t seem relevant today or just seem so obvious today. And the parts I’m highlighting now that do seem eye opening and really interesting. So very fun read. And I do think it’s one of those books that you can just go back to and read it over and over again throughout your career. You’re always going to pick up something new.
Travis Howerton
Absolutely.
Brett
Let’s switch gears and let’s dive deeper into rig scale. So at a high level, what problem are you solving?
Travis Howerton
Well, we just got into this compliance problem. So for me, when you’re starting a business, you have to figure out how to make somebody a lot more money, or you have to make a lot of pain go away for a price they’re willing to pay. And there was nothing I did in my career that I found more painful than compliance.
Brett
Like, if you want to go to.
Travis Howerton
A bar and shut a conversation down, just start talking about regulatory compliance. Everybody hates it. Huge documents, nobody wants to write, nobody wants to read. So it’s a lot of write, once read, never stuff. And we just thought that was one of the last big problems left in it. That’s holding back digital transformation. And we wanted to take our stab at can we combine AI and automation and new ways of thinking to reimagine how that’s done and just make this major pain point in businesses go away, or at least minimize it as a.
Brett
Function at, and take me back then to late 2021, when you founded the company, what were those early conversations like, and what was it about this problem? Of all the problems that are out there that you probably could have tried to solve, why this problem?
Travis Howerton
Well, you’re kind of looking for something that you’re passionate about, that you’re good at, and that you think you’ve got some competitive advantage. And so spending 20 plus years in the nuclear weapons program, I got inundated with all things compliance, deeply trained in a lot of different ways. Some of the extreme ends of complexity and scale were dealing with in compliance there. So I felt like it was something we understood deeply. We also felt like the world was changing where everything’s API driven and there’s all this rich telemetry that exists now that just the way that it’s done is stupid and will become increasingly stupid as a function of I. When everything gets real time and ephemeral and AI based in the coming decade. So we knew it was going to break.
Travis Howerton
We thought we had a vision of a better place it should be and how to get there. And were passionate about solving the problem. So it’s one of those, were at a point in our career in Neil and I where we didn’t feel like we had a lot to prove in the world we came from as executives in that world. But this was sort of the big, nasty problem that just bothered me. I could never solve. And so we felt like on the private sector, we had a better chance to solve it. And that’s kind of how we got into this.
Brett
Talk to us about those first paying customers. How’d you manage land those that’s obviously something that every founder struggles with in the early days, so I’d love to learn from your journey there.
Travis Howerton
Yeah, some of them like creative marketing, going to conferences. A Neil is a world class loser, so sending a deal out to talk to people helps. I think we had a really visionary idea. And so what we kind of found that both helped us and hurt us was finding other visionaries who are excited about the vision. Because when you’re an early stage product, you don’t do everything you want to do in the vision. You do some pieces of it, but you want to get somebody excited about being part of it. And so we found a very large financial institution that was feeling this pain, and we felt like we could immediately solve their problem. With the MVP. We had same thing. We’ve had a very large defense contractor that also had similar but different vertical domain problems.
Travis Howerton
And were able to land two really big contracts early on, as well as some smaller ones. But those two sort of wells we landed, I think, got the attention of the investor community because you don’t tend to get contracts of that size at the maturity were and with organizations that have that much diligence in procurement and other things, which kind of led them to believe we might be onto something. If people were that excited about the idea.
Brett
And why do you think they gave you a shot early on, what did you do to build that trust and credibility with them?
Travis Howerton
I think we sat in their chair. Unfortunately, I’m not a young guy anymore, and so I’ve lived a lot of the same problems that they’re dealing with, and we thought we had a really creative way to solve it. We ran into a whole bunch of people who just couldn’t mentally get there from here. They couldn’t get out of. I’ve always done this in excel. I’ll always do it in Excel. We’ll just throw bodies at it sort of mentality. But we found like minded people who were feeling the pain and felt like something should be done about this. They helped us get our start, and so forever grateful to those folks. But it did take finding some people with a shared vision and passion for the problem in the early days to get us going when we’re still figuring a lot of stuff out.
Brett
When it comes to your market category, how do you think about the market category? Is it continuous compliance automation, or what’s the actual market category?
Travis Howerton
Yeah, we’re focused on continuous controls monitoring, which is kind of the thing Gartner is starting to write about is what’s coming next beyond GRC which I think is a crowded space. So there’ll still be GRC totals. People will do the manual stuff, but for the subset of things that you can automate or use AI to make go away, we think there’s a lot of business case for just cost reduction in those areas. At the same time, there’s a lot of audit risk in those areas from just not being able to check things because you don’t have enough bodies, you can’t get access to the data. We just think there’s a whole bunch of ripe areas.
Travis Howerton
So we got a couple areas we’re focused on in continuous compliance monitoring that we think we’ve got highly differentiated capabilities that are new, unique and different, but also complement some of the existing technology stack that large enterprises have.
Brett
What role do analysts play in your go to market today? Are you actively working with Gartner to try to shape and influence this new category?
Travis Howerton
Yeah, we do talk to analysts. We’ve been mentioned in four Gartner hype cycles this year, which we’re excited about. So we’ve gotten some recognition from analysts both at the need for this space, some market validation that large enterprises are feeling this pain and looking for solutions. So there’s a market there, and then we’ve been recognized this four times as a thought leader in that space in this emerging market. So it’s too sinning for them to have a magic quadrant or anything like that. But they’re starting to write about it, and they’re starting to write about Reg Steel as one of the thought leaders and platforms that some of the more visionary companies are early adopting. That’s pretty exciting.
Brett
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Brett
Now back today’s episode.
Brett
When it comes to the customer base or just revenue base, what’s the split between government and private enterprise?
Travis Howerton
It varies a little bit. We have more private sector customers, for sure. The government customers tend to be bigger, so by revenue they’re a good chunk of our revenue, but by volume of transactions are smaller. So they’re nice when you get them. But we’re definitely not focused on the government vertical exclusively. The majority of our customers are still private sector, and that’s where we see a lot of the scalable growth for the business is in the private sector. But we love our government sector customers too, and we have a fair number of those as well, especially in the national security community.
Brett
What founders have told me on the podcast previously is landing the government is like the ultimate boost of trust and credibility. And you can take that trust and credibility that you get from people saying, well, if it works for the government, it can probably work for my company. And then all of a sudden you’re in that organization. Is that something that you’ve seen as well?
Travis Howerton
Thousand percent. It’s one of those. When you sell to the Department of Defense and they’re using it there, it’s kind of hard to say it’s not good enough for your bank, right? And so we’re pursuing our fedramp. We’ve kind of started with this thesis that if you can handle the complexity and the security requirements of the government, you can move down market from that. What we’ve seen is it’s really hard to start with light security in the private sector and then move up market and handle all those security requirements and try to backfit it into your stack. So we kind of started with the high watermark. Frankly, it’s all we’ve ever known coming out of the nuclear weapons side where you kind of get the extreme end of the requirements.
Travis Howerton
But we started with sort of design for the maximum level of complexity and security and then moved down market. And so far we’ve been doing a good job at that.
Brett
Someone I had on about two weeks ago was talking a lot about CMMC compliance and how that’s going to be coming through for any organization that touches the defense industrial base. Is CMMC something that you’re going to eventually offer, or is that something completely outside of what you’re talking about here?
Travis Howerton
Yeah, we offer it today. We offer 50 plus regulations. So Fedramp is a big one for us. It’s one of those that we sell a lot of software for people at Fedramp issues because it’s so painful and expensive to get it. CMMC is a lighter lift than that. A lot of our CMMC customers use our free community edition, which has been downloaded over 300,000 times now. And so for those smaller use cases, we just give the software away and try to help the community be more compliant. And then for these larger enterprises who have really complex multi regulatory frameworks, they have to comply with. That’s where our automation AI really saves money at scale and where we charge for some of the enterprise features. But we support CMMC today, PCI, HIPAA, NERC, SIP, Fedramp, every variant of disk you can think of.
Travis Howerton
And so we’ve taken sort of a horizontal view where we can support any compliance requirement, even ones that aren’t cyber related, that might be nuclear safety or environmental as well.
Brett
When it comes to growth, are there any numbers and metrics that you can share?
Travis Howerton
Yeah, over the last year were really focused on tripling and were able to beat our target there. So we had a great year over our last fiscal year. This year we’re looking to double and position ourselves for a future capital race as we get to the end of this funding next year and start thinking about our series B. But right now we’re focused on doubling again and getting some validation in some new markets. But we’re continuing to grow and excited to see what we can do in some of these new markets we’re targeting.
Brett
From a marketing perspective, what do you attribute to that growth? What are you doing to rise above all the noise that’s out there and connect with customers in the way that you are?
Travis Howerton
Yeah, some of it’s organic growth through the network, referrals from customers who tell others how we’ve been able to help them. Some of it’s just being young and hungry, so great customer service and really bending over backwards to make our customers happy. And I think some of us were just really aggressive on the technology front. So extreme automation, some AI stuff that customers will describe as black magic and witchcraft. So we’re just doing some stuff that’s very forward leaning. The continuous controls monitoring space with automation and AI. So it’s not automated like a lot of tools where you type it into a web form instead of a word document. It’s doing some pretty extreme DevOps automation AI based things.
Travis Howerton
So I think the forward leaning nature of the stack, we just have the benefit of building on a modern tech stack versus starting ten years ago where everything was harder and the tooling wasn’t quite there.
Brett
What role has content played in your marketing success? While I was going through the website earlier, I noticed the resource section is just full of content. You have Reg skill university, you have a reg ops community. Can you talk to us a little bit about the content marketing thesis and philosophy and approach?
Travis Howerton
Absolutely. So we kind of think of ourselves as leading a movement. We talk about it as reg ops, or bringing the principles of DevOps to regulatory compliance and trying to develop a framework and set of principles that enterprises can use, whether it’s with reg scale or not, to just rethink how they’re approaching compliance in a way that’s more cost effective, lower risk, and more sustainable for the long term. So we put a lot of content around that. Lots of white papers, customer use cases, webinars. The other thing about being a DevOps platform is almost all the DevOps tooling is open source with lots of online docs to help you get started. And we’ve really leaned into that. So all of our docs are open and public facing. We don’t put everything behind a paywall or make you register and bombard you with marketing.
Travis Howerton
So we put a lot of content out there and made it easy to get. And because of that’s part of how we got to the 300,000 downloads that people have found us. They’ve got a problem. They can get a free tool that can get it up and running easily. And then a lot of those find they have more complicated needs or there’s more they want to do with it. And then they decide that maybe they want to up convert or consider doing more with the paid version. So we have some direct b to b stuff with the enterprise that’s working. But we’ve also got an up convert motion that we’re seeing as well through our free community edition.
Brett
How do you think about measuring the impact of that content? That’s one of the conversations that I have a lot with founders and with cmos, and I’m a big fan of having everything open and making that bet that adding value in the long term always wins. But I come across a lot of cmos who join a company and they’re hell bent on saying every single thing we do is going to be gated.
Travis Howerton
We need to be able to measure.
Brett
Exactly where that lead came from, blah, blah, all of that kind of stuff. So what’s your view there, and how do you think about measuring the impact of these content efforts?
Travis Howerton
Yeah, absolutely. So one is, we’re very fortunate we hired SD Peskowitz, who’s our chief of marketing. She’s just fantastic and she’s a great partner to work with. And I know I probably drive her crazy at times because marketing always wants to capture what they can so that they can be more effective in their job. But at the same time, we’re a customer first organization, so we don’t want to create a lot of friction between our customers getting value and then having to go through a bunch of steps to get it with us. So we’ve sort of taken partially. It’s content driven. So people find us, they hear us speak, they see what we’re doing at conferences and other things and they get excited about it.
Travis Howerton
Other times it’s organic, where one of our existing customers is a fan and they tell others and then a lot of it’s just the free side we’re giving out. And so they get to play with it. They can test it, they can evaluate it. There’s zero friction in the process. They might even decide they don’t need the paid guardian. They’re small and this more than meets their needs and we’re happy that were able to help them. So sort of multifaceted marketing plan. The beauty of estee is no matter where anything goes, she’s got data on it, cost per lead, all well planned out. So we’ve got a lot of capabilities I wouldn’t expect in a company of our size and maturity on the marketing side that she’s put together. But it’s definitely multifaceted when it comes to funding.
Brett
As I mentioned there in the intro, over $21 million raised to date. What have you learned about fundraising throughout this journey?
Travis Howerton
A lot of our preconceived notions of how you raise money were just wrong. We did a first lap where I think Anil and I did a terrific job of embarrassing ourselves not knowing what were doing. The upside is we did learn from that experience. We built a network of folks who coached us, counseled us, and were also raising during the time where I think the whole VC world chased a lot, where they expect you to bootstrap a lot more. In an age of cloud where you can build prototypes fast and quick, they expect you to have more revenue and have done more customer discovery. They expect more market analysis, they expect a better team. They’re less concerned about where the team is than they were before, where you had to be in one of these central hubs.
Travis Howerton
Covid changed some of that pretty rapidly and some of these modern tools. So a lot of things were changing while were trying to race. But I think the thing we did well is when were embarrassingly stupid, we listened, we learned, and we tried to be creatively stupid the next time. And then eventually we ran out of ways to be stupid and were able to close around.
Brett
Let’s imagine you were starting the company again today from scratch. Based on everything that you’ve learned so far, what would be the number one piece of advice that you’d give to yourself?
Travis Howerton
I think the big thing for me is to slow down. There’s always such a push to grow fast. And the thing, if anything I’ve learned is that sort of slow is smooth and smooth is fast. As Kayla would say on our team, some things you can get done really fast, but they just come back to bite you. And so just taking time to think deeply on problems get them all the way solved and sort of grow more predictably than first. How we did in the beginning, because were able to close a lot of deals, but we got a little over skis at times and support. Then we had to go hire a bunch of people. But being just more smooth and predictable on how you’re growing, you can still get to the same number.
Travis Howerton
That, for me, is the biggest lesson learned from the past year.
Brett
Now, final question for you before we wrap, let’s zoom out into the future. So let’s say three to five years from today, what’s the big picture vision that you’re building?
Travis Howerton
I think what we want to be is part of the new digital transformation toolkit for large enterprises, where if you think about doing digital transformation clouds, there AI is there, all this great tooling is there, but a lot of times it’s the regulatory requirements and the paperwork burden and all this procedural hurdle that’s built over time. That’s what slows people down, makes them miss their schedule, makes them fall behind against another competitor. Tools like regscale in the continuous compliance monitoring and automation space are going to be a big part of the toolkit for the future. And so if you go out three to five years, we want to be a market leader in that space and a thought leader in that space. And the thing that motivates me more than anything is just being part of the solution. I’m an engineer.
Travis Howerton
I’m not that motivated by money, although certainly we want to get a return for our investors. But the thing for me is I want to be part of solving a big problem. And for me, this is the nastiest one left when it comes to large companies who are trying to accelerate into the future but are always being held back. So if you ask me like what being successful in five years looks like, it’d be that we have hundreds of customers who say, hey, they really helped us get where we needed our business to go. And we love Rick scale. That’s something that would make me happy.
Brett
Amazing. I love the vision. I’ve really enjoyed this conversation. We will have to wrap here. But before we do, if there’s any founders that are just listening in and want to follow along with your company building journey, where should they go?
Travis Howerton
I found just the community has been great for us. I’m fortunate to live in East Tennessee, and everybody we’ve talked to in the business community and the political community, the chamber of commerce, fellow founders, everybody who’s built a business knows how hard it is and seems to be more than willing to mentor, to coach, to help. What I found surprising is I thought, if you ask these people, they’re important and too busy, and why would they help you? It’s really been the inverse. So I say don’t be scared to find good mentors. The best way to get smart on something is to find somebody smarter than you and ask them. And we’ve been really successful at surrounding ourselves with mentors who’ve helped us a time.
Brett
Amazing. Travis, thank you so much for taking the time to chat. Really appreciate it.
Travis Howerton
All right, thank you very much. Thanks for having me, Brett.
Brett
No problem. Keep in touch.
Brett
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