The following interview is a conversation we had with Kyle Hanslovan, CEO of Huntress, on our podcast Category Visionaries. You can view the full episode here: $160 Million Raised to Build the Future of Managed Security
Kyle Hanslovan
Yo, Bret, thanks for having me, bro.
Brett
Not a problem, man. So to kick things off, can we just start with a quick summary of who you are and a bit more about your background?
Kyle Hanslovan
Yes. So I always try to go with kind of the spiciest, fun stuff. So before Huntress, for ten plus years, I did offensive cyber operations. So literally creating the implants, the exploits to get into networks, steal intelligence, and deliver valuable outcomes. Intelligence world, you could imagine valuable outcomes sometimes mean, like sexy intel. Sometimes it means bombs on bad guys. So it’s kind of a wild world to start and kind of pivot into startups from there.
Brett
Was it hard making that shift?
Kyle Hanslovan
Not hard leaving the government, that’s for sure. Really hard getting used to this world where not everything was kind of like life limb and you could chill a little bit. So that was a positive pivot.
Brett
You seem so happy, and you’re so high energy. Were you always this high energy? Were you like that when you’re working in the government?
Kyle Hanslovan
I was pretty ridiculous, Bret. It was one of those things that thankfully different parts and different. Maybe if I was in the Marine Corps or something like that, they would have been like, listen here, jarhead, you’re not allowed to be that way. But the air force were kind of known for chair forcing it up, and they kind of allow us to chill. So, yeah, I’ve always been this ridiculous.
Brett
So I’ve talked to a lot of founders who come from the intelligence community, and one thing they shared with me was that they can’t talk about it. I had one Founder on that. I looked at their LinkedIn, and they looked to be about 40, and they had no job history at all. And I was preparing for the interview, and I almost didn’t want to take it because it almost felt like a scam. And then we did the call, and he explained to me, like, yeah, I have this whole career. I can’t talk about anything that I’ve done, but that’s just the way things are. Have you had that at all? Were there things that you did and things that you were part of that you can’t even reference and talk about?
Kyle Hanslovan
I will flat out say, yeah, of course, that there was clandestine work or stuff that was classified, but I actually think most of it is folks drumming up hype. Yeah, sometimes I have to go back to the agency, to NSA, and say, hey, can I get pre publication approval? But let’s be real. None of us are that sexy. It’s not that clandestine. And I think some people just get used to you work in this world where you take operational security so serious and it kind of adds some allure and you run with it. I like to kind of break down that myth and just be myself.
Brett
I mean, it definitely sounds badass, right? Someone’s asking you about your previous work, and you say, I can’t talk about that. Or, let me clear with the NSA and get back to you. Sounds pretty badass.
Kyle Hanslovan
Yeah, I would totally use that with, like, oh, hey, you know, my deployment to know tell you, but I’d have to kill you. But the reality is I was, like, somewhere in air conditioning behind a computer, so it just sounds sexier that way.
Brett
What’s the biggest misconception? Is it what you just described there? Or what do you think is, like, the biggest misconception about working intelligence?
Kyle Hanslovan
Oh, that everybody’s created equally. One of my favorite comeback quotes, because a lot of founders are like, I do military grade encryption cut straight, forged from the fires of the national security apparatus. And the reality is there’s janitors there, too. So even just like startups have some folks that are meant to run the whole marathon, some people are supposed to burn out in a sprint. My favorite and kind of mantra is dispelling the difference between those that just kind of got by and those that really made the mission happen. And so I’ll try to justify during this next little bit with your team here, why I was not the janitor.
Brett
Now, when you’re working intelligence for that ten year stretch there in the back of your mind, did you have this master plan of, I’m going to leave this someday and I’m going to go and be a tech Founder? Where did that come from for you?
Kyle Hanslovan
I would love to say I think everybody always has an awesome story. They’re like, you know, as an kid, I had a lemonade stand, or I pushed a lawnmower. And I had plenty of that hustle. I was broke. But for me, it was always about leveling up for my family. And I, like, I’m deceptively crusty. I’ve got kids that are 1917 and twelve. Most people have no clue that I have kids that old. And so for me, it was just about leveling up, like life quality. So I was like, hey, I’m going to do this thing, and the military will pay me for my college. Okay, I’ll do that. And then I was like, okay, let me pivot that to the next level.
Kyle Hanslovan
And I finally got to the point where I was like, hey, if I want to make the next level of difference, I’m going to have to do this as a product because this whole one off services thing, I can’t make a big enough difference. So I think there was some of that cool hustle mentality that I knew, but I didn’t know how I was going to do it, and I definitely didn’t know it was going to be like a product SaaS company.
Brett
You have a kid who’s 19.
Kyle Hanslovan
I know him and I, when you.
Brett
Had it, I thought you, and I’m like, 33, and I just assumed you and I were the same age. How old were you when you had the kid?
Kyle Hanslovan
No joke. I was weeks before I turned 19. So 18 years old in the service, living in England, had my first kid, so I got a lot of that life out of the way. And if you can imagine, I’ve built this whole startup while having three kids of this age. So it’s been a wild ride, but you can definitely do it. If you truly understand work life balance and not just what people preach, I’ll.
Brett
Be hitting you up for advice. My fiancee and I just found out we’re expecting our first kid coming in May. You gave me here. If you were pulling this off when you were 19 years old, then it makes me feel like, feel a little bit lame here. Complaining and feeling stressed out.
Kyle Hanslovan
No, congrats on that. And you can totally do it again. It’s just going to be about your own self regulation.
Brett
Yeah, makes a lot of sense. Now, when it comes to inspiration for you, are there any founders that come to mind? And let’s skip the obvious ones, like Musk, Jeff Bezos. Yeah, yeah, we know everyone’s inspired by them a layer deeper. Who are some founders that have really inspired you along your journey?
Kyle Hanslovan
I would say not so much on founders, but definitely business models like the team at Shopify and trying to say, like, look, instead of going for the biggest businesses in the world. How do I empower kind of the businesses that power most of the global economy? The SMBs. Huge fan of the go to market model and some of the culture there with the Shopify team, there’s probably others, but I would actually say that was one of the biggest ones. I know it’s cliche. The team at base camp, some of the books that they wrote early on about remote and rework, those two ones were really big about allowing me to challenge that you don’t have to be in the office. And that was like a pre Covid book for any of the listeners who haven’t heard it before or haven’t read it before.
Kyle Hanslovan
So I would say those two ones are pretty big.
Brett
We were just talking about that in the pre interview of this idea of were both remote companies before it was acceptable to be a remote company. And our journey was, we started the company. It’s an agency, so it’s just bootstrap from nothing. And then after, like, two years, I was like, okay, the next obvious thing is to get an office, because then you become a real company when you have an office. And a friend gave me the book remote, and I read that, and that completely changed my view when it comes to just business in general, but especially on the office. And I always think back to that. If I hadn’t been gifted that book, I would have signed this long term lease. I would have been stuck in San Diego and living the office life, which doesn’t sound very appealing.
Brett
So, huge fan of that.
Kyle Hanslovan
You didn’t tell me earlier that was. See how funny, right? As founders and some of the things that you can do just by sharing knowledge. What, the ripple effect? Right. I think so many people think that their impact in the world is just the splash they make while doing it. And they don’t think about how they empower others to be that kind of ripple that goes all the way to the edge of the lake. So that’s too funny. You and I both got inspiration in the same place.
Brett
Absolutely. Yeah. The base camp guys, they’re really entertaining to watch. I think that they make a point of taking very controversial stands. There’s no secret there. I think that’s part of their playbook. I think Shopify also did something similar. Right.
Kyle Hanslovan
So Tobias and team had several things that weren’t just about their go to market. It was about their feelings on culture. And so one of the ones that I enjoy the most, that kind of stuck with me. Not everybody has family. And so I really take a very hard stance where most folks say, like, oh, it’s so and so company. We’re family. And you might feel that way, but if you ever grow up, I’ll be just as brutally direct as possible. I had a dad. Like, if you used to google my last name, you would find my brother and my dad’s mug shots. That’s the type of so think of, like, career, narcotics abuse, bad decision makers. And it turns out, like, if you’re going to use that word family, I would strongly suggest using the word like chosen family.
Kyle Hanslovan
And that’s not just to be woke for the sake of woke. But the reality is the sports team analogies that Tobias used to use at Shopify of, like, look, Netflix has used some of those as well, where they said, hey, we’re just a sports team. And the reality of a sports team is, if somebody’s not playing well, unlike your family, you cannot part ways with your family.
Brett
Right?
Kyle Hanslovan
They’re there forever. But the difference is, when you’re just trying to make a big difference, you need to be able to part ways with people that need to step up into their next position and need to step out into a different organization. So I’ll get off the soapbox there real quick. But those are some of those big things that weren’t just business model that I pulled away from great founders.
Brett
What about books? So, outside of anything written from the base camp founders, the way we like to frame this is to talk about Ryan Holliday. I’m not sure if you’re familiar with him, but he’s a really interesting author, so he calls them Quickbooks. So Quickbook is a book that rocks you to your core. It really influences how you think about the world and how you approach life. Do any Quickbooks come to mind?
Kyle Hanslovan
I do, but I have weird reasons. They’re my quickbooks. Like, the probably most obvious stereotypical one would be. It starts with watched Simon Sinek’s TED talks. Some of you have read the books, but I actually reread the book once a year, and I’m a big fan of abusing books. What I mean by that is I’m getting the highlighter out. I’m writing on every page. And if you went into my study in my office, I actually have seven versions. I’m eight years in. So coming up on the eigth one, and I reread that book, and I write about what the changes are and sometimes go down memory lane to see how it talked to me different. So that one, to me, is important for very different reasons.
Kyle Hanslovan
It’s been a little bit of a guideline, making sure that not only did I follow through with the why that was really important to me in the beginning, but I allowed my why to adapt as I adapted, and that’s been a big one. Any chance you read that one? That one’s so stereotypical. But like I said, I kind of really abused that one, so I enjoyed that book a lot.
Brett
Yes, I have read that. It’s a very impactful book, and it’s funny you mentioned that. I do the same thing. I went through a phase where I used to just kind of read every book I possibly could, and I sat there at one point, I was like, all right, this is getting out of control. There’s, like a few books that have been very meaningful and have really changed my life. I’m just going to reread those over and over again. I think where we differ is on our strategies with where we highlight the book. So what I do is I have the same book, and then I go through with a different highlighter color every time, so I can compare that to the previous year to see what I highlighted. You’re taking a different approach, right? You just buy a new copy of the book.
Kyle Hanslovan
I do, yeah, you’re right. That could actually be a pretty useful way of seeing how did I compare and contrast from the years. I suppose after eight years, most of the book would be highlighted, or I’d be highlighting the same thing twice or three times for different reasons. But I don’t do enough of that kind of. Sometimes founders are probably most guilty of not making time to reflect and do the retrospect. And I think the way you’re describing, at least for a two year increment, how did I do this year and how do I feel about it now? That would be really nice.
Brett
Yeah, it’s a lot of fun.
Kyle Hanslovan
Probably some app out there that does this, like on a Kindle or something. But I’m still old school when I do reading, I want to get away from my laptop. I want to go read something that’s paper.
Brett
Yeah, I’m the same way. I can’t do Kindle. I need to have the physical book, and I need the physical gratification of having it in my bookshelf afterwards. What are you going to do to show people? Here’s my audible collection or my Kindle collection. It just doesn’t have the same appeal.
Kyle Hanslovan
I have many pdfs. Admire them.
Brett
Please scroll through them.
Kyle Hanslovan
So, yeah, that one, the other one that I enjoyed, especially as a non, I mentioned I was coming from that services world. I’m hacking things for a living. I know nothing about product, and Guy Kawasaki’s art of the start 2.0 had just come out, and it was very relevant. Some of the biggest, I would say, kind of mantras that I latched onto, especially his ability to talk about analogies. So not just the sexy ten slide deck that everybody knows him for. There’s some amazing things about a Founder dancing in a field by themselves that I really kind of latched onto those. I’ll save that to the reader to figure out what I’m talking about there. But those two are the ones that, again, quake books. I’ve read a lot of them, or I’ve read a lot of books.
Kyle Hanslovan
Those are the two that kind of shift me to the core, and I keep rereading.
Brett
Nice. Yeah, two great books. All right, let’s switch gears. Let’s dive deeper into the company. So how we like to frame this is, let’s talk about the problem. So what problem is Hunter solving?
Kyle Hanslovan
Do you want to know it from the immature 2015 brand new entrepreneur, or do you want to hear, like, the sexier eight years later?
Brett
Let’s start with 2015.
Kyle Hanslovan
Oh, gosh, I was so daft. But I was like, look, I just want to wreck hackers that are out ruining businesses, and I’m a hacker myself, so I think I can do a better job at fine. It was so bad. It was not even a good elevator pitch. I did not know who the go to market was, and I just want to share that with the audience of, like, you can be very successful and for different reasons, attract folks, and it’s okay to not be crisp. I’ll say. It took me, like, four years to eventually get to what stuck at Huntress?
Brett
What is it today? Give us the new, refined, pretty pitch.
Kyle Hanslovan
I’ll give the four words first, and then I’ll give that refined, quick elevator pitch. It was just cybersecurity for the 99%. And that’s cute, referring to the 99% of companies that fall below the enterprise. Like, there is kind of a poverty line that exists between enterprise and mid market SMB companies, and we’re for those folks that are the 99% that are usually ignored. I wouldn’t give the pitch that way, though. The reality is it doesn’t talk about value. It’s kind of not sexy enough. You kind of got to know what both cybersecurity and the 99% is. So it’s not great. But again, four years to get down to four distilled words. It takes a long time. The revised version of that probably sounds something much softer. Like, there’s a lot of great it talent out there.
Kyle Hanslovan
There’s not a whole lot of amazing cybersecurity talent. There is a gap. What if you could buy the expertise of cybersecurity rock stars for the price of a product, enabling your most junior technicians to be more efficient? And for those awesome cybersecurity folks that you have, hopefully retaining them and allowing them to focus on what matters most to your business, that pitch, what’s nice about it is it focuses on a core problem. It’s going to get that person to the point they say, oh, so you’re a product. And really the whole point of an elevator pitch is just to get them to ask, what do you mean? Do you want more? Can I take a meeting? So that would be the rendition.
Brett
Did SMBs care about cybersecurity back when you started the company? I feel like there’s been a shift now where SMBs no longer think, okay, this is like a big company problem. No one’s going to target this little manufacturing plant in Alabama, but I feel like that’s shifted. Is that accurate?
Kyle Hanslovan
I listen to enough of these podcasts with you, Bret, that I’ll throw the hot take out there. I’m not so sure that the majority of SMBs still care, even in 2023, despite the news and everything. But in 2015, they did not care whatsoever. And so what I knew is, I knew there was a gap. I knew that hackers were wrecking them, but there was a huge educational gap. And so, as embarrassing as it sounds, my first, like, five or six calls were to these small businesses that were like, kyle, I really like your story, and it’s cool that you were a hacker and all, but we don’t have any it. We outsource it. And I know everybody says, like, fail fast, fail often. I would actually challenge, it’s better not to fail.
Kyle Hanslovan
But this is not one of those cases where I follow that advice. I called five more SMBs, and they were like, we outsource our it. And probably the fifth or 6th call, I finally called these people who actually do care about cybersecurity, who do have the budget. And that’s how I reach the SMBs. I go to market through the it outsourcers, who often call themselves a managed service provider.
Brett
Interesting. So that’s your channel partner then?
Kyle Hanslovan
Essentially, yeah, we’ve got about 4000 of those, and they bring us to about 110,000 of those SMBs. It’s not all of them. Because as the S’s become m’s mid market companies, they start having their own qualified it team, qualified security team. And so there’s a little bit of both that plays in the mix. But it turned out like cracking that nut and finding out who actually cares enough to pay a dollar for what you’re doing. That by far, especially as a technical Founder, you can obsess over your technology, but if you cannot figure out how to get somebody to part a buck from their wallet, like back it up, you’re going to go out of business anyways.
Brett
What was it like getting those early msps on board with you then?
Kyle Hanslovan
Gosh, you’re asking the questions that cut right to the bone. They weren’t beautiful either, because I was this cool hacker. I had just won like the World Series of hacking with my co founders and I, so I had some real street cred that it people liked. And so that got me in the door. So I guess if I was given advice to the audience, I’d say, find your superpower and make sure you can articulate it to get that good meeting. But I ended up pitching my first handful of customers and was like, I will work for free one day a week in your office to learn more about msps. And I did that for probably the first two and a half years just to learn. Because again, I was this enterprise guy. Cybersecurity for the government at the highest levels of government.
Kyle Hanslovan
I didn’t know anything about a 30 employee company that was doing like CPA work and turned out working and spending that time while also learning from some of the Airbnb founders who were doing stuff that didn’t scale. Some of those examples are like the know rooms that were sold. They weren’t very clean. The pictures were terrible. They were going in there and doing things that didn’t scale. Cleaning the rooms, taking good pictures, helping them with their listing. And by me doing that time with the msps, I learned a lot about the market. I learned how to listen to feedback, and I learned the real reason why people wanted to separate a dollar. I also validated the size of my addressable market. So I guess I’m concluding that as it was a fail in the sense that I had to do that.
Kyle Hanslovan
But without that, for me and my background, there’s no way we’d be where we are.
Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we’ve built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now back today’s episode. Early on, did you have any investors saying, let’s forget about the 99%, all the money’s in the 1%? Because a lot of the conversations I’ve had with vcs and the companies I’ve worked with, everyone wants to be in enterprise. People want to avoid SMB.
Brett
Did you have any pushback early on with that thesis of really serving the 99%?
Kyle Hanslovan
So were headquartered in Baltimore. So, one, we didn’t even have real great vc. And so not only did I hear that from the limited vc we had in the mid Atlantic area, when I came out to the beltway or out of the Beltway and into the Bay area, every single meeting was, I like the approach. Let me show you how to take it to enterprise. And I was like, whoa, you’re missing the opportunity. Most people forget, like, Walmart. Walmart’s the fortune one. They’re not Fortune 100. Literally fortune one, because they go after this long tail of the market. And so I actually had to be very strategic at who I could get money from, because most people that wanted to take my money required us pivoting completely away from the mission that we wanted to support.
Kyle Hanslovan
And so from the angels to the series A all the way, believe it or not, into series B was the first time I got conviction for SMB. So that is five years in, people did not believe in my go to market.
Brett
Wow. How did you see through that? What was that, like, five years where people didn’t believe in your go to know?
Kyle Hanslovan
I don’t think you got to go as crazy as Elon and only support yourself. You don’t got to go as crazy as Kanye and kind of fall into your own echo chamber, but you got to have something slightly wrong with you to be told over and over. I think the cool cats would call that probably, you know, make it a little bit spicier and say, like, something’s got to be slightly effed up for you to have that conviction. But I had the data points. It wasn’t just blind conviction. I had the people telling me the stories, people showing. I had the data that I was building from the bottom up on saying, look, this is how big the total addressable market is. And so that kept me going.
Kyle Hanslovan
But I still had to have, like, how I proved people, by the way, that the SMB was worthwhile. The market didn’t change for me. I had to show them that, look, I’m at 10 million in ARR. And then I could finally get real movement. So you can imagine that was a.
Brett
Long time being an entrepreneur, especially in tech. I think it’s glamorized a lot. What’s, like, the lowest point that you reached so far in building the company founders?
Kyle Hanslovan
I would say all the founders I’ve talked to that have gone from early stage all the way through IPO. So we’re talking multibillion dollar companies. We all joke about one thing, which is the roller coaster of you are on your high one day, and the very next day you’re in the dumps. I would say there was one time where my co founders and I just literally looked at each other and we’re like, hey, I think we should sell this company for $30 million. That was our magic number. And were out. We were done. And even a couple of times as co founders, we’ve kind of had to support system each other where one co Founder is like, I’m burnt. I can’t do this anymore. And you kind of got to. I know some people do, like, single founding companies.
Kyle Hanslovan
I personally couldn’t do it and wouldn’t recommend it to anybody. Two, maybe three. That’s the sweet spot. And so when you ask about low spots, wanting to sell your startup that you’re passionate about, or just feeling burnt yourself, that’s how low it’s gotten. And I would say that probably happened the burnout side probably three times in eight years. So it’s real.
Brett
What do you do when you’re starting to feel burnout?
Kyle Hanslovan
Don’t work, turns out just a simple, like, vacation or rotate back onto your family. My kids play soccer, so getting involved in that type of thing, finding something, or really what really got me out of it is my family could never quite understand the stress and the loneliness you go through as the CEO. But if you can find other CEO founders, especially ones that are a little bit later stage than you, it normalizes and kind of re energizes or at minimum puts it into perspective. So for me, I would obviously say take care of your life. But if you don’t have good founders that are kind of two to three years ahead of you, I personally wouldn’t have been able to make it.
Brett
Have you ever wished that you moved to Silicon Valley and had that Founder network here because there are just a lot of founders, there’s a lot of vcs, there’s a whole ecosystem here, and you’re not in Silicon Valley. Have you ever considered it?
Kyle Hanslovan
My first five years, that was literally Chris, John and I, my two co founders, and I said, one of us has probably got to move out there. One of us has got to do it. And it turned out now that we’re eight years in, I’ve been able to get around it by just making four visits a year. And it is a non optional meaning. I go out there for, like, saster. I go out for other places that I know there’s going to be quality founders. I also go out to hang out with just the venture capitalists. Like, nobody wants to put money in you when they’re just getting to know you. A good example of this is like the series C. I raised $60 million.
Kyle Hanslovan
I didn’t even build a series C deck because I had such solid relationships and had been sharing data for so long, because I had been going out there once a quarter for like, three or four years. So I would say now that I’ve learned it, no, you don’t have to go and move to Silicon Valley, especially now that Silicon Valley’s had a bit of an exodus in some places, too. But I think if you’re not visiting it, you’re going to give yourself a disadvantage that I don’t think you should take.
Brett
Makes a lot of sense when it comes to your market category. How do you think about your market category? I introduced you as a managed security platform. I think I stole that from somewhere on the website. But what’s the market category?
Kyle Hanslovan
So a lot of people love to know I’m the whatever of Uber, or, like, Uber, if I had to use that example. There’s a really great enterprise company that does a good job at selling many security products called Crowdstrike. They’re great founders, great technology. I would have to, if I was doing it all over, I would say, oh, I’m the crowdstrike of the SMB. But it turns out that sometimes that people immediately, when you call out that great company, they would ask, well, why can’t Crowdstrike do what you do? So if I had to overcome that objection, or I was just being cognizant of it, I would say, look, there’s three words in what I do. Managed security platform. The one that differentiates Huntress is how we deliver the cost of our humans at the price of a product.
Kyle Hanslovan
So the word that’s important is managed we build all of our own intellectual property. We do all kinds of amazing things at Huntress, but how we deliver that at great gross margins for any early Founder, especially if you’re talking to a vc, they want to know how you can scale. And so if you’re not aware of how to keep those kind of net dollar retention, gross retention and gross margins under control in that top quartile or top decile, and that, for us, had allowed us to continue scaling. And that’s a weird thing as a technical Founder, so I’ll stop there, but that’s how I would address it.
Brett
What’s the competitive landscape look like today?
Kyle Hanslovan
So in 2015, it didn’t exist. Today, everybody wants to be a managed security platform of the SMB. You literally have the greatest enterprise players from above coming down. You have some of these incumbent smaller players from the bottom coming up, and then you’ve got unrelated companies that do just traditional it management trying to come over. So it is becoming hyper competitive. But because of the moat we carved out in the beginning, knowing our mission, getting our name out there, we’re able to withstand that pressure. And so for the first time, I would say in eight years, where my biggest competition was just education and awareness, I’m now facing real heavy competition from every angle. I turn it and it turns out the market’s big enough if you have truly a big tam.
Kyle Hanslovan
Some of these key players, like Crowdstrike, who since their amazing 2019 IPO, they’ve been saying they’re going to come to the SMB. I run into them in 1000 deals in a month. I run into them five times. That just shows how big. If you get a truly large total addressable market, there’s plenty enough for everybody to win.
Brett
What are you doing to win? How are you attracting customers? How are you rising above all this noise?
Kyle Hanslovan
So I had to get better at saying this, but I’m actually pretty stoked you asked me that question. So again, I’m a hardcore kernel developer, exploit developer. I slang code my whole career, but all the answers, if you notice this back half, I’ve been giving, like, revenue and finance terms, and it turns out the finance geeks, they would call the reason I win lowest total cost of ownership. That just literally means even though my product isn’t the cheapest, if you combine the cost of acquisition, plus the cost of the operations or humans to manage it, plus that opportunity, that you could be doing other things, and those three things into TCO, or total cost of ownership. I am the lowest total cost of ownership and we just disproportionately win our deals, crush it that way.
Kyle Hanslovan
I didn’t know, by the way, that was the reason were going to win. It just became very obvious as we got further. So I hope that doesn’t like, if you’re early stage, focus on how you’re getting repetitive deals. This is something, though, is any of the audience who’s going from series a to series b, especially in this world where now profitability or at least efficient growth is being considered. If you don’t have some strong awareness of this, you’re going to have a harder time raising those later rounds of capital.
Brett
Where did you learn about this idea of TCO? I’ve never even heard of that.
Kyle Hanslovan
Gosh. It turns out, like, I guess if you go and get a proper MBA and all those other things, this is just like, it’s just like a basic thing. Clearly, if you can tell coming from a military service background, the ability to execute and get the job done was way more important to me. And I clearly skipped that class. But I learned that total cost of ownership by, again, meeting with other great entrepreneurs and people a little bit further ahead on the journey. So as I started looking at IPO and the amazing opportunity to ring the bell one day, I had to start talking to people like cfos and chief revenue officers and much more mature investors who care so much about those type of unit economics.
Kyle Hanslovan
And when they would ask me these things and I kind of was just looking like an idiot, I would just admit, yo, I’m a cool hacker, but I don’t know, can you explain? Like, I’m five? And it turns out people really appreciate that humility and will go above and beyond to make sure that you don’t ever have to look that goofy again. So I just embraced the idea of just asking anytime I didn’t know. And people have been able to help me get a lot further ahead.
Brett
As a tech Founder, you mentioned ring the bell there. Is that a big milestone that you’re excited about and working towards?
Kyle Hanslovan
Well, two answers to this. One, the public market is rough right now. So I think we’ve seen with the great companies like Instacart, I think, you know, had a recent IPO arm, had one as well. It’s not the sexiest market to go in there, but the reason that is so important to me is if you’re trying to become a truly iconic company of consequence and Huntress, that’s been our whole thing. That’s great validation. And so for me, I don’t actually care. So much if I ring the bell, but having the option to ring the bell because I grew so far, made such a big difference and can become this enduring company that’s going to make a difference.
Kyle Hanslovan
That to me and that optionality has always been the most important, because it means I took good care of my clients, I took good care of my technology, and stayed ahead of hackers. So the ringing the bell is symbolic for what it truly stands for, which is I’m disrupting hackers and protecting the 99%. So it is what it is. But yeah, I’m chasing it. I’m chasing that opportunity.
Brett
How has your platform had to evolve? Or I guess, how is it going to have to evolve with AI and everything that’s happening? From my conversations with other cybersecurity founders, they say that AI could potentially change everything. And being in the arms of these black hat hackers, it’s going to be very dangerous for businesses. How are you thinking about adapting the platform to prepare for this next wave of assaults?
Kyle Hanslovan
I guess you could say, yeah, I’ll caveat that although I come from a data science background, I am not an AI expert. However, you cannot be a Founder in this days and not get spun up enough on how to implement or take advantage of these new, cool technologies. What I am, though, an expert at, is automation, and AI is largely a great form of that. And so what we’re seeing is, one, you can do amazing great things with the current iterations of AI to augment people and kind of democratize. You can literally take junior people and have them perform as much more elegant, sophisticated operators or technicians or security folks. You can also use those same skills and level up script kitties that become much more sophisticated hackers. So it cuts both ways, is where I’m going.
Kyle Hanslovan
For us internally, the thing that we’ve found is we’ve found very few cases where AI truly replaces, but many cases where it augments. So you can imagine, on my end, as I’m considering efficiency, I’m having to kind of bat away some of the crazy questions of, like, can AI just ruin all this? And I’m like, look, my Tesla idrive tries to kill me eight times a day with its AI. It’s not perfect, but what it can do is it makes my distracted self way better at driving. And that’s kind of what we’re seeing with both our team and other combating technologies. So you can imagine hackers have a very tight feedback loop. They’re always looking for a new way to iterate and get better. And so for us, we’re kind of looking at that and saying, how are they going to leverage this tech?
Kyle Hanslovan
How can we get ahead of it? And really, how can this help us scale better and that efficiency? I think, at least here in this time frame, 2023, 2024, this is a perfect use of AI in that case. So that’s what we’re doing with it.
Brett
As I mentioned in the intro, you’ve raised nearly 160,000,000 to date. What have you learned about fundraising throughout this journey?
Kyle Hanslovan
It’s storytelling, plus amazing unit economics. And for any early stage Founder, the unit economics are largely discounted. You have to prove that, yes, your claims are possible, but I have always, especially coming out of an intelligence background where you get rewarded for accuracy. There is some really interesting things about Silicon Valley and valuations that, because I pitched so accurate of what I was going to be able to do, like, I’ll be very direct. I said I was going to hit 1.5 million in revenue one year, and then I said I was going to hit five and I ended up doing 5.3. And then I said I was going to do ten and I hit ten and then I said I would do 20 and I did 20. Nobody rewarded me for that accuracy.
Kyle Hanslovan
They actually, in their minds, were discounting because they hear so many flamboyant, amazing stories that they internally discount, you can’t do. So I just want founders to be aware of that, because I think in many cases, my actual valuations and dilution took a little bit of a hit because I was so adamant about what I was doing. I will caveat, though, that by the time I showed people so many times I could do what I would say I did. It’s made the later stage of raising capital much easier. So if I could give advice to anybody else, raising capital would become a phenomenal storyteller. Make sure that you tell the full potential of just how big your idea can be. It don’t limit yourself with what’s reasonable, but tell them this is the full capability.
Kyle Hanslovan
But I would also say bring that humility and caveat and say, even though this is the full potential, I think because of execution, we could look something closer to that. And what you’ve done is you’ve given them the high, you’ve set them to the point of where you think your valuation or what you think the opportunity is, and then you’ve given them that, hey, I know you’re going to discount me, and I think the discount needs to be in this range, and that hurts. As a Founder now, when I’m looking at what that’s worth, that’s probably worth over $100 million in different places. I’ve taken more dilution because my pitch wasn’t as crisp as it could have been.
Brett
How does that feel, saying that out loud, $100 million potentially lost. Does that hurt you? Does that hurt your brain at all? Or are you just like, numb to it now?
Kyle Hanslovan
As somebody who grew up broke, it’s all gravy at this point. I’m sure somebody out there, some super privileged person, would say, like, oh, you should be clawing that back and you should be upset. I’m all for, like, you deserve to get what you deserve at the end of the day. But if you have that problem, you have such a first world problem that take your crocodile tears somewhere else. What I’m more worried about are founders who lose 33% of their company in their first series A instead of 25 because that has a big ripple effect on how your cap table looks in the future. So that’s that message, series A, and kind of all the seed rounds that come before. That’s the folks I would really worry about, what you do at your cap.
Brett
Table and how you pitch outside of fundraising. Let’s imagine you were starting the company again today from scratch. Based on everything that you’ve learned so far, what would be your number one piece of advice to yourself?
Kyle Hanslovan
Gosh, that’s such a big question. The number one thing would be, I didn’t suffer from impostor syndrome a whole lot. I was always very confident, maybe even like slightly borderline cocky, and that got me through. But I thought everybody was like me. I thought everybody didn’t suffer the same. And I think I’ve discounted a lot of some of my best teammates ability to deal with impostor syndrome. For those not familiar, that’s just the idea of even though they’re really great, they might believe that they don’t have a seat at the table. And as a Founder, your voice is a megaphone. Literally. They, meaning even your co founders, your board, your teammates, for sure. They will listen to the smallest inkling and find reasons to find fear, and they will listen to the smallest compliment and use it for rocket fuel as motivation.
Kyle Hanslovan
And if I would have thought about that a little bit better, I can think a couple of places that putting a little extra effort into giving those compliments and making sure people know that they’re doing good and helping them get out of their headspace, that could have probably made some on sequential difference in eight years. So I know that’s an atypical type thing, but that’s something I could have controlled. There’s a lot of things I couldn’t have controlled, and that’s the reason I would have spent more time helping people deal with kind of some of their imposter syndrome.
Brett
Final question, since I know we’re way over on time here, let’s zoom out three to five years into the future. What’s the big picture vision? Yeah.
Kyle Hanslovan
So if Huntress is lucky enough and we ring that bell the way we said, my favorite question people ask is, what does an IPO mean to me? And I remind them that when it comes to protecting the SMB, the 99% of companies, the IPO would be just the beginning. So five years into it, I’m probably looking at, all right, I see a billion dollars in ARR coming. How do I get to 2 billion? And what I’m really saying under the hood there, that’s what finance people want to hear. What SMBs want to hear is, all right, great. You’re protecting 300 or 400,000 of us SMBs. How do you protect the 34 million that are in the US alone, let alone the hundreds of millions across the globe? So I’m looking forward.
Brett
Amazing. Kyle. It’s been such a fun conversation. I’ve really enjoyed it. I know it’s going to be a hit with our audience. Before we wrap up, if anyone wants to just follow along with your company building journey, where should they go?
Kyle Hanslovan
Yeah, so I’m super active on both. I think they call it x these days. And on LinkedIn, I just try to make sure that I actually communicate, and I’m pretty savage when it comes down to giving advice of skipping the BS in the middle and just giving it direct. So that’s where you can find me, the companies, of course, on all social media platforms.
Brett
Amazing. Kyle, thank you so much for taking the time. Really appreciate it.
Kyle Hanslovan
All right, brother. Thank you so much, Bret, for having me.
Brett
All right, cheers, man. This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.
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