Rolling Up E-mail Security SaaS: Gary Steele, CEO Of Proofpoint (Part 4)

SM: When you were flying out to your 25 potential customers and converting three of them into very large customers, what was the competitive landscape?

GS: There were a lot of existing vendors. CipherTrust was a player; it turned into Secure Computing and was then bought by McAfee. They had established a good number of clients and had been in the market for two years prior. Symantec had a product there a couple of years earlier as well. We came in late, but we did have a different perspective.

The category was defined. Our hypothesis was that people had not thought about the category correctly. People had expected it to be a one-note market that could only do security. We have seen a broad ecosystem around e-mail that deals with security, compliance, and all aspects of encryption and data loss.

Today we have a next-generation infrastructure that is all based in the cloud, where we can do very interesting things. We do all the antivirus and spam ourselves. Folks such as Postini have tried to expand into other categories but they have been very slow. Our other categories today are key growth areas for us.

Something important that has carried over from the early days is our strong relationship with the customer. It has become part of the culture of the company. We really proved to every employee daily the true value of the customer. It is hard to get this right. I have worked in other companies where they would say that customer satisfaction is our top priority, but in reality it is not. That is just lip service.

SM: Offering real customer satisfaction can be very expensive.

GS: Which is why it has to come from the top. It has to come from the top. It is about behavior. If I personally commit to making customers happy, I can get everyone else to be happy to do that, too. We invest in support. I believe that every employee wants to know that you are treating customers well. It is a matter of pride.

When we eventually moved to SaaS, our customer centric attitude was important. In the SaaS world churn is a key metric. How high can you keep your retention rate? At the end of the day, it is a business metric that really matters. In the old enterprise software world it was a drive-by shooting. Shelfware was the ideal situation. We don’t have shelfware. We have 99% usage. We are motivated to see every dollar of software used.

SM: You have four suites of products. What is the process you used to build up those suites? Every product is expensive to build.

GS: We built and we bought. In the first years our initial offering was e-mail security. In 2003 and 2004 that was the place to be. There was spam, virus, phishing, and malware as well as the policy infrastructure to go with that.

We then recognized that there was a growing opportunity around data loss prevention. We build controls and policies to allow users to manage what goes out of their network. We saw the opportunity in 2004 where more and more organizations had to meet compliance rules. We were very early to that market, and we do not regret that. We then bought a company to have our own encryption capabilities in 2008. We bought archiving and discover in 2008 as well.

When you look at the ecosystem we built, the key is to know how we built it. We listened to what our customers were asking for. We did market studies with our customers. We knew the things that was important to our customers. It was all very natural.

Our largest acquisition was the archiving and discover product. That company was based in Toronto, so we have a large business presence there. Toronto is about 25% cheaper than the Valley. We love our location there, and we have had good luck finding great talent.

This segment is part 4 in the series : Rolling Up E-mail Security SaaS: Gary Steele, CEO Of Proofpoint
1 2 3 4 5 6 7