Child Entrepreneur David Koretz, Now CEO of Mykonos Software (Part 7)

Sramana Mitra: What did you charge Bertelsmann for that deal and what does your product cost today?

David Koretz: We charged them very little because we really wanted the reference. Our product is an enterprise product. We start at 25 thousand dollars and it can range up to 150,000 dollars. Large organizations may have multiple deployments because they have multiple data centers. Compared to the cost of getting hacked we may be massively under pricing today. The problem we encounter at places like RSA is that we are so different people will tell us that if we are successful, we will be a billion dollar company. They always, always use the ‘if’ caveat.

Sramana Mitra: Has this all been funded out of BlueTie?

David Koretz: We spun it off and it is funded through the same investors. We will probably raise a round in the future. It is truly a standalone company. We gave the investors at BlueTie a pro-rata equity stake in Mykonos when we spun it off of BlueTie. All additional investments have come from that same group of investors which includes myself, Tom Golisano, the Polisseni family, and Walter Turek. They are all originally a Rochester based group.

Sramana Mitra: What has been your experience working on technology companies in Rochester?

David Koretz: It is without question a double edged sword. There are two enormous advantages. Our annual voluntary attrition rate on the engineering team is right around zero. We don’t compete against any other security companies in Rochester, NY. We also have a massive economic advantage because we are not paying Silicon Valley overhead. The downside is that most cultures outside of Silicon Valley are lifestyle driven. They are driven by people who want a nice life-work balance, have families, and live the traditional 9 to 5 life.

Work is a part of their overall thing but not a big driver of it. I always found it difficult to find people who share the same level of aspiration and work ethic. When I created the first business I remember employees saying that we should just leave it alone and let it be a cash cow. Even at 16 that did not make sense to me. I am willing to take a risk on a really good thing to be a part of a really incredible thing.

Sramana Mitra: Do you intend to raise money in Silicon Valley?

David Koretz: They key for us is to raise money from firms who have a security expertise. That is why I moved the headquarters to Silicon Valley. Development is still in Rochester which lets us have a great cost center, but we now have an emerging Silicon Valley culture in the company. We have great relationships with Rochester Institute of Technology and it is a great center for us to find talent. I have helped push RIT to be one of the first computing schools in the country to teach application security and it is an NSA center of excellence.

Sramana Mitra: What are some of the key lessons learned from your journey so far?

David Koretz: There is a difference in the risk profile in Silicon Valley. I was lucky in Rochester because everything I did worked out. Outside of Silicon Valley there is a low tolerance for risk. Outside of the valley companies don’t fail, people do. I work hard to get people to accept that failure is part of the processes if you are truly innovating.

Sramana Mitra: Thank you for taking the time to share your story with us, I look forward to following your continued success.

This segment is part 7 in the series : Child Entrepreneur David Koretz, Now CEO of Mykonos Software
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