Building a Pre-IPO Company Over 10 Years: Centrify CEO Tom Kemp (Part 7)

Sramana: How did the business ramp from 2004 onwards?

Tom Kemp: The ramp has been really good. We formed the company in 2004 and we did not ship product until 2005. We did over $1 million in our first calendar year. The next year we grew to $3 million. In 2007, we grew it to $10 million. Then the recession hit in 2008 and 2009, and we were able to grow but just slightly. Since 2010, we have grown from the teens to over $50 million last year.

Sramana: What kind of capital has it taken to get to this run rate?

Tom Kemp: It has taken us $50 million which we raised over 4 rounds during our 10 years of company history. It has also taken human capital. We value our reputation and we work very hard to treat people properly and run our business above reproach.

Sramana: Some of the huge success stories of our industry have been led by people who are not particularly known for being particularly nice. Many of them are assholes and it seems that style of management has been very successful in Silicon Valley. I’m not advocating that style but I know it exists.

Tom Kemp: That is very true. The reality is that most of us won’t be a Steve Jobs. The rest of us are mere mortals. In the end, you can be tough but fair.

Sramana: The industry wisdom is that you want to go public with $100 million of revenue and some are even advocating for more than that. You have hit $50 million this year and are experiencing good growth. What would accelerate your growth such that you would be able to take the company public sooner?

Tom Kemp: There is a starvation for quality security products. Most security companies like Symantec and McAfee are not innovating. It is companies like FireEye and Palo Alto Networks that are doing the innovation. Security is finally getting disrupted. We are seeing that security companies don’t have to be at $100 million. Veronis, a company that primarily focuses on file security, was able to go public with $75 million in sales. They priced at $17 to $19 and came out at $32 before their stock jumped to $44. People are starved for quality security. The IPO bar has gone down. We just needed to continue to execute and grow and at the rate at which we have grown in the past. Things will take care of themselves.

Sramana: Do you expect to hit $75 million this year?

Tom Kemp: We expect to be considered a growth company. I look at companies in the security space that are growing at a 30% clip and I want to make sure that we are doing a bit better.

Sramana: Is a roll-up in your through process at all? Companies of your size are looking at rolling up other companies that can bring in revenue.

Tom Kemp: Now that we have reached that critical mass, that is something that is under consideration. At the end of the day we have to build a real business with the products that we have built. We do think about the other companies that are out there that might have something that we could benefit from. We are a small company compared to the larger companies that are out there, but that being said there are always some good technologies out there to be considered.

Sramana: It has been very nice talking to you. Thank you for sharing your story.

This segment is part 7 in the series : Building a Pre-IPO Company Over 10 Years: Centrify CEO Tom Kemp
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