Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 5)

Sramana Mitra: By the time you got this term sheet, how many customers did you have?

Domingo Guerra: We had about six or seven beta customers, but they weren’t paying yet. A lot of times, it’s like a chicken-and-egg thing. They want to go with you but they want you to get funding because they’re afraid to invest and deploy your technology fully and not have you around. The VCs would like to see revenue to help them facilitate that investment.

Luckily, Ray and Steve are familiar with the space. They knew that if these large customers are using your product, they’re not going to waste their time with a small startup unless you’re solving a problem that they have difficulty finding a bigger technology provider to solve. That means you’re on to something. Even though they were beta customers and not paying customers, they saw that it had traction and validation. They were big enough brands, and it made a difference.

Sramana Mitra: When did you close the round?

Domingo Guerra: April to May of 2012.

Sramana Mitra: What happens next?

Domingo Guerra: Now we have the ability to hire. At that time, there was just four of us on the team. We were all working on sweat equity. and we were now able to hire more engineers. We started building out the product. We started doing more integrations with partners in the mobility space. We partnered with enterprise app developers and the MDMs. That put us in front of a lot of enterprise IT and enterprise security teams. That was the way for us to collect more feedback on the product. By 2013, we finally were able to do our deployments to Mobile Iron and AirWatch. That’s where the interest for the company started to take off because of how large Mobile Iron and AirWatch are and how many customers they are in front of. Instead of focusing on all of their customers because they also serve SMB, we started focusing on their largest accounts.

That turned out to be great because it helped identify the right type of customer. These are very large companies, so they have a lot of devices and employees. In general, we see that folks have between 100 and 120 apps on their phones. With a lot of employees and a lot of apps, it made it impossible for these customers to manage the app security manually. They have to protect a lot of their core intellectual property. It was really a right match.

We made their products more sticky because we were able to provide something that their portfolio didn’t have in terms of mobile threat defence. It also automated a lot of the MDM management. It allowed for customers to get more benefit out of the investment that they had already made in their MDM.

Sramana Mitra: Now you have funding and the beta customers are maturing. What were the average deal sizes?

Domingo Guerra: Our first customer was $42,000 a year. I remember that because it was the first check we got. We were moving into a little co-working spot and I lost the check. That was really embarrassing. I didn’t want to go tell the customer that we had lost the check. I stayed up all night and eventually found the check stuck between two of the moving boxes that we had.

As we started moving into the enterprise zone, the average deal size started growing significantly. One was they were larger companies. Two was larger deployments. We charge on a per device per month basis. Instead of managing 20 to 100 devices, we started moving to 5,000, 20,000 to 80,000 devices. If you’re going to have a direct sales model, you need to have a much higher average sales price to make it worth it.

This segment is part 5 in the series : Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority
1 2 3 4 5 6