Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 6)

Sramana Mitra: At what point did you make that switch from going indirect to direct?

Domingo Guerra: I think it was around 2013 when we were in front of a lot more customers. We started realizing that it is a new space that’s changing very quickly. It’s difficult to train a partner to sell something that’s changing very quickly, because you’re not getting a lot of the feedback as quickly as you wanted. It’s almost like the telephone game where the customer tells the partner and then the partner tries to interpret that and tell you.

There’s a lot of details that get lost along the way. We wanted to be closer to the customer to capture the feedback and also be able to move faster into the development and customer requirement. That took us into being more direct. It also allowed us to have better visibility into upcoming requirements and better pattern recognition across the different customers.

Sramana Mitra: How did your revenue ramp from 2013 to 2015?

Domingo Guerra: 2013 was our first parlay into the enterprise space. In 2014 we realized that a lot of the products had been built with lower requirements than the enterprise. So in 2014 we went back and said, “If we are going to scale this big, we need to do a lot of re-architecture.” 2015 was the year when we saw a big ramp up as we were able to take on a lot of the customers and we launched Appthority 2.0. For 2015, we more than doubled our 2014 revenue. We have 99% renewals. That’s great in a SaaS business.

Sramana Mitra: In terms of strategic moves, what are some that you’ve made in the last three years?

Domingo Guerra: Going to the enterprise was a big move. It meant that we had to let go of a lot of our early customers and a lot of the smaller deal sizes. It meant that we were going to focus on the more demanding customers. The more demanding customers are ultimately helping us build a better product that will stay ahead of competition. If you can sell to enterprise, you can sell to anyone.

We made a lot of investment early on. It’s very tough selling into the enterprise space – very long sales cycles. It made our product a lot better. We got recognized by Gartner and other analysts as the best product in the field. That’s been paying off because now, we’re able to work with partners that target the SMB directly. We stay with our core, which is the enterprise customers. It’s a lot easier to use now.

Sramana Mitra: That acuteness of the problem you are solving is very significant at this point right?

Domingo Guerra: Absolutely. In 2011, there was no Android in enterprise. Now we’ve seen it grown quite a bit. Everyone thought that Apple and Google secured every single app. Now we know that’s not the case. The market has also matured in our favour. Our product has matured. We were way too early in 2011. Now that the market is turning, you have to make sure you’re still around. Now there is a market. We’re starting to see competition where in the first few years, we never saw anyone in the space.

Sramana Mitra: How much money did you end up raising after that first round?

Domingo Guerra: Series A was just over $10 million in December of 2015. Then we did a Series B in June of this year, it was a little over $17 million.

Sramana Mitra: Is there anything else you want to share?

Domingo Guerra: I had always tried to prepare myself with education. I had a professor in school who said “You’re never going to learn entrepreneurship in a textbook. You learn by doing.” A lot of folks talk about the risk of a startup. For me, I saw a risk of wondering what would have happened in not trying it out. I felt that Silicon Valley had enough jobs that if I failed, I could always go back and get another corporate job.

Sramana Mitra: Great. Thank you for your time.

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