Rolling Up E-mail Security SaaS: Gary Steele, CEO Of Proofpoint (Part 3)

SM: Once you had a large enterprise willing to test the product for the first time, how did you handle the test?

GS: I put our engineering team on-site because I knew that they would find bugs. You can’t deploy new technology and not find bugs. My only direction to the engineers was to make the enterprise love them; to take time to build technical relationships and do the right thing. Our first enterprise test took two weeks and a good number of issues were found. The engineers came back and they were not sure that we would win the deal. It was very competitive, and a good number of issues were found.

Our response was to write up and formalize our response to the issues. We specified the technical corrections we were going to make and what the timeframe of those responses was going to be. We were very clear on all of the issues. The client decided to make the purchase, and I can remember driving down I-85 when I was told that we won the business. It was a monumental move for us.

After the fact I asked the buyers why they were comfortable making the purchase when they knew there were outstanding issues. We were told that we were the only company that acknowledged that our product had issues, that we had clear dates and deadlines to deliver corrections, and we had already proven that every time we gave them a date or a deadline we delivered. They had more confidence in us than they did in more established vendors.

As a startup, you have to convince enterprise vendors that you are a viable choice for them when they have so many other choices. For me, the number one thing I learned was the close you can get and stay with your customers, the better you are going to be able to navigate.

SM: When did you actually make your first big deal?

GS: We started shipping product in 2003. We started to see the market evolve over time, and we saw more and more customers have their resources constrained. We saw the opportunity that as the economy was not doing so well, more customers would turn to the cloud.

SM: I remember that in 2003 the cloud was not yet accepted.

GS: No, it was considered a small business thing. I think we have progressed to the point that it is now enterprise. By 2006 we had really matured our cloud capabilities, and we have only seen that market grow. Unlike other segments, like the application segment where the benefit is to get up and running quickly in a less resource-intensive manner, we are seeing economies of scale and core architectural advantages of being in the cloud that reduce the total cost of these systems.

At the end of the day, how much do you want to spend on compliance? That is why I love Proofpoint, because I wanted to sell something that people have to buy. I want to make that purchase as low of a barrier to entry as possible. We are offering a totally different cost of ownership from what people are used to seeing. A current customer of ours is evaluating a cloud archiving solution. They looked at on-premise offerings and cloud offerings. Our cloud offering was $450,000 a year, and the on premises solution was $6 million. Cloud computing is delivering a set of very clear economic advantages.

This segment is part 3 in the series : Rolling Up E-mail Security SaaS: Gary Steele, CEO Of Proofpoint
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