The Silicon Valley Entrepreneur – Preventing Phishing Attacks

good evening and welcome to the Silicon Valley entrepreneur a series of conversations we startup founders and investors that fund them i’m chris gill president CEO of s-phase and tonight i am delighted to have with me Andrew Steele co-founder and chief operating officer of true domain who is recently in the winner of one of the next generation internet sessions at launch Silicon Valley how do you thank you for coming along thank you for having me not at all it’s good to see you here so tell us a little bit about what does trudeau mind so we found a true domain to stop email born phishing attacks everybody that I know everybody that you know has received phishing attacks I think here in the Silicon Valley most of us think we’re smart enough to sniff him out ourselves and you know not click on things we shouldn’t are not open attachments that we shouldn’t but you know the history and the data shows that the average consumer isn’t quite as savvy so our objective in starting the company was really to build a technology platform and a set of services to identify phishing attacks that are deployed through email and be able to stop them before they reach their intended target okay just for people who don’t know about this movie what is fishing and it’s not spelled like with an F is it no it’s it’s spelled with a pH like the like the rock band but fishing is basically when a criminal a bad guy sends well more generally fishing is is basically masquerading as someone you’re not with the objective of trying to steal information or trying to steal money from your target now we’re we’re specifically focused on email as a delivery platform and so in our world when we talk about fishing we’re talking about people that send emails and make it look like it’s from somebody else okay well i certainly get loads of those even though i’ve got spam filters i get them from purporting to be from Bank of America and Wells Fargo or you’ve won something right so how big an issue actually this it’s it’s a very very large issue identity theft as a category is 50 to 60 billion dollar-a-year problem and fishing is a significant contributor to the that loss and so you know if you look at the the amount of money that is lost both by people like you and me as well as the brand’s the companies that that you know are sort of used as the bait for the phishing attack the costs are very significant and and frankly they’re growing hmm okay so how did you and your co-founders get involved to come up with this sure there’s no obvious problem there but how did you come up with something to try and address it well I think there was an obvious recognition that the problem is big the problem is growing and therefore the you know the natural conclusion there is that there’s not a great solution to that problem out there already there were some things happening in the marketplace in the in the email marketplace that signaled to us that you know now would be the right time to try and take advantage of some of the trends and apply them specifically to try and address the fishing problem and in our world when we we look at what are what are the market dynamics what are the underlying trends that made us think that it’s all about email authentication and from a technology perspective that’s really what we’ve latched on to as the foundation of what we’re trying to do okay so so as one of the the co-founders how did the co-founding team come to together to try and address this issue sure well the the other found a Robert pick up and I met initially about four years ago when we were both working for companies doing similar things in consumer email services I was working with a company called mail blocks and we had deployed what was called challenge response and the idea was it was a way to validate every every person or every entity that was trying to send you as a customer and email was indeed who

said they were and we accomplish that by sending a challenge email and requiring that person to respond so Robert and I met working you know running in the same circles you know working with similar technologies and fast forward four years the markets change challenge response really never got adopted but some things out of that that challenge response service idea were what really started to build the the awareness and sort of the underlying standards around email authentication so it’s really more a matter of us reconnecting than you know connecting for the first time okay so that’s important factor you’ve worked it together in the past at an organization for a number of years and you are in the same market correct as the market you ended up going into correct and I think that’s an important factor certainly for most investors looking at somebody addressing an established market which this is they look for that expertise in the founding team and that experience of working to two together in the past it comes up all the time on this show so it’s a little bit more about how true domain is different from other ways of going about protecting from from phishing attacks sure so there’s there’s really two fundamental differentiators as we see them one is the foundation in email authentication you know they’re the the adopted solutions the technologies and the products that are deployed out there in the marketplace today really don’t use email authentication at all as it relates to email security there’s a reason for that and that is because in our business or at least in our architecture what’s important is that entities that send email the brand’s the the brands that are typically targeted by the fishers do something with their email when they send it and that’s that’s really the start of the authentication cycle and it’s only been over the last really 12 to 18 months that we’ve started to see critical mass of adoption on the sender side of email authentication so products that were designed and developed and deployed over the last several years really didn’t have that you know at their disposal as they were trying to figure out how to address the different problems in the email security market so we came to the market at a time when you know they did the adoption had hit its inflection point nobody was really doing anything meaningful with that technology so we saw that opportunity so the technology is differentiated based on the foundation and email authentication the second piece the the second thing that makes us different is the way that we’re actually deploying the technology instead of selling appliances or instead of selling packaged software we’ve created really a clearing house where we’re performing email authentication in the cloud and through our architecture connect the sender’s of email and the email receivers through that common framework to make sure that we’re we’re handling the authentication consistently and we’re also creating an audit trail for the sender’s so they actually have for the first time visibility into what’s happening downstream once they send the email okay so prior to the the program I went to your website to see what the latest things were happening there and you’ve got some some partner announcements there can you talk a little bit about that or about you know who the partners are how you engage them and why they chose you sure I can talk about a few things okay we we are I mentioned are two constituent groups the senders and the email receivers so on the email receiver side we have partnered with a handful of companies that provide email services to end users the largest of them is Yahoo so we deployed with them in February of this year and have been live since so through the combination of our partnership with Yahoo and the other email receivers that were working with we’re protecting about thirty percent of the the consumer mail accounts today obviously our tomorrow part of our objective is you know we’d love to have a hundred percent coverage because then we can say a to any sender when you send an email you know it’s going to be treated the way it should and you also know that bad guys can’t spoof you and and do bad things to you or to your ear customers right okay can you talk about that because there are many startup founders out there who would love to have a partnership with one of the big names like a yahoo or a google or Michael can you talk a little bit about how you how long it took to get that partnership guy how you approached it so the pit for

some of the things that lucky things happen what whatever it was that made it happen can you talk about some of that sure absolutely I’d you know first and foremost a lot of persistence and hard work but you know yahoo was was is good for us on a number of levels obviously from a business perspective it really gives us a shot in the arm in terms of distribution across the the mail universe right but they’ve also of the you know the large ISPs out there they’ve also been one of the more forward thinking in terms of how to adopt and use email authentication for a specific commercial goal that goal being you know to stop fraudulent emails from being delivered to their customers so you know it was a really interesting set of circumstances where they already understood the value our interests are very aligned in that by deploying true domain and being able to apply email authentication on behalf of their customers they’re protecting their customers providing a higher quality of service etc etc so you know our incentives there are very well aligned okay so we’ll come back to true dome in a minute we want to like those it dig a little bit more into your background to understand more about how how you got here on what were the circumstances that led to this sure and again see if there’s some patterns that viewers of the show can recognize so how did you get here what what’s your background sure well it’s in everybody takes a different path you know I’m I’m not what what anyone would call a serial entrepreneur I have worked in very large companies and I’ve worked in startups before so I’ve I’ve had experience on on both sides of the spectrum there which for me personally it was great because it’s it creates a great combination of skills you know learning sort of the the critical and the analytical ways of approaching a business that you get from working for large companies in my case it was microsoft and you know working with you know in a start-up environment where agility and speed and quick decision making or are you know key to survival so you know having that mix having that balance i think for me is has been extremely valuable i’m also the roles you play wheel the technical side on the commercial side of what was it a role we play so my background is primarily in business development in corporate development so on the business side of the house okay but I’ve you know I’ve spent time doing and managing marketing I’ve carried a bag had a sales quota before which I recommend everybody should do at least once yeah even though I swore I’d never do it again Never Say Never so my my background is definitely more on on the business side very early on I was in finance so again you know a great quantitative foundation to build off of okay and your co-founder what skill set and background is your co-founder sure Robert really is the the email and email authentication industry expert okay he’s been in the email space for the last 10 years or so has founded companies in the space before and has been really more directly involved in this specific industry for a lot longer than I have so Robert really is is the you know brings the industry knowledge brings the product vision and things along those lines to the table so we make a good combination sunday sounds like you’ve got a number of the factors that most investors look for they said before you’ve worked in the industry you’re looking to to address as a team you’ve worked together in the past and a company you’ve got complementary skill sets right business as well as technical which is extremely important and you’ve you’ve been able to take that and meld that into a really solid sounding company I mean the fact that you’d be able to do partnerships with people the class of Yahoo is great testament the capabilities that you have so having founded the organization when was true demain founded we founded the company in april of 2009 so well so those words n a year ago this is pretty fast moving it is this is really pretty quick it has to be though in this fine environment so um did you require any venture capital to get you where you are now or is it all been bootstrapped or how was that part of it flowed well we spent the first I’d say seven or eight months really working on sweat sweat equity we had no capital you know everything we did we were you know we were self-funded to that point okay we raised a little bit of angel investment late last year on a convertible note and then as we

announced at your conference we closed a seed funding round yep in may of this year which was our first equity raise so in total now as of that raise we’ve we’ve brought in just a little over 1.2 million okay well you always talk about the investment sure now there right now with their all angel investors okay so which is appropriate i think for our category being a b2b play at our stage in our life working with angels was really the right thing for us to do where you know really lucky that we were able to find a group of angels that were willing to you know to provide us the capital to really get to that next you know the next benchmark the next milestone but we’ve got five angel investors that have invested in the company four of them were actually owners of our first beta partner company called fastmail based in australia which was recently acquired by opera software so we started working with the company and the the owners they’re really in a commercial we they you know they were the first email receiver to agree to deploy our technology across their mailbox footprint we went through that process and as we started to raise money the you know the owners thought well hey you know we think we might be interested in investing in this now that we’ve seen you really from the inside out we think there might be something there so they’ve been the four gentlemen involved with fastmail have been the largest investors okay so far and then we have one additional angel investor based here in the in the Silicon Valley all right so um in terms of actually getting to where you are now was it just you and your co-founder until you got funded or did you have to attract other people into the team it was the two of us until we were we raised that initial convertible note okay money and then at that point we started to build up the technical team we brought in a head of engineering a head of operations and it was really limited to the four of us and then a small number of contractors that worked with us on you know equity cash and equity you know friends and family type of arrangements until we you know we closed the the seed round and since then we’ve started to build the team further so you sound like the epitome of what one of our previous guest Steve Blank would call a Lean Startup very much you you you kept cost very very low you built something that you could get out to at least one customer to try out and having got that that customer sufficiently impressed they they invested in you mother said so that’s a great start that’s right that’s terrific where do you anticipate the business is going to go or what are your plans for the business from from where you are now well obviously I mentioned earlier we’d love to have a hundred percent coverage of all the mailboxes on the planet that’s going to be a lot of work but you know that’s really our aspiration is to become that that central that you know that widely distributed in the email world right so I think but looking a little nearer term obviously we’re working with Yahoo today there are other large ISPs their large email providers out there that we would like to be working with and we’re talking to all of them and you know obviously our business is really contingent on in addition to building up that mailbox footprint bringing as many senders into the network as possible because it’s really then you know you we really do have that element of a network effect in our business model that the more we can bring in on both sides the value to everyone we increases okay I understand that and why is it you think that that trudat don’t domain you and your co-founder were able to come up with a solution that’s obviously has an attraction if it can attract a partner my yahoo compared to the larger more established companies that have got in some cases you know billions of dollars sure their disposal to invest in something like this I think it’s not uncommon in any you know any tech sector that it’s the you know the bootstrapped or the venture funded startups that really push the envelope from an innovation or from a new technology development perspective and even in our industry there’s some pretty solid precedent in you know the venture industry and the startup community really bringing new and revolutionary solutions for security to the marketplace if you look at the last big evolution that happened when you know email security move or started to move from endpoint software and enterprise appliances to host it in SAS solutions it wasn’t the incumbent vendors who developed and deployed those it was venture funded startups like Postini and

MX logic and bright male mm-hmm that you know brought the innovation to the marketplace proved the value you know started to build the business around that and then there was a consolidation and you know your left then again with the same set of incumbent players after that all shook out okay so not totally out of out of the realm of possibility for us to think the same sort of thing is happening here with respect to email authentication okay I like to dig in a little bit more to to how you got to some of your customers so you’re you’re a two-man team you get a foot you’re based here you’re the first customer in Australia how did that happen well I should i should mention Robert my My partner is is Australian so okay he came to the US with those relationships starting to develop already and so that was obviously very helpful for us that we weren’t starting from scratch so wasn’t purely coincidental that our first partner was Australian ok all right ok so that was already something how did you get the the next one what I often find with co founders who are both from an engineering none of them wants to go and knock on the door right they want to employ let’s employ a vice president of sales or somebody is revisited to go and do that for us right I’m assuming you didn’t do that because you were previously carried a bag but can you explain to that what you did if that’s right i mean that really was again getting back to the the complimentary you know capabilities and skills that Robert and I you know brought together you know we did I you know I did we did a lot of networking just both through our own existing circles industry organizations have been extremely helpful to us as forums to you know not only make contact but you know to start to get our message out and meet the right people meet the decision-makers so it’s really a combination of of you know basic networking blocking and tackling and making sure that we’re in the right places at the right time to you know to talk to the people that we need to talk to so what sort of people were you some tips for other co-founders in what sort of people you trying to get to within an organization that would be the influences that could say yay or nay to taking your your your product on board and trying it right or did you have to get well in our business we are generally selling into the security and the IT organizations so as we looked at you know who are the people that that we need to talk to it’s a combination of the decision makers the cios the CIS OS the the you know the VP level people but also frankly the people that have really championed what we’re doing are you know the email operations managers and sis admins and and security managers you know who live this problem day-to-day right and and no you know tangibly what you know that the magnitude of the issue that we’re trying to solve and trying to address here so we’ve we’ve been lucky that we’ve been able to find someone that could carry the flag for us on the other side of the table and help us you know advocate to the decision makers and I think that’s key in any business and once you’ve got these advocates there how did you make it easy for them to get a yes from whoever controls the purse strings was it a SAS model or or or recurring a license for Yorkshire how was it made easy to go from being yes I want to have this to actually having it well one of the nice things about how and I talked earlier about how we’re differentiated and because of the way we’ve gone to market for our customers it’s purely it’s it’s a SAS subscription okay so they don’t buy any technology they don’t license any technology they don’t have to install or maintain or anything like that so when it comes to the decision process from an operational perspective there’s really you know almost no impact with bringing us into the mix we don’t impact how they send email we do all of our heavy lifting on on the receiving end so for our customers the the decision really boils down to do I see the ROI in what I’m going to have to pay true domain versus you know what costs am I either going to be able to recover if there’s direct financial loss involved what costs am I going to be able to mitigate customer service technical support you know when phishing attacks happen people call customer support and those calls aren’t free so there’s very clear cost impacts that we bring to the table by helping customers avoid those okay so it sounds like you made a very easy path people to say yes once they

think that they wanted to get it it was very very easy that Germans no having to go and knock on the door of the CFO and saying you know I’d like to get a million bucks a year to do it it was very straightforward that’s right and I think as you know as we look at how we’ve architected the solution i mentioned earlier everything we do is is in the cloud which is you know a popular buzzword these days but it really does give us significant cost advantages when you compare us to do I have to go buy an appliance or do you know even the hosted data center centric solutions have a much higher cost base than we do so we’re able to be very aggressive from a from a pricing perspective ok now it’s it’s famous in the valley that when Yahoo was looking for money you know whose money you’re partners they had to pitch 75 times before anybody would give them money how many times you had do you guys have to pitch for your most recent round of funding because you had the Australian connection to get your first round how many times you have to pitch for the most recently 75 sounds about right oh really no we we we pitched gosh maybe 50 or 60 times which on the one hand gets very monotonous and frustrating but on the other hand is extremely valuable as an entrepreneur because you you have to go through that process to get really good at giving your pitch right and every now and then you run into an investor who’s willing to give you constructive feedback as well which is immensely valuable any every entrepreneur no matter whether an investor says yes or no should always ask for feedback and more often than not you’re not going to get it but every now and then you will and it can do nothing but help make sure that your pitch is is focused in the right areas the the you know the tone and and the key points are all out there ok well we’re running out of time unfortunately interesting great to have you here do you have any last words of encouragement or advice for first-time entrepreneurs who might be watching the show Wow haha I think just just be committed you know before you take that leap make sure you’re committed and just be persistent you know every every day is not a good one there’s some great days some down days but you know keep your eye on on the objective and you know that’s really key and we pleasure talking to you thank you very much beep your time and thank you for having me not at all and it’s good night from the Silicon Valley entrepreneur and look for to seeing you again next month you