From Idea to Investment: Nurturing Early-Stage Cybersecurity Startups with Tim Eades, General Partner @ Cyber Mentor Fund

Welcome to another episode of the Cybersecurity Startup Revenue Podcast! In today's episode, we have a special guest: Tim Eades, entrepreneur and the CEO of Anetac. But that's not all - Tim also co-founded the Cyber Mentor Fund, a seed fund dedicated to supporting early-stage cybersecurity companies.

In this insightful conversation, Tim shares his experiences and offers valuable advice for startup founders and entrepreneurs. He discusses the importance of seeking advice from successful mentors, validating ideas through customer interviews, and building strong relationships with customers.

Tim dives into the world of sales and emphasizes the need for a customer success person before a salesperson, highlighting the significance of proactive technical support. He draws inspiration from successful models in the security industry, such as Tanium Founder Orion's technical account management, and shares his thoughts on building and maintaining happy customers.

But it's not just about sales, as Tim also delves into the importance of building a strong network of advisors and mentors as a company grows. He provides practical tips on finding the right advisors who can make introductions and offer guidance in specific verticals.

Join us as Tim Eades brings us his wealth of knowledge and shares his unique perspectives on building, selling, and funding cybersecurity startups. Get ready to gain valuable insights from a seasoned entrepreneur, right here on the Cybersecurity Startup Revenue Podcast!

Cyber Mentor Fund
Timothy Eades on Linkedin

Transcript

Andrew Monaghan [00:00:00]:

How often do you get to chat with someone who is a multi time founder and CEO, a multi time board director, and a multi time early stage investor? Not that often I would hazard the gas. Well, you're in for a real treat with the discussion I had in this episode with Tim Eades, the general partner at Cyber Mentor Fund. We talk about how he started in investing, how CMF works with early stage companies, and even before they cut a check, we get his take on things like enterprise browser, zero Trust, and wiz the role for AI in security since it's so hot right now. And also how to get attention in this crazy, noisy cybersecurity market. This is definitely one of my favorite interviews, and I think it just might end up being a favorite for many listeners to the podcast. Don't go away. 

Welcome to the Cybersecurity Revenue Growth podcast, where we help cybersecurity companies grow sales faster. I am your host, Andrew Monahagn. Our guest today is Tim East, who is both the general partner at Cyber Mentor Fund and currently CEO at stealth startup Anetac. Tim, welcome.

Tim Eades [00:01:20]:

It's great to be really, really looking forward to this.

Andrew Monaghan [00:01:23]:

Yeah, it should be fun. I'm looking forward to it for two, three reasons. One is you have that kind of unique combination of being a CEO and founder of multiple times, and also you're the general partner at Cyber Mentor Fund, which invests in early stage cybersecurity companies. So you see this from both sides of the aisle and can have a different perspective than maybe some who are earlier on in their journey on either of those paths. From the CEO side, you've got background from companies I would recognize anyway as Silvertail, Brightpoint, White Sky , and most recently as CEO at vArmor. And then from the investor through CMF, the names I picked out and saw and recognized were Blue, Lava, Bolster, Cygognito, Dragos, Revelstoke, Synsaber, people like that. So these are all cybersecurity companies that many of us will recognize and maybe have come across in our lives so far?

Tim Eades [00:02:17]:

I hope so. I mean, these companies, they start off young and you help shape them and you help form them. And then I would say that a bit like kids. When they're young, they need you all the time. They call you a lot. Then as they get older, they only call you if they've crashed a car. They need money or they're going through a divorce. But these early stage stuff are super fun.

Andrew Monaghan [00:02:36]:

I've got two teenage girls, and I definitely understand the money side of all that. It's probably why I work right now. I don't know. Let's get on to the business side of this. So you were a CEO, founder, head of sales for many years, and then you started you founded Cyber Mentor Fund. What was the catalyst for that? How did you make that change? Or how did you add that into what you were doing?

Tim Eades [00:02:59]:

Yeah, about 20 years ago, I was a head of sales and marketing at a startup, and I would lean on friends of mine around the Bay Area to kind of give me advice on what to do next and how to learn and grow. Somebody like Dean Draco at the time was the founder and CEO of Barracuda. He was one of those people who I still admire is a fantastic entrepreneur, one of the best ever, I think. And so I would lean on these people on how to get better. And I'd read and all about the business model. I'd read the Financial Times every day about and then when I would meet with them for a cup of coffee, I would try and add value to the conversation. And as that started to grow, I got opportunities to invest in other companies and be advisors to other companies. So from about 2003 2004 to about five years ago, I was a seed investor and advisor to a bunch of different companies. So backblaze who just went public only after doing a series, a signified I was on the board of for like six and a half years, shape Security. There's tons of them, so probably 20 different companies. But then about two or three years before the Pandemic, joey Andy came to me and said, hey, I'm thinking about doing a fund. And I was like, Well, I thought about doing one too. How about we do one together? And we were going for a walk in Mountain View. So we raised like, $15 million on a seed fund in about three or four weeks because of the track records that we had for doing seed investing and early stage stuff and being this operator mentality that you actually believe you can really help somebody. Because I love the venture community, but I'm on the operator side. I'm an entrepreneur who just puts some money where his mouth is to try and help people. And so we started the fund. There's three fantastic ladies that work in the fund full time. Joe works in it full time. I kind of am kind of almost like an operator in residence. I'm obviously CEO of Anotech, and that's an enormous part of my time. But at like, for example, I spent an hour this past Saturday on the phone with Ellis and Anne from Envel, who I talk to every weekend for like, three and a half years. And yesterday we're looking at a new company that should get funded next two weeks. And we had a review on that yesterday afternoon. And so weekend afternoons between typically between 130 and 435 o'clock, I do CMF stuff. And it's incredibly rewarding because you get some of these entrepreneurs and they come to you and they go, we're going to the moon. It's roughly this way. Like, we're going to the moon still roughly this way. Alison Ann, when she first left the NSA, she rings me up on a Tuesday and says, I hear you can help me become a CEO. And I said, I can, but I can't do it during the week. How about Sundays at two? Every Sunday at two for three and a half years. And she's obviously got did a series A, she did a B. She's off and running and big company now. But I find it incredibly rewarding. It's kind of like giving back to the community that's given so much to me. But also it's a great mission to help the country and help the enterprises be more secure.

Andrew Monaghan [00:06:00]:

And when she came to you and I guess subsequently other people, what sort of topics are the things that they struggle with that they want to really talk through most?

Tim Eades [00:06:07]:

It goes all the way through from, hey, how do I get a general counsel, how do I get funded to how do I deal with this particular employee that's gone a little strange. How do I deal with this customer, how do I access this customer? How do I improve my messaging to sales operations? How do I better look@my.net retention, how do I look at gross retention if I'm packaging up the software differently? How do I look at my SKUs and different things, everything, and there's no way I'm right, but you just try and give some advice and kind of the edges in a different way. And because we kind of vote with our money and vote with our time, it's a good mission to be on.

Andrew Monaghan [00:06:49]:

Yeah, for sure. Well, I want to learn about how you engage with companies and how you choose to invest or mentor them as well. I guess I'm going to do it this way, though, Tim. I'm going to bring up two or three of your portfolio companies and ask you to tell the story about how you go involved with them and what you saw in them that you really liked and felt it was worth the time and effort to help them out. The first one I'm going to pick is actually how we got to know each other. So Jory Van Antwerp at Sin Sales was someone I'd known from back in the day. And when I taught them on the podcast a few months back without even asking him, he know, you need to talk to Tim, which is how we got connected. So take us back to that Sin saver. Jory is the founder CEO there. How did you get involved with him?

Tim Eades [00:07:31]:

Yeah, since Cyber Mental Fund has a bunch of LPs, I think it has like 45 or 47 LPs. And one particular gentleman, Mark Weatherford, referred Yuri. Mark is a superstar human and great friend of mine, and he refers it in any inquiry typically goes to Jerome and the team first, and then I get to meet them. We meet Yuri and he's like, I've got this idea with Moran. And they're like, hey, I'm going to go do this company and they're at ground juror, they're at a PowerPoint deck and that's pretty much about it. I would say a prototype but I think that was being kind. Yuri, if you're listening, love you mate. But they had an idea that what they wanted to do and so one of the things that he wanted to do is obviously get funded but also along the way validate the idea. So one of the processes that Cyber Mental Fund does is engages with the early stage company and goes and interviews customers. Is it a problem? Is it a big problem? What do the regulators say about it? What's the alternative is? Doing nothing an option, really. Big point. And they document these interviews almost like a court reporter. So we did that, the team did that and we built that as part of our process because it helps the CEO of the startup get some perspective. Typically these are not sales calls at all. These are like market validation, product validation, problem validation, also problem trajectory. Was this a big problem three years ago? Where is it now? Where's it going to be in three years time? These are the types of questions that we ask and we document them. And so we did that with Yuri and know we introduced them to a great general counsel, john Gavillman over at Cooley. We work with them on their financials, we work with them on the deck and then what we do is we partner with the venture community. So people like Jayleek over at Sin for example as a superstar and say, hey look here's something that we've been working with. We've been working with them for quite some time. Here's what we've done from a research perspective on the market, the opportunity, the problems. Here will be interviews of the customers, here's the financials, here's the deck, here's the team. We love it, we're going to invest in it. You should have a good look at it. And because we've got good relationships with the venture community, when we walk over with a particular deal like that they're like, okay I got to pay attention. And so we were there literally before they were funded. They didn't have a general counselor, they didn't really have much at all and we come all the way through and obviously now they've raised a bunch of money. Now they have customers and they have a team and all this kind of stuff. Again they kind of grow up so.

Andrew Monaghan [00:10:01]:

Fast and you put all that work in before even investing, right? Is there a fall off? Are there people that you do some of that work with and you go not something there after all?

Tim Eades [00:10:10]:

Rarely. The reason why is prior to even doing the work we set up a bunch of sessions to see how everybody gets along. I mean this is a place in life where you want to work with really good people that you really care about. And so we want to make sure that we get along with them, that the team does, that we believe in the opportunity and they like the idea of being around, mentorship people because obviously all our LPs also help and stuff like that. So, yeah, those people are fantastic. But yeah, you've got to do the work ahead of time, otherwise you'll get into trouble afterwards.

Andrew Monaghan [00:10:44]:

Yeah, for sure. Next one on my list is had. I actually had Mike Barker, who's the Chief Commercial Officer over at HYAS on just a couple of months back, actually. So what was the origin story with HYAS and CMF?

Tim Eades [00:10:58]:

Yeah, the early team came into my office at VMA a few times and before they were funded this is years ago now, probably six years ago. And we were like, well, should we have it? They basically had a threat and tell kind of a DNS kind of platform at the time. And we were like, what is this? Is this a DNS firewall? What is it? And they weren't sure if they wanted to fundraise or not, whether they wanted to go build a company. And this is, like I said, a while ago. So they went away and they came back and they sat in the office, the corridor office of the Armor, and just sat down. They're like, OK, should we do it? Do we want to do it? And I'm like, all right, well, keep thinking. And then that night we went to dinner at Bistro Vita in Mellow Park, which is just an awesome place, and we sat there and had a bottle of wine and ate some great food. And they said, all right, we want to do it. We want to go get funded. And so we leaned in there from a long time ago, and that company has I still think it's a little early for the market, to be honest, because they're way ahead, but it's catching them right. Startups, sometimes you have to make sure that you're in the right obviously you want to be in the right place at the right time, but it's understanding the trajectory of the market, the dynamic of the market and the technology transitions that go on. And I'm sure that they're at the right place now. They're still probably a year ahead of it, but I'd much rather be there. And they have proven so David is now the CEO. I help him out when I can, mainly on things like now. He needs some introductions to different people to help navigate again, help navigate the market. One of the things that we do is it's difficult if you're a CEO, it's a really lonely job and you've got to kind of keep your context building. And it's so dynamic of what's going on, what's fortinet doing, what's CrowdStrike doing, what Cisco is doing. How do I stay on top of that and still build a company and understand it? And so one of the ways I help Derby right now is to keep them in the loop of a bunch of things that I'm seeing in the market and give them context to people to go talk about it.

Andrew Monaghan [00:12:48]:

It seems like from what you've talked about with both Senseaver and Hyacinth, the mentor part of cyber mentor fund seems to be the DNA of what you enjoy, for one, but also what people probably really value from you.

Tim Eades [00:13:01]:

Yeah, absolutely. The mentorship piece, it's almost like an incubator in certain ways. Probably more like an incubator than anything else because we try and really help and then we put a little bit of money alongside it so we don't disturb the captain. We don't ask for a chunk of money.

Andrew Monaghan [00:13:15]:

One thing before we move on. So I was talking to a CEO a few weeks back and he had some advisors on his board of advisors, whatever it was, and I asked him the question, which of your advisors are producing the most value in terms of getting you into companies and introducing you to people and things like that? He kind of looked at me like I was crazy that advisors were there to advise on product and technology, not to do not sully themselves with introductions and selling and things like that. What's your view on when people get some advisors on board? What would you think about the role of those advisors?

Tim Eades [00:13:50]:

I always tell people set their expectations. Otherwise they'll set their own. So I think there are different types of advisors, right? I have advisors at Anatec. I have advisory board at Know. As the company grows, it's kind of interesting. They're very interesting questions. So I have product type advisors right now at my new company that's stealth and it's funded and stuff. I've got a bunch of engineers working on stuff and they're very much tech and product advisors that are looking at everything from how to deploy it, how to price it, even how to understand what the design partners want. So that's that as you start to kind of mature the product and you start to get to that point where you want to reach out more broadly, it's good to have one or two on these that can help you do these introductions. Typically they might be different than the product people. I would be careful on burning them out though, right? If you ring them up every week and say, hey, can you get me into this place? Hey, can you get me into this place? They get burned out because these introductions are like matches. They burn out. So I would definitely think there's two, right? I would say here are the products and the tech ones. Here's the customer introduction ones. I will create a program around it and do somewhat quarterly. My personal belief on the introductions type people is I would align them by vertical. So I'd have one in finance or I'd have one in healthcare, because when you go into these markets, vocabulary and terminology really matter. And so as you align, obviously, security now has to align with the business more than ever before, and so the vocabulary matters. So these people cannot just help you with the introductions, they can help with the vocab and the terminology.

Andrew Monaghan [00:15:31]:

Yes. They can sit beside you and say, you're not using the right words for the financial services market here. This whole thing came out of Fsisac last quarter. You need to kind of align more to that sort of stuff. Right?

Tim Eades [00:15:41]:

100%. Yeah. And by doing that, you'll get more kind of penetration in the verticals because you're using the right language and you've got the right guide through that forest. Right?

Andrew Monaghan [00:15:52]:

Yeah. I talked to my clients about the idea that if you talk someone's language and you can summarize or explain their problem better than they can, they just believe you have the right answers as well. If you're just in that world, it's just a psychological thing us humans have, is that, yeah, this person gets me, therefore he must have the solution as well.

Tim Eades [00:16:10]:

Yeah. The empathy, that credibility comes from understanding them, for sure.

Andrew Monaghan [00:16:16]:

So you're working with predominantly early stage, super early stage companies. I'm sure as you're going through the journey with them, someone, either the investors or the company themselves, is sitting there going, tapping their feet, going, all right, we need to get some customers. We need to go sell some stuff. Right? How do you advise companies about how to make that leap, to say, yeah, we've got to do this properly. Let's go do sales.

Tim Eades [00:16:38]:

Well, so I give you a funny story. So one of the stars I know, their first customer, Bay Area based, right? The first customer was in Japan, and the second one was in Taiwan. Right. The argument was, don't do that. The area code in the Bay Area, 650-40-8415, 510, sell close, look after those early customers. Proximity matters, and it could be proximity round near to you so that the engineers and that everybody and the UI people can kind of engage, or they have to be in the same vertical in some ways. But I just think that proximity to the office really matters because you really want to understand their experience and of using the product, engaging with the product and engaging with the company. But one of the things I always tell people, if you don't know what to do, start making a list of all the things you don't want. I don't want my first customer to be in Japan. Okay. I don't want my second one to be in Taiwan. Okay. Pretty good. No disrespect to those countries. I love those countries, but I want to be closer to my customers early on, and I think that's the path forward. So that's where I would go. Obviously, the venture guides always push for customers quicker. And it's funny, one of the things I'm doing at my new company now is something I've never done before, which is I'm hiring a customer success person before I hire my first salesperson because the customer engagement is going extremely well, but I need a proactive technical kind of person. Orion did this, I think, at Tanium early on. Orion is one of the best entrepreneurs in security by a mile. But one of the things I loved about that is the technical account management process and also the customer success model that he built. And so, yeah, analyteca, I refer to it as NewCo because we just got a name. We're going to hire a customer success person in the summer prior to a salesperson because we think that customer engagement model is absolutely critical early on.

Andrew Monaghan [00:18:33]:

But I would imagine, Tim, with some of your experience and your background, you can lead all the engagements with prospects, right? So that your customer success person will have a bank of customers to keep successful or get successful. There's a whole bunch of founders out there who are very technical or comfortable with going out and doing the selling site and want to as quick as they possibly can. How do I get this off my plate and give it to someone who knows what they're doing? How do you advise you on that tension between how long do you stay being founder, led selling or led engagements versus let's get someone in here who knows what they're doing?

Tim Eades [00:19:09]:

So I think founder led sales rarely stops. I think you're always going to have to do the executive touch. I mean, Diraj at Nutanix was an exceptional person at that. But I think the early on, I think you start to transition as you go through kind of two, three, four or five customers and it starts to build depending on the velocity of those, I think you start to turn around. I need somebody to do it because there's a whole bunch of reasons. A, you need separation from the CEO and the founder, right? B, these people are good. The early stage ones are like special forces people, right? You put them on the ground and say, here's three days of food, I'll see you in three weeks. There's no marketing budget, you got to live off the land. So let's go. I'll give you the air cover between my friends, my advisors and my venture, people will give you some air cover to get you in the room, but you're going to be living off the land. I can see you in that model is these people are also really good technical, creative, and very good at thinking on their feet about the fit and where it fits. And so, yeah, early on, special forces, there's a gentleman on the East Coast called Paul McGowan who I've worked with a bunch in the past. Spectacular early stage sales guy. Go get your first five, six customers, then hand it over to somebody else. Troy is another one. There's a few out there, but I would find find them. If they need help, we can always find them. And then between your order dates and my order dates and a bunch of people but you need these first few salespeople. The one or two salespeople are a rare breed. Right. Because very few of them will take it to 10 million to 20 million error. Very few of them. But they will have a roller dates of early adopter customers, and they will go after that market, because it's a bit like when you're selling into finance. Right. Back in the day, when E Trade was not part of Morgan, you'd always go to Morgan, always go to E Trade first, because Q cooper at the time was the CISO had built a culture around adopting early technologies, and the team was used to do it. They would get the best price as a result, for sure. No harm, no foul. Right. But you would go into those markets, and you have to know those early adopters by vertical, and then you can go in, and they're used to dealing with it, and they actually enjoy early technologies. On the salespeople side, you get those really unusual people. And two, they know that the early adopter customers yeah.

Andrew Monaghan [00:21:35]:

They're plugged into who those people are, and they're knowing. Right. I mean, they just know that this CISO, this company yeah. He takes calls and the loves helping early stage companies. Remember, I talked to one CISO probably ten years ago, and he had earmarked he had a big budget. Every year, he had earmarked $5 million to spend on early stage technology. And he knew some of it wasn't going to work out, but some of it would. Right. And it was part of what he wanted to bring to his company and his role, but also to the community. And knowing who these people are seems like half the battle sometimes.

Tim Eades [00:22:07]:

Yeah. Because what happens is the CISO drives the culture down of, like, hey, I want to engage in early tech. I need to see around corners. Right. And they need to jump curves on certain stuff. And Q is a fantastic example of that.

Andrew Monaghan [00:22:22]:

And the other side was they're comfortable in the uncertainty. Right. As you're saying, they don't have the bartending, they don't have leads. They barely got a laptop sometimes. Right. So someone who flourishes in that world as opposed to even just survives is a rare breed indeed. Right. How does someone know they've got someone. They're getting shoes to someone. How does a founder know? Yeah, there's someone who fits that mold that Tim was talking about.

Tim Eades [00:22:50]:

This hire, by the way, is also one of the most important hires. I mean, I still think the early tech team is probably the most important. The first five engineers are the most important. But this salesperson is almost like a market development person. Right. So you got to look at this person and test him and quiz him and go after his references really carefully. Because your product is your brand and your brand is your product. If this person is representing you going forward into these early adopter customers. You can't have that person go wrong. So you have to stay very close to them. A lot of the will come on. Hey. They don't have to come on as a full time employee. They'll come on as a consultant for four or five months and you pay them ten grand a month or whatever it's some sort of commission and maybe give the a little bit of equity. A lot of them have that model because they found their spot. Right? And they've got that rhythm and so a lot of them have that. And if the approach you, I want 225, 250 grand a year and a 450 OT. And I want one and a half percent of the company. And all that other stuff that's not there's signs there that if they're not willing to, as part of their model, get you to talk to two or three of their early adoptive friends, then they're not the people.

Andrew Monaghan [00:24:02]:

Interesting. Let's switch gears on this a little bit. We're going to play a game. Tim. I'm calling it Torres or Del Galic. You'll know intuitively what that means. But let me explain for the audience who might not know. So, Liverpool football club being around for 100 plus years. Two players who are well known in recent years. One is a guy called Fernando Torres and another one is called Candoglish. Let me give you the profile. So Fernando Torres was a superstar at Liverpool. Right? He scored 65 goals in 102 league games. He was there for three and a half seasons and those three and a half seasons were awesome. He was great in front of goal. He executed well and he was like the darling. Right? Darling of the cup for a while. But before Liverpool and after know he was definitely a rising star before he got there. Probably more rising than star. And then after Liverpool he didn't do very much. He went to probably seven or eight clubs after that and never really found his mark and his hit rate wasn't as good as it was in Liverpool. So you might call him maybe unfairly, a bit of a flash in the pan right, hot for a year or two. But then it could have died out. Douglish Kane. Gleesh. On the other hand. 13 years as a player. Seven years as a manager with a bit of overlap as player manager in the between. And when we say manager in EPL world that basically means head coach in the US world. Right? And commonly rated one of the top footballers in British football of last century. So effective and so well known and such a good person. He got named a sir after a. While. And when you go to Anfield to watch football there, you might be sitting in this Sir Kenny Doug Leash stand. So you might say, know dog Leash is longevity here forever transformed the football club, things like that. So we've got two different things. Taurus flash in the band. Doug Leash is here for a long time and making a big difference. So I'm going to give you a couple of things here and I'm going to ask you to say Taurus or Doug Leash and tell me why. Sound good?

Tim Eades [00:26:02]:

Yeah, totally. By the way, Taurus is flashing the pan goals he's scored against Man United.

Andrew Monaghan [00:26:09]:

That was huge, lurufo. Yeah.

Tim Eades [00:26:12]:

But after it, with Torres at center forward, we used to kick Man United.

Andrew Monaghan [00:26:18]:

Yeah. So let's do this. So, first one for Torres or Douglas, and I'll go with enterprise browser.

Tim Eades [00:26:26]:

Well, it's going to be a little controversial and some friends of mine will be upset with me, but I think it's more Torres. And I think the reason why is Taurus had three good seasons, lots of wins and made Liverpool a bunch of money. So let's start with that. But I don't think it's going to become part of a suite of capabilities provided by some of the Sassy people and the secure service edge and everything else. I think there's a consolidation model there. I go some friends at Ireland or the friends at Thailand. Mammoth is a fantastic company. I'm an investor in that company. Michael Shea is a superstar. But I think there's a place to make a lot of money there. But when the consolidation occurs, it's going to be like musical chairs, right, and you've got to find somewhere to land. Great solution. Particularly for third party suppliers. I think for third party suppliers, it's a really great play. I just think there's some challenges with it coming massive, that's all.

Andrew Monaghan [00:27:20]:

What do you think the threat is from Google and Microsoft? Given that they are in the browser.

Tim Eades [00:27:25]:

World, not to be ignored, it would be the short answer. I think anybody that ignores Microsoft in particular these days, with their security stuff, the said Italian moto patsy, very crazy. But, yeah, I think they are going to innovate and innovate and innovate and innovate, and I would not be in the way of that truck too much.

Andrew Monaghan [00:27:45]:

But to your point, it's musical chairs, right? When things start consolidating, there's a consolidation coming, right?

Tim Eades [00:27:51]:

I mean, like, Netscope could get into the market, zscaler could get into that market. There's a bunch of people that could come into that market. Sanjay over Netscape is a superstar, jay's a superstar at, you know, these are good people, but, you know, the only have to have some of the capability to start rolling into the enterprise level agreements.

Andrew Monaghan [00:28:09]:

All right, so enterprise browsers, torres, let's go next.

Tim Eades [00:28:12]:

With Zero Trust, I think Zero Trust is Douglas, and that's partly because the longevity to solve the problem and the complexity of the problem. I think Zero Trust, whether it's identity based zero Trust, or whether it's your application based zero Trust, I think obviously when Biden came out with his mandate, it confused a lot of people because everyone was like, really? Can you be a little bit more specific? But it's a complex problem, particularly if you look at hybrid enterprises and hybrid cloud and then the diversity of how you implement it, whether it's a device based, whether it's a smart device, whether it's an application, whether you look at it from an identity perspective. But I think it's absolutely a necessity. So I think it's a journey that people would start on. But I think it's like Kenny played for what, 1213 seasons? So I think it's going to be a decade long program, at least.

Andrew Monaghan [00:29:02]:

It feels like the essence of Zero Trust has been sullied a little bit by people claiming Zero Trust features and things like that in their products when essentially it's a mindset to bring to deliver security in which there's all sorts of different ways to do that. Right. It seems like it's been modeled a little bit.

Tim Eades [00:29:20]:

Yeah, it's a multilayered framework, and you've got to start at it in an organized way and start to build a program around it. It's a bit like if you suddenly want to get fit, you can't suddenly run a marathon. You go to build a program around it and do it over a period of time.

Andrew Monaghan [00:29:34]:

All right, next one. Taurus or dog leash? Whiz.

Tim Eades [00:29:38]:

Wow. Well, actually so here's an interesting thing. If you ever go there's a really interesting read if you CrowdStrike before going public, obviously had the father s one, and you can go look at George, george's margin back three years before they went public. At one point before they went public, three years before they went public, I think they're running on like 37% margin, 40% margin, and only later as they came closer to the IPO and do they rotate their margins. And because they can get greater mass in the cloud now, I think they're running at like 77 or 80% margin, and Wiz has to go through the same transition. So, yes, they grow really fast, but their margins, because the way they consume the cloud costs of the customer and the way they charge their own costs back to the customer is not what it should be. So they're growing extremely fast. My friend is the product guy there, so wow. Torres or Doug Leash. Wow, that's a toughie. That's a real toughie. I'll go with Doug leash. But it's a real close one, because making that margin transition, the way that they've got the revenue up so high is they consume a bunch of costs and pass that cost back to the customer. It's a fascinating model, but at some point, you've got to get the economics right in order to go public. So I'll go with Doug Lease but, man, it's a close one. It was incredibly successful and made a lot of money.

Andrew Monaghan [00:31:01]:

Yeah, I know. It's not all bad, right? I'm not saying it's bad, I'm just saying there's a time frame involved, I guess, is where I was going with this. I'm from Scotland, right? We're simple people, so let me see if I understand what you were saying. So, because of the nature of what they do, they've go costs on the Cog side, right, to be able to build and deliver what they're doing. And to your point, they're offering a 20% gross margin right now, and then after that comes all the sales and marketing expenses, things like that. But to be able to have a viable company that you can do something with, you need that gross margin to be a lot higher, otherwise it's always going to be eating money for you.

Tim Eades [00:31:40]:

Yeah. So what happens is, in the old world, when you were selling on premise software, you would run it like 95, 96, 97% margin. If you're running a SaaS business, you typically run at 80 ish a little bit below, a little bit above, but margin. What a lot of companies are doing these days in the startup world is they will take the cost of their own. Let's say I'm selling to Andrew at Nike or whatever, and I'm trying to sell them here's some cloud costs. I have my cloud costs to actually run the solution for Andrew, I will package up those costs and pass them on. So therefore, I have a cost of goods that know most people wouldn't pass on. But this is what a lot of staffs are doing and by doing that, it impacts their margin. Now, at some point, you've got to rotate the economics because the public market expects you to have higher margin.

Andrew Monaghan [00:32:24]:

All right, last one. So topical right now, torres or Doug Leash AI to help cybersecurity. Let's say operations teams do their jobs a lot better.

Tim Eades [00:32:37]:

100%. Doug Leash, 100%.

Andrew Monaghan [00:32:40]:

Tell me more.

Tim Eades [00:32:41]:

I think it's absolutely scary when you look around the corner of AI in this world. I mean, if you just take one simple thing, one attack vector that we've all looked at for years and said email and phishing attacks, right? The ability to emulate Tim and a phishing attack is getting better and better and better and better and better. And we're not in the first few minutes of the first half of Genitive AI. And I think what you're going to find is next year and the year after that, I think it's going to get really bad. And so the SoC teams need all the love that they can get. And if I was a CISO, a lot of my friends are carving out money and budget and time and education of where this can go will be my top priority right now.

Andrew Monaghan [00:33:31]:

Do you think this is going to make a huge impact on the skill shortage and the talent shortage that we have in cybersecurity?

Tim Eades [00:33:38]:

That's a great question. I don't know, I'm obviously more of an optimist, otherwise you wouldn't do startups and help startup and you kind of believe in the future of things. I think it creates for the right individuals, it creates a whole new thing to get involved into security and to a whole level of excitement to understand it and see the other side of the coin. And it's going to take offense and defense to a whole nother level. And if you don't get excited about that, then you shouldn't be in security anyway. But this is going to elevate everybody's game. The average hacker just became great, right? So we got to do the same on the defensive side. So I think it will have a short term impact on the negative because the resources are already split too thin and that's why you'll see more MDR companies and everything else grow like Arctic wolf and stuff. But I do think longer term it creates a real interesting fight and if people are interested in it, it's a real fascinating offense. Defense play.

Andrew Monaghan [00:34:34]:

Yeah, it feels like full of potential and opportunity and excitement, but as you say, we are basically getting off the blocks right now, it seems like.

Tim Eades [00:34:42]:

Yeah, but everybody should be carving out time, space, budget to go learn about it.

Andrew Monaghan [00:34:50]:

Tim, before we go any further, let's get to know a little bit more about you. I'm going to ask you to pick three numbers randomly between one and 35. And I'm going to read out the question that these numbers correspond to.

Tim Eades [00:35:02]:

All right? 23, seven, one.

Andrew Monaghan [00:35:06]:

Okay, this is not by design, but 23 is red or blue.

Tim Eades [00:35:11]:

It's red for sure.

Andrew Monaghan [00:35:12]:

So for those that don't know, Tim, talk about the shirt you're wearing right now. Actually, if you're watching the video, you'll see this. If you're audio only, you won't.

Tim Eades [00:35:21]:

I'm a Liverpool fan. Diehard Liverpool fan, ever since 74 when Keegan put the past Newcastle in the FA Cup final.

Andrew Monaghan [00:35:28]:

So for the people in the US who don't know, liverpool are playing red. So when I ask Tim red or blue, it's going to be red every single time, right?

Tim Eades [00:35:35]:

Yeah. Because Everton is blue.

Andrew Monaghan [00:35:37]:

Everton is blue, yeah, exactly. All right, seven is so we are in a really hectic busy world right now. All sorts of things coming at us from all sorts of directions. When or where do you do your best thinking?

Tim Eades [00:35:51]:

I do it first thing in the morning for sure. And everybody always says their best ideas come to them when they're in the shower. I think the best ideas come to me when I'm in a shower, but actually, when I have a problem that I can't seem to get through and I can't get the sequence of solving the problem, I actually go for a ride on the bike and I just ride up the hills where I live and I come back. I remember when I was at Sauna Security 18, 1920 years ago, the CEO at the time, I was just running sales and marketing. The CEO at the time would tell me, Go for a ride on my bike. You always solve problems on a bike. Go for a ride on a bike. So he'd send me home, literally. It was quite funny.

Andrew Monaghan [00:36:29]:

That's funny. What I find is I get a lot of learnings from podcast. Obviously, I do a podcast. I've been into podcasts for years, but I need to break that habit sometimes and just go on walks with the dogs in silent mode. Right. And not have this thing constantly talking to me in the ear. Because you lose that precious time of just being at one with nature and getting time to think things through.

Tim Eades [00:36:51]:

Yeah. And being on your own. Just kind of separate.

Andrew Monaghan [00:36:55]:

Yeah. I heard someone say, you'll be okay with boredom because the boredom is what's going to get your mind kind of thinking about all these things.

Tim Eades [00:37:02]:

Yeah. You have to be your own company, for sure.

Andrew Monaghan [00:37:04]:

Yes. So, last question. I'm going to modify this one a little bit. As a child of the UK, in the question for you is mods rockers or punks?

Tim Eades [00:37:14]:

Oh, punks every day of the week. Yeah.

Andrew Monaghan [00:37:16]:

Why is that?

Tim Eades [00:37:17]:

Saw the Pistols, didn't see the Clash, which I was devastated about. Saw Joe Strummer come on with a pogues once and sing the entire set because Shane McGowan was too drunk to sing it. I saw The Dam, all that stuff, for sure.

Andrew Monaghan [00:37:28]:

You know, what I saw recently was Springsteen was touring, or still is touring in Europe, and when he was in Dublin, he went to see Shane McGowan and he looks very different.

Tim Eades [00:37:37]:

Yes, I saw that. Yeah. Bless him. He's ill now.

Andrew Monaghan [00:37:40]:

Yeah.

Tim Eades [00:37:40]:

I still got a big hole in my left shin where I put my foot through the floorboards at a post concert in like, 87 or 88. Yeah.

Andrew Monaghan [00:37:48]:

Oh, that's awesome. So you're a punk at heart, then?

Tim Eades [00:37:51]:

Yeah, I used to have a bleached, Tomahawk Mahican.

Andrew Monaghan [00:37:54]:

Oh, is that right?

Tim Eades [00:37:55]:

Yeah, I was even best man for somebody at a wedding with it, and it was crazy because I had to try to calm it down for the wedding from the wedding photographs, and it didn't get much calm.

Andrew Monaghan [00:38:08]:

When did you lose the Mohawk?

Tim Eades [00:38:10]:

I had it for years, so I probably had it from like 86 to 89 or 90, something like that. Yeah, probably 90, maybe even 91. Yeah. I stopped bleaching it. My hair used to fall out.

Andrew Monaghan [00:38:24]:

It's funny. Funny things you do to yourself when you're younger, right? Yeah.

Tim Eades [00:38:28]:

I used to used to have the hairdryer between your forearms and a can of hairspray in each hand to try and get the line right.

Andrew Monaghan [00:38:37]:

Last question for you, Tim. In general, 3400 vendors out there in cybersecurity, more or less somewhere in that region. That's a lot, right? When I first started doing this 20 years ago, I don't know how many there were, but it was a lot less than that. But it does mean that it's hard for your companies, your portfolio companies, and the company that you're in stealth mode with right now at an attack to stand out and be noticed and someone want to care to listen to you and what you're doing now. You've got your role decks and you've got your network so you can go to have those conversations. But for someone else who doesn't have all that right now, how do you talk to your portfolio companies to say, you got to think about how you're going to get that mind share out there?

Tim Eades [00:39:20]:

It's a spectacular question. So the way I look at it is happy customers. You can't build a company, sell a company, fund a company without happy customers. So start with that mentality and then start to understand the customers that you've got in a really deep way. The old book, Jeffrey Moore and Paul's, especially a very dear friend of mine, or Crossing the Chasm still works, right? And when you're inside the bowling pin analogy, where you're going in by vertical and understanding those customers and creating kind of a community effect through customer engagement and product led sales cycles, you can create a really interesting community model. So how do you do it? I think you've really got to stick to closer to the customer. Your customers are your best salespeople for sure. Creating a model where your customers create that viral capability, creating that engagement model and sticking to things in the enterprise model, I still think you've got verticals matter, right? Like we talked about earlier, terminology, vocabulary, positioning into those things, pricing, how they know how to do it, all of these things really, really matters. But it's all about the customer. It's all about getting your first few customers, understanding them, making them your best salespeople, making them your champions, and then building out the knowledge around the verticals and why them and why would their peers buy it? And then creating that knowledge cycle is critical. It's the only way.

Andrew Monaghan [00:40:44]:

So we want them when they're in their slack communities, right? They're talking about things and saying, does anyone know anyone that does this? They want to go out there and go, yes, and I back. These people have done so much for me that I highly encourage you to go talk to them.

Tim Eades [00:40:59]:

Yeah, 100%. Creating that feel, that whirlwind around those opportunities and this customer love is critical. I mean, the other thing I would say is the biggest thing that I see startups go wrong, the moment, which is a concern is I call it the three who's. They lose sight of the three who's, who's your economic buyer, who is your technical recommender, and who is the operator of your product? If they don't know those three things, you get lost. And it's not, I'm going to call the CISO. No, you can't all go to him. Right. And so you've got to know your three who's. And the challenge is, sometimes in certain organizations, they're too diverse. If they're too diverse, it's going to be very difficult to get that business off the ground because you want them as close in the same organizational structure as possible. And you've got to know them. You got to know them by title. And then you can replicate your model by title because it's peer groups. And then you make the first 5610, 20 absolutely in love with you, your champions. And then you can spiral and then get the thing really moving. But if you lose sight of the three hoots, then I think you're in real trouble.

Andrew Monaghan [00:42:10]:

One of the things that I've talked to some of my clients about is you want that, but you can't leave that to chance, that they'll then be an advocate. Right. It's almost like you need to handhold them or create opportunities for them to advocate for you. Right. Hope is not a great strategy when it comes to them going off and advocating for you. Have you got any experiences about how best to hold their hand to be the advocate?

Tim Eades [00:42:35]:

Yeah, I think this Customer Success Person hiring a Customer Success Person, we did it too late at my last company. We're doing it even before a salesperson at this company, I think Customer Success Person who is technical proactive and can relate to customers really well. There was a gentleman I hired at Silvertail, my second company called Tony Gampacorta. And Tony was like, yoda at this. It was just natural for him to engage at customers and engage with them proactively. David at Viabo, we fantastic at it, but we hired him too late, in my opinion, because we should have hired him really early on. And that's where I'm going now. So I think getting that skill set in the company helps the DNA of the company, but also drives that program, if you will, into your 1st, 510, 2030, 40, 50 customers, if you do it right.

Andrew Monaghan [00:43:25]:

That's awesome. Well, I think it's somewhat appropriate that in 2023 we're wrapping up a sales podcast, talking about much bigger things than just sales and talking about customer success and things like that. So to me, that's very apropos. So, Tim, if someone wants to get hold of you and start a conversation, what's the best way to do that?

Tim Eades [00:43:42]:

It's just Tim@anotech.com is my email that I check the most. How about that?

Andrew Monaghan [00:43:47]:

Very good. I'll make sure that's in the show notes as well. Tim, I love having you on. Love talking about our shared passion for Liverpool Football Club and obviously for Cybersecurity as well. So it was a pleasure.

Tim Eades [00:43:58]:

This has been awesome.

Andrew Monaghan [00:43:59]:

Well, that was a real joy for me to have the conversation with. Tim really felt like he's doing so much good in the community, so much good with early stage cybersecurity companies, and really got great perspective and got the ability to have a super engaging conversation, tell great stories and anecdotes and things like that. So for me, that was just a really meaningful conversation for me. I hope you forgive me for the UK culture references and the soccer, the football from England as well, but I was trying to make it interesting and relevant for everyone involved. So, three takeaways from me. One thing that Sean threw for me all the way through was what Tim was talking about, his desire. And I think that's core to him is the desire to help, right? And think about when he was first talking about how he got into investing. He said that he was the one that was seeking advice from people, as he was earlier in his career. But rather than just be a taker all the time, he wanted to show up to these meetings and have a two way conversation. So he put the time in to read and understand and get to know the markets, the dynamics of what was going on, things like that. So rather than just be there, always asking questions, he was able to be a contributor and build better relationships that way. So he was giving, not just taking in those early stages of his career, and also just engaging throughout to help companies when they're super early, right? They've got the PowerPoint and the dream. They've got a set process at CMF to get these people into the fold. Understand about them, learn about them. Feel like if it's a good fit and the source of human beings they want to work with and take. Them through that process so they even get to the point where they're able to raise some money, if that's what they want to be able to do. So for me, the narrative throughout the whole thing was doing things to help these companies and these founders get going and be successful. Second thing that I thought was really interesting, when he was talking about the desire to invest early in customer success, and he said that there was one company where they went early and it worked well. There's one where it worked well, but it was a little bit late. I think in V Armor he was saying that, and what he's doing at this new company is making sure that they invest early in CSS. I think he even said before hiring salespeople, that's not normal, right? I think it's usually the thing that we hear that you want to invest in sales, and then when you've got X number, I don't know what number is 10, 15, 20 customers, then you need to think about CS. But as Tim said, it's all about delighting customers, making the just unbelievably happy with what they get from you, learning from them, adapting the product to adapting your whole company. I guess, to what you learned from those early interactions and knowing it inside out. So that it's easy for both you as a vendor, but also for them as the customer, to advocate to others that this is the right tool, the right company, the right people to work with. So invest early in CS was a takeaway from me. And then the last thing was, it was super interesting when he's talking about that rare breed of salesperson who flourishes in those early stage companies, they come in super early when there's not much there, they don't expect much. The know that right. And it's the environment in which they know very well. And as Tim said, having that role decks to know where to go is a valuable asset these days. Right? We talked about 3400 vendors in cybersecurity right now. If you don't have people that know people, it's hard to break through and rise above the noise. There's many things have to go your way for that to come true. But as he said, if you get those people that just know who the right people are, have access to the right people and flourish in that environment I think the phrase that he used, which I just loved, was you give them three days of food and tell them you'll see them in three weeks and they're okay with that. They expect it, understand it, and flourish in those environments. And that's a rare breed to find, but they're out there for sure. So, three takeaways from me, super interesting conversation, and I hope to have Tim on again in the future, and maybe we'll do more episodes like this and talk about his experience, and maybe even some of his portfolio company experiences of working with them and what they learned along the way. So Tim and the team at CMF, and also the company he's building, Enetac, wish you every success for this year.