Geography has played a role in the success of KnowBe4, a Clearwater-based cybersecurity training firm.
“We are now the world’s largest player in our space. We have competition in Silicon Valley and New York, and being in Tampa Bay is a massive competitive advantage,” said Stu Sjouwerman, CEO.
Sjouwerman and Marcin Kleczynski, CEO of Malwarebytes, talked about location, talent and what it takes for a startup to succeed in a wide-ranging 25-minute conversation at poweredUP, Tampa Bay Tech’s technology festival.
A lot of similarities between the companies emerged during the CEO2CEO panel. Each company has about 700 employees and has been rapidly growing, as they stake big claims in the cybersecurity space. Malwarebytes offers software to individuals and business to protect their devices, or endpoints, from advanced malware and virus threats. KnowBe4 educates users to operate on the internet more safely by providing awareness training and simulated phishing to address the problem of social engineering.
But Malwarebytes is based in Silicon Valley, while KnowBe4 is headquartered in Clearwater. Real estate costs are a key difference between the two locations.
“Just the fact that we are paying $20 a square foot, versus San Francisco where you pay $100 and then you are looking at a dark damp cellar, by itself is already enough,” Sjouwerman said.
Silicon Valley is “busting at the seams” and the costs are unbearable, Kleczynski said. Most of Malwarebytes’ product engineering is done at its office in Clearwater.
It’s relatively easy to find employees in sales, customers support or accounting in the Tampa-St. Pete area, but finding engineering talent locally be a challenge, Sjouwerman said.
“We have a team of people who do nothing but recruiting and we hire engineers from anywhere you can. Although if you tell them it’s Tampa Bay, it’s generally not that hard to get them to move, provided there’s a good relocation package and an exciting team to work with,” Sjouwerman said. “From an engineering perspective, money isn’t necessarily the first thing they are looking for. They want to be in an environment where they can solve really hard problems with a really good team and learn new skills. If you provide that, it is not that hard to get good people.”
The mission and the culture of a company matter, Kleczynski said. “Awesome people want to work with awesome people.”
One of the challenges Kleczynski has faced is hiring the right talent.
“Marry the believers, divorce the naysayers,” he said. “The people around you know that person is a problem before you even knew they were a problem. Act more quickly on the wrong people on the team. Every day that goes on, they are making micro decisions that affect you longterm.”
KnowBe4 is extremely picky about hiring, Sjouwerman said. The company gets 3,000 resumes a month and hires one-half of 1 percent of those who send in a resume.
The two entrepreneurs also offered some advice to other startup founders.
Stamina is key, Kleczynski said.
“You won’t get anywhere in six to nine months. To be a startup founder you need to be relentless. You need to have runway. You can’t think six months at a time. You need to think longterm and just be ruthless in getting to whatever your goal may be,” he said.
It took Klezcynski four years to make his first dollar. Sjouwerman also didn’t take a salary for four years.
“It takes twice the amount of time and three times the amount of money that you think it will,” Sjouwerman said.
Product-market fit is key and has to happen early on, Sjouwerman said. “You need to research to really find out what is truly a needed product that will translate into customer purchases.”
Both CEOs agreed that their services are desperately needed to keep a growing number of “bad guys” from wreaking cyber havoc.
“We are very complimentary,” Sjouwerman said. “It all boils down to a combination of policy, procedures and process. Some of it is software and some of it is humans. If we want to keep the Russians and the Chinese out of our systems, we all need to band together and make sure our networks are very hard to break. There’s no absolutes, if you have resources and time and money the bad guys will always get in, but you can make it as hard as humanly possible.”