00:05:30 · Varun Badhwar, Siddhartha Ahluwalia
And so the commonality in CypherCloud and uh later Redlock, and as we talk about Endor, I'm sure we'll get to that, but was always these big technology shifts and its implication to cyber and cybersecurity and safety, um, and really creating new markets for problems most people couldn't even comprehend, and how we had to educate the market, create budgets, and eventually create category-defining companies. [00:05:56] S1: So, how was the journey, you know, when you became ultimately the CEO at Red Lock, raising money, getting the first few customers? Because before that, you were mostly on the product and engineering side.
00:06:09 · Varun Badhwar
[00:06:09] S0: Look, I've I've always been obsessed with customers, customer needs, customer use cases. And I've generally been um I've had enough uh to be dangerous knowledge on product and technical side as well as on the business and sales side. And so I think for me it was a natural thing to become CEO. But I'll tell you like nothing gets nothing prepares you for it. It's a lonely job. First thing I tell people is the buck stops with you, right? The consequences of decisions you make for days, weeks, months, and years are based on what you chose. As a founder, there's no book you you know you have read and you follow the track on. The reason we're creating something is because you're trying to do something that hasn't been done before, or you're solving a problem that hasn't been solved before. So it's not like I can follow somebody's playbook and do it. And I think it's a lot of part art, part science. So intuition matters a lot. Instincts matter a lot. To this date, I usually say that, you know, when I'm interviewing candidates as an example, usually I feel like in the first five minutes, I have a high degree of confidence if this person is gonna be the right fit for us or not. This next 55 minutes or longer that I spend in the conversation is really getting to the details. So instinct development matters a lot. And I feel like I had developed that over my first two startups. Uh, I'd also learned about just how important it is not to take shortcuts. I think usually people will think about, well, I just got to get this out. Let me just create something. But if you think about Redlock, you know, in three years, we went from uh first idea to an exit, a very large successful exit. But three years and one day later, we were thinking about how to service 65,000 Palo Alto networks customers post-acquisition. And we took that business from five, 10 million ARR to 100 million error. And I'm talking about doing this in 2018, 2019. We couldn't have done it if we had all these shortcuts on our platform and everything was held by Band-Aid and Duct tape. So, yeah, I think some foundational aspects of build for scale from day one. Yes, you got to be scrappy, but you've got to really look around the corners. Intuition and gut matters as much as science and what you've learned in school matters, were probably the big things I've taken away.
00:08:29 · Varun Badhwar, Siddhartha Ahluwalia
And the importance of investing in the right team upfront. I think we made the mistake early on in the first couple of companies where it was like, well, we don't have a lot of funding. Let's figure out how do we cut corners. And I just realized eventually, even like your equity, right? As a founder, you don't want to give up too much equity. Um, but you can only build a successful company if you share the wealth and you find the best talent and kind of unconstrain yourself to do that. [00:08:58] S1: So, so let's compare your journey now in Redlock, right? How much did you raise in the first few rounds and how big did your team get before you got acquired?
00:08:58 · Siddhartha Ahluwalia, Varun Badhwar
[00:08:58] S1: So, so let's compare your journey now in Redlock, right? How much did you raise in the first few rounds and how big did your team get before you got acquired? [00:09:07] S0: So with Redlock, we had raised a 2.5 million seed and about an $8 million Series A. So we were very capital efficient as a company. We'd raised under $12 million in funding. The company was about 85 people, split half and half between India, uh, Bangalore, and US. And um, you know, we were closing in on the first 10 million of ARR, a short amount of time actually, from inception to that point. And the exit was uh, you know, close to $250 million exit for the company, which was an incredible return for all our investors. It was life-changing for every employee because, again, I believe in investing in people, you know, a lot of times people say, well, in India, when you're hiring employees, they care more about cash, less about equity. And I would always educate people like, look, salaries pay the bills, but life-changing moments come from equity. And I think it's really interesting, even when I look back now, many years from now, I'll get a text message from somebody saying, Look, I bought the second vacation house. This is all thanks to you know the redlock run I had, or you know, I've got this nice new car, couldn't have it done without redlock. So I think it's very fulfilling knowing that it was not just a wealth creation event for investors and founders, but for every individual that worked in this company.
00:09:07 · Varun Badhwar, Siddhartha Ahluwalia
[00:09:07] S0: So with Redlock, we had raised a 2.5 million seed and about an $8 million Series A. So we were very capital efficient as a company. We'd raised under $12 million in funding. The company was about 85 people, split half and half between India, uh, Bangalore, and US. And um, you know, we were closing in on the first 10 million of ARR, a short amount of time actually, from inception to that point. And the exit was uh, you know, close to $250 million exit for the company, which was an incredible return for all our investors. It was life-changing for every employee because, again, I believe in investing in people, you know, a lot of times people say, well, in India, when you're hiring employees, they care more about cash, less about equity. And I would always educate people like, look, salaries pay the bills, but life-changing moments come from equity. And I think it's really interesting, even when I look back now, many years from now, I'll get a text message from somebody saying, Look, I bought the second vacation house. This is all thanks to you know the redlock run I had, or you know, I've got this nice new car, couldn't have it done without redlock. So I think it's very fulfilling knowing that it was not just a wealth creation event for investors and founders, but for every individual that worked in this company. [00:10:26] S1: And uh you ultimately created Prisma Cloud, which became uh one of the core infrastructures of Palo Alto. [00:10:35] S0: Yeah. [00:10:36] S1: Right. So how was that so strategic to Palo Alto? Did you realize that at that point in time?
00:10:43 · Varun Badhwar
[00:10:43] S0: I I don't know if anybody could have realized how strategic it could have been. It was certainly strategic, and I'll tell you a small story around this. Um Nikesh had just come in, Nikesh Arora had just come in as the CEO of Palo Alto Networks. Um it was the first acquisition he was making. Remember at the time, people were wondering why this non-cybersecurity person is a Googler coming in and taking over the realm of a cybersecurity company. Palo Alto was known for firewalls and network security. And the craziest part that most people don't remember is a couple of months before Nikesh joined, Palo Alto Networks had made one of its biggest ever acquisitions of a direct competitor of Redlock, a company called Evident.io. And the interesting thing is after that acquisition, you know, Endor, I'm sorry, Redlock was really deep into um winning even more accounts. Like we got even more momentum after the acquisition while Evident was busy getting acquired, and you know, they were limited to AWS, Endor, uh, sorry, I keep saying Endor, Redlock was much more gravitated around multi-cloud. And you know, the architecture was fundamentally different. And so we were scaling and we were beating Evident and Palo Alto Networks on a lot of deals. And so when Nikesh came around and the team said, Hey, you should come meet Nikesh, I just said, like, you're my biggest competitor, you know, I'm not going to waste my time. And long story short, Nikesh and I met had a meeting in the minds. He said, Look, I'm making a bet in this, you have to make a bet in me. He created very big goals that I thought were fundamentally unachievable. But kudos to him because the only way it was possible to scale this thing up is to not tuck Redlock as part of the network security business. But he allowed us to create an entirely new business unit that had never been done before. We used to call it a speed boat. So if you think about the big network security business as a mega yacht sailing in the middle of the ocean, cloud security was a new business. You needed a speedboat to be scrappy, move fast, and catch up to the core business.