Archive

Posts Tagged ‘woodruff-sawyer’

Off To The Races & Billion Dollar Valuations…

December 13th, 2016 Comments off

With the original Cylance team established in July of 2012, the orchestra came together and at that time there as a unified vision to transform the security market and change the way that corporations were thinking about their security infrastructure. We were less than a dozen people working in the living room and bedrooms with a goal of security transformation, and in the eyes of our founder, achieving a billion dollar valuation inside of 4-5 years. When you’re starting on fold-up tables there is no blue print to getting there…only a bit of a dream. However, that’s exactly what the team was doing in those early weeks and few months…creating the blueprint on white boards and oversized post-it notes. The team was sparring on a daily basis on what approach would achieve the best commercial results. It was all about specifically identifying the value proposition behind the vision of the tech that had been decided. While we were not trying to build a new company in a high growth sector, we knew the security sector was dominated by dinosaurs and there was billions in revenue that were ripe for disruption. Cylance was going to be the disrupting force in the equation and that exactly what the team was focused and unified on accomplishing.
We also knew that we could accomplish the goal while being very surgical in our spend and that our success would be based on a breakthrough tech and not spending tens of millions on advertising campaigns, spending ridiculous amount early on trade shows, non-value add events, as well as keeping our hiring cadence under strict control. The company cash burn was extremely minimal in the early stages and it was nearly 18-months before the company received its second round of investment in February of 2014. As we continued to bolster our headcount, invest in the Services team, and gradually moved into new offices, the original $15M investment lasted that first 18-months. Again, we were extremely surgical in our spend and spent every dollar like it was our last dollar. A philosophy that managed to last the better part of almost 4-years…
While the Research team was focused on developing the product there were a host of other operational issues to address as we started to grow as a company and would need a foundation for the first few years. First on the list was to find commercial space as we would definitely need to move out of the house. While a remodel was imminent, we were also working in a space where there were water leaks, open beams with exposed nails, and all the other fun elements of a home start-up! You can imagine the response received when you’re trying to meet with The Irvine Company on a commercial lease, as a new company, no revenue, and you want to sign a 5-year lease and then have them pick up all the buildout and incorporate into the lease rate so as to minimize any immediate cash burn. On top of that…and as a start-up…you’re also asking them to have certain restrictions on competitors worked into the lease as well. Suffice to say that we had a pretty weak position and it took more than a few meetings to get them to buy into our vision and the growth we were looking at achieving. At that stage, it was a huge accomplishment to get our lease signed with The Irvine Company, in a premier location, with building top signage on both sides….and all with a minimal security deposit. Score one for Cylance!
Even with our new lease, we kept our spend to prudent levels that were consistent with our philosophy. Rather than spend six-figure amounts on furniture, we committed to a new entry level offering from Steelcase that could easily be added to as we grew…but not before staying on fold up tables for many months before getting into our new space. We all tended to joke that fold-up tables had become part of the Cylance DNA.
Next on the list was our corporate insurance portfolio. Rewind to the start-up that had no revenues, still had less than a few dozen employees, had actually been turned down by Marsh for being “too small”, but seeking coverage in the low 7-figures. I looked to a prior relationship and again found a partner that believed in our vision as well. Fast forward a few months later and securing our first few customers and we were already going back to ask for additional increases in coverage to the mid-seven figure range. This drill continued on almost a quarterly basis until a final larger customer pushed the coverage limit again…to a point that exceeded our billings on even a cumulative basis. Again, transparency and strength in our relationship got the coverage in place. While there was certainly some raised eyebrows, they believed in Cylance and continue to realize the benefits of the relationship, which now extends on a global basis. Again, it came down to relationships, communication, and a mutual respect on both sides to manage the expectations on such a hyper growth path.
Marketing? The first few shows were an absolute kick to plan being the new kid on the block. Our burn was primarily aimed at headcount support, but we also knew we needed to start getting the Cylance name out there. For the first few RSA and Blackhat shows we had the luxury of being an unknown and used it to our full advantage as the team rolled out a full guerrilla assault on the show. With everything from custom napkins dropped in bars, to rented suites to meet with potential customers, to other similar means, we made a huge impact in those early days and clearly got the Cylance name out there. Not immediately recognized post-show, but we established the open ended question of “Cylance?”. We were clearly on the radar at that point…and already starting to create discomfort with our competitors.
At this point, there was still a unified team, all engaged in the same direction, and we knew the end play we were headed for. We knew we were going to be able to achieve our objectives without putting excessive spend in place. What I appreciated at this point, which was similar to the philosophy we had in place at DC, was that we were operating in a brand first capacity. There were no decisions made in the best interests of a person, department, or other agenda…it was all about Cylance. With this philosophy politics were still being avoided and there were no silos in place. We all bled green. Along with this approach was the continued prudence in spend throughout every level in the organization. We were pacing well, the product was coming along, and all indications was that once product was commercialized in 2014 we were going to start eating our competitors lunch. What our competitors didn’t hear was the increasing sound of the Cylance war drums and their sunset turning a bright shade of green…
Thanks for reading.
Jeffrey Ishmael

Are You Managing Your Risks…& Your Expenses?

November 21st, 2013 Comments off

I often discuss the need to have strong partners for all areas of your business. While those partners may not always necessarily be the most economical, there’s the comfort that the services or product they deliver will provide the quality and protection you need so you can stay focused on the business. In the case of our company, as we have continued to expand the profile of client we are dealing with, we have had to increase our corporate insurance levels in order to meet certain vendor requirements.

Although we had previously reached coverage levels that would be sufficient for any of our clients, we were also faced with an environment of increasing risk premiums. In fact, in the October-13 edition of CFO, they cited that “the average expense that corporations incurred for risk management jumped 5% last year”.  It was pretty satisfying to proceed with our most current renewal and see a double digit decrease in our premiums while receiving more robust coverage levels. Nor did we achieve the decrease by going with lower quality insurers either as we continue to engage with A-level insurers highly recognized in the market.

It’s examples like this that become a nice testament to the quality of a network and the results they are able to deliver. Do you have the same quality and commitment within your own network? If not, it might be worth a bit of homework to harvest some of those hidden savings.

Thanks for reading.

Jeffrey Ishmael

FEI/Woodruff Saywer Panel: Securing Your First Board of Directors Seat

February 11th, 2010 Comments off

            Last night I had the chance to attend another great FEI dinner for what has been a great 2010 season. Although the events have all been memorable this year, last night provided another opportunity to revisit the topic of securing your first Board of Directors seat. It was a repeat of the panel hosted earlier in the year by Woodruff-Sawyer, which also happens to be a sponsore of the Orange County Chapter of FEI.  Also a good opportunity to catch-up with Ron Pakhouz and Jared Pelissier and hear about their great start to this year and the new clients they’ve been signing.

            For the panel last night, we were also fortunate enough to have the same high-caliber panel, which include Paul Folino (Chairman of Emulex), Priya Huskins (D&O expert extraordinare of Woodruff-Saywer), and Bruce Lachenauer, who specializes in Board member recruitment. I’m not going to go into a full overview of the panel, since much of what was discussed at the earlier one was repeated here. However, below are some of the key takeaway points by the panel members last night.

 

– More HR positions relative to the Comp committee.

– 40% of current new Board members are brand new vs. 16% previously.

– Last 4-months Board activity is up 40%.

– Large increase due to need for financial expertise.

            A. 25% are CFO’s

            B. 25% are from Audit firms

            C. 25% are from Investment Banks.

            D. 25% from other functions.

– “The days of the Generalist on the board are dissipating…” – Folino

– Develop a Board that has broad-based strengths and can contribute to all areas… – Folino

– Regardless of your functional area of expertise, you better be able to have a valuable point of view/position on all Board issues – Priya Huskins

– What can you do to make yourself a more attractive Board candidate? – Bruce Lachenauer

– There is no on-the-job training for a Board…you need to hit the ground running – Lachenauer

– How do you leverage Private or Non-Profit Board experience to Public? Typically there are Public individuals sitting on the former. – Folino

– I can’t think of a better time for individuals to be looking for Board seats than now. – Folino

– It’s not just about D&O insurance, it’s about the conduct leading up to questionable events and the quality of due diligence. – Lachenauer

– It moves beyond more than just the financial risk, but the risk to your personal reputation – Folino

– There’s an absolute need to scrutinize your fellow Board members & their reputations – Huskins

– What are the opportunities to interview the Executive Team of the company before making a decision? – Lachenauer

– I can’t imagine not having someone w/ a strong legal background on the Board when it comes to M&A activities. – Folino

– Participating as a Board members vs Advisors involves a much higher level of accountability. – Huskins

– This is the first year that Brokers will not be able to cast votes for Board members, which may create a very interesting environment for Board retention. – Huskins

– The Nominating Committee is now usually headed up by an outside Director as opposed to the CEO. – Folino

Woodruff-Sawyer Board Panel: Conclusion

October 7th, 2009 Comments off

            In my conclusion of summarizing the Woodruff-Sawyer panel discussion on Board of Directors seat appointments, the final discussion point of the panel addressed the three key areas of Board consideration. These areas included Board dynamics, the management process & interaction with the Board, as well as the levels of protection afforded to Board members in carrying out their respective duties.  As discussed in my previous post, Bruce Lachenauer of Spencer Stuart had commented that it can be as difficult to remove yourself from the Board as it is getting the position in the first place. With this consideration in mind, great care must be taken by the candidate in assessing their offer.

 

            The panel spent good time discussing the considerations of Board dynamics. Some of the points that they touched on included;

Ø  Knowing what the views/perceptions are by Sr. Staff of the Board.

Ø  How the actions between Board members would be characterized.

Ø  What is the level of interaction between the Board and management?

Ø  What role does the Board play in corporate risk management?

Ø  What involvement does the Board have in the development of corporate strategy?

            Folino also commented that potential Board members should also be afforded the opportunity to engage and interview company executives in order to gain the appropriate insights on management styles, identify any concerns about corporate structure, or any other challenges a new Board member might have to deal with.   Additional considerations, outside of the management and member dynamics, might include;

Ø  Knowing the selection & interview process for new Board members.

Ø  Knowing the timing, frequency, and average agenda for meetings.

Ø  The nature of your ideal involvement with the Board.

Ø  Structure of Board meetings and conference calls.

Ø  Travel considerations for Board meetings and impact on current schedule.

           

            The final portion of the conversation touched on the compensation levels afforded to Board members, which will obviously vary according to the complexity and size of the organization. While Lachenauer commented that the average retainer is up over 50%, the level of compensation is still not commensurate with the level of work and risk for Board members, which has increases substantially in recent years. While there is typically a cash retainer, this is not the only level of compensation.  Lachenauer cited that the average cash retainer is approximately $75k. There is also typically an equity element, which is usually in the form of RSU’s. The level granted will also vary according to the size of the organization and will usually be higher for the smaller entities.

 

            I know as I start down this path to secure a Board position, which I am targeting for inside of the next 12-18 months, this was a very informative panel discussion to attend. For my colleagues out there who have experience sitting on a Board, I’d also welcome the feedback and know how your experiences compare to what I’ve outlined over the last few days.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Woodruff-Sawyer Board Panel: Part II

October 6th, 2009 Comments off

            Last week I gave an overview of the Woodruff-Sawyer panel discussion that I attended, which focused on the process of Board of Directors seat selection and the considerations to pursuing such a position.  I had previously left off at the considerations and value of sitting on the Board for an external organization.  As Bruce Lachenauer had discussed during the panel, sitting on the Board for an outside organization brings great perspectives to the company you work for if you are functional executive. However, in consideration to this pursuit, there are a number of considerations.

Ø  If you are seriously looking at such an endeavor, it’s ideal to start front-loading that effort with your existing company, President, or legal counsel to ensure there won’t be any issues with such an engagement.

Ø  Typically, any external Board appointments need to be run through your internal Board, regardless if you are a sitting member or not.

Ø  Preliminary support from your President or CEO is crucial in such an effort. 

            Paul Folino, Chairman of Emulex Corporation, also discussed the merits of sitting on a Non-Profit Board. Folino felt that this was a great way to get the feet wet with Board participation, while also giving something back to the community. However, as Folino cautioned, “don’t expect that the work load of a Non-Profit will be less than that of a standard corporate Board”.  This was also endorsed by one of the members of the audience, who also had extensive Non-Profit Board participation.

 

            With regards to the selection process, Lachenauer did not feel that a separate resume was warranted for the process. In his view, he has to do as much, if not more, due diligence for Board selections than a standard executive search. If the resume is more an overview of candidate’s background then it will lack the details that are often the important selling points in presenting a candidate for consideration. The accomplishments are critical and will need to be shared, and therefore, should not be excluded from the resume. Further comments by Lachenauer included:

Ø  The selection process is intended to find a candidate that will be entering into a long-term relationship & participation on the Board. As difficult as the interview process can be, it’s just as difficult to leave the Board, which puts a heavier emphasis on the long-term views.

Ø  Board members are not going to find you…you need to find them. 

            As a response to a question regarding whether an individual should pursue a Board seat for a public or private company, Folino commented that “there should be no consideration to Public or Private, but that it should come down to your background and the experience that you will bring to the table”.  Tomorrow I’ll wrap up my notes on the panel discussion with an overview of the key areas to consider with respect to choosing a Board, the management of risk in such an appointment, and additional considerations before accepting an offer.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Woodruff-Sawyer Board Panel: Part I

October 1st, 2009 Comments off

                As mentioned yesterday,  I had the opportunity to attend a panel discussion on the considerations to accepting a Board of Directors position. The panel was sponsored by Woodruff-Sawyer and led by Paul Folino, who is the Chairman of Emulex Corporation. The panel was also rounded out by Priya Cheria Huskins, Esq. and Bruce Lachenaur. Priya is a Partner at WS and is considered a leading expert in D&O liability risk and corporate governance. Bruce is a Partner with Spencer Stuart, which is a leading executive search and consulting firm and leads their Board Services Practice. It’s worth noting that Spencer Stuart is active on a very high percentage of all Board related searches nationally.

 

            As an individual who has had extensive interaction with Boards and presentations to, I have not previously sat on a Board and have initiated this as a goal to achieve within the next year. To my benefit, one of the opening stats that Lachenauer touched on was the shift in Board compensation from being more internally focused to having a higher degree of outside influence. It was mentioned that the trend has almost reversed and the current ratio is approximately 3:1 with regards to external Board members. This bodes well for those looking to become involved with outside companies. However, as a result of the current climate, it has also become more difficult to secure that first time Board seat. Recent statistics show that only 16% of Board appointments were first-time appointees versus the historical figure of 40%. Consistent with the trend for outside influence, there is an increasing demand for a Chairman that is independent of the company and can bring unique perspectives.

 

            The panel also discussed the aspect of Committees, as well as the make-up of individuals that should sit on those committees, as well as the Board. Lachenauer commented that the most difficult committee spot to fill has been that of the compensation since this has become such a contentious area of the previous few years. With the contentious nature of the business environment in mind, in all areas, Paul Folino commented that he “can’t imagine having a Board make-up that does not include strong legal counsel”. Folino also commented, in response to a question, that age is really a non-issue with respect to the Board. That all considerations are based on the experience that one brings to the Board, and in some cases to the detriment of the Company, Board age limits can result in the loss of immense expertise and experience.

 

            There was an extensive amount of information that was shared during the panel and I look forward to summarizing my notes in future postings. The additional areas will include the considerations to sitting on an outside Board and strategizing that with your current company, the search & interview process, compensation levels, as well as what dynamics to consider in choosing what Board you will commit your time to.

 

Thanks for reading . . . .

 

Jeffrey Ishmael