In this episode, we sit down with Slavik Markovich, CEO and co-founder of Descope, a low-code/no-code Customer Identity Access Management (CIAM) platform. A serial entrepreneur, Slavik has been at it for two decades and over this time built three companies.
Before Descope, he was co-founder and CEO at Demisto, a leader in the SOAR industry that was acquired by Palo Alto Networks for $560 million. Before co-founding Demisto, Slavik was VP & CTO of database technologies at McAfee (Intel Security). He joined McAfee via the acquisition of Sentrigo, a database security startup, where he was a co-founder and CTO. Slavik also served in the Israel Defense Forces (IDF) for 5 years as a team leader. He graduated with a degree in computer science from The Technion (Israel’s MIT).
We speak with Slavik about his childhood and what got him hooked on cybersecurity. We cover Slavik’s learnings on how to identify early product-market fit and define a category like what he did with SOAR (Security Orchestration, Automation, and Response). We discuss the art of negotiating a VC fundraise and M&A exit. And of course, we touch on how Slavik’s love for good coffee has played a key part in building friendships including with one of his co-founders Rishi Bhargava.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Sid Trivedi (00:04):
Welcome to Inside the Network. I'm Sid Trivedi.
Ross Haleliuk (00:07):
I'm Ross Haleliuk.
Mahendra Ramsinghani (00:09):
And I am Mahendra Ramsingani. We've spent
decades building, investing, andresearching cybersecurity
companies.
Sid Trivedi (00:18):
On this podcast, we invite you to join us inside the
network, where we bring the bestfounders, operators, and
investors building the future ofcyber.
Mahendra Ramsinghani (00:30):
Today, we are joined by Slavik Markovich,
CEO and cofounder of Descope, anidentity and authentication
startup that launched with a$53,000,000 seed round. Slavik
is a seasoned cybersecurityfounder with a passion for
tackling complex challenges.With 2 decades of experience,
(00:51):
Dscope is his 3rd startup. Mostrecently, he was the cofounder
and CEO of Demisto, a leader inthe security orchestration and
automation space. Within 4 yearsof its launch, Palo Alto
Networks acquired Demisto for$560,000,000 Prior to Demisto,
(01:12):
Slavik co founded Centrico, adatabase security startup that
was acquired by McAfee.
In our conversation today,Slavik shares some practical
advice on building products,raising capital, and managing
globally distributed teams. Inthis episode, you will hear some
interesting stories about boardpivots. For example, Demisto
(01:35):
started off as an endpointsecurity company, but then ended
up as a leader in the securityorchestration space. How did
that happen? What is theimportance of engaging with
prospective customers?
And most importantly, how didthe team draw insights from
evolving technologies likeSlack? Slavik also shares the
(01:57):
importance of a good game ofpoker and how that is helpful in
raising capital and, of course,good coffee and how that might
help you to land a greatcofounder. Today at Descope,
Slavik and his cofounders are onto the next challenge, identity
and authentication. Tscopesolves the password problem
(02:23):
while focusing on developers andengineering teams. It sells with
a bottoms up self serve adoptionmotion.
Now this is very different fromDevasto which focused on
cybersecurity teams and sold topdown. Here, you will find out
how Slavic and its cofounderscontinue to challenge themselves
(02:44):
and grow and evolve as marketsand technologies change. Get
ready for an episode packed withinsights, wisdom, and practical
advice from a proven founder whois embarking on his 3rd and
potentially the largestopportunity. Let's dive in.
Ross Haleliuk (03:03):
Welcome to the network, Slavik.
Slavik Markovich (03:05):
Thank you for having me. Happy to be here.
Ross Haleliuk (03:07):
We will split today's episode into 4 parts. We
will start by discussing yourbackground. Then we will cover
achieving product market fit,raising capital, and finally,
what all founders want to hearabout, getting to an exit. Let's
kick things off with your originstory. What got you intrigued
(03:27):
about cybersecurity?
Slavik Markovich (03:29):
I think, like, a lot of, folks, my age at
least, we all started by tryingto hack games to remove, like,
protections from the games. So Ithink a lot of folks basically
started there with your early,you know, commodores, and then
like the the 86 instruction set.And I think I got introduced
(03:51):
this whole thing by playinggames on my compatible IBM 86
instruction set and learning theassembly there and just hacking
away by patching the game andremoving stuff and so on. So it
was all kind of a PPS systems,and the like minded people that
(04:13):
just stay you spend nights onthat while, you know, going to
school, I guess. So, yeah, thatwas the start, but I think the
official kind of cyber journeystarted in the Israeli Defense
Forces where, you know, you hadto emphasize cybersecurity and,
which was part of kind of yourjob there, I guess.
Mahendra Ramsinghani (04:37):
So IDF, was sort of a training ground
for you, Slavic. And then overthe past 2 decades, you've built
3 separate startups. The firstone was Sentrygo, database
security. The second one wasDemisto, SOAR or security
orchestration automationremediation. And now the third
(04:58):
one is Dscope. So you've beendoing this for 20 years. How is
it different this time?
Slavik Markovich (05:03):
I guess, first of all, I guess I'm a very
boring person. That's what Iknow to do. So I don't even try
to do anything else, trying tocreate something in cyber and
and so on. I think, generally, Ialways went to ideas that
interested me and were, youknow, a bit of a challenge from
(05:25):
a technological perspective orfrom a process perspective and
so on. And the early days ofdatabase security, that was,
like, super interesting to mebecause, say, at the time, there
were no good products thatprotected database activity.
So that was interesting. Thentalking about, SOAR, security
orchestration, automation andresponse, it was basically about
(05:49):
the process and how there wasnot enough manpower and the, you
know, the automation aspect ofit, but also the chat ops and so
on. And this scope, I think, isprobably our largest, like, term
in a sense that this is like,the identity space is so
important, and it also toucheseach and every one of us
(06:12):
because, say, everybody hatespasswords. You know? Everybody
hates doing, like, these wholechallenges of security and
multifactor and so on.
And so if you can make it assecure but less frictionless and
help companies build that likethat, I think that is an
interesting challenge. So,generally, each of my start ups
(06:35):
was something that I wasinterested in, and the scope is
slightly different in the sensethat it doesn't even sell to
cyber people. We actually sell alot to the to the engineering
folks, to the CTOs, VPNs, andand and so on. So it's slightly
different, but it's still, youknow, the challenge is what kind
of got me started here.
Sid Trivedi (06:56):
Your first startup, Slavik, you talked a little bit
about it. It was calledCentrico, and it was a database
security company. What problemswere you solving, and and how
did McAfee, which ended upacquiring the business, how did
they hear about you?
Slavik Markovich (07:08):
The reason I think it's a kind of a lesson
for a lot of founders is try tosolve things that, you know, you
understand are painful for you.And so I did some consulting to
Sony PlayStation at the timehere in Foster City, and we
(07:28):
implemented the bidding system,the 1st online gaming system for
PlayStation, which was actuallypretty interesting. And one of
my bragging rights is I have myname on a lot of the games that
were out in the in the creditdraw at the time. I'm talking
2003, 2004, and so on. Sothat's, that's my bragging.
(07:48):
Right? But beyond that, whatreally surprised me was that I,
as a consultant, could accessthe database of all Sony
customers with, like, billinginformation. And it wasn't
encrypted, and it wasn'tprotected against
administrators, basically. Andso I said, oh, that can't be
(08:10):
right. And how can we protect itin a way that is as close to the
database as possible, but notbeing controlled by the database
administrators?
And so this is a Sentrygo wasactually a very challenging
technology because what we did,we reverse engineered all the
(08:31):
relational databases likeOracle, Cypress, DB 2, SQL, SQL
Server, and and so on. And theywe attached directly to the
memory of the database to derivethe activity. So I will say for,
like, 3, 4 years, I wasbasically dreaming in assembly,
like, seeing memory structures,living inside IDA Pro, and and
(08:54):
and all of that. So it was verytechnologically challenging, But
the problem that we solved isstill super interesting. How do
you monitor database activity,especially for privileged
access?
And so if your DBA looks at yoursalaries or there's a SQL
injection hack and then yourapplication becomes done, it
(09:14):
does things that they theyshouldn't do, I I you know, it's
still very relevant. So, that'show we we kind of started. And
we actually approached McAfeebecause they had like a server
security kind of unit. Anddatabases were like a lot of the
data center were like one of thecrown jewels, the most important
(09:36):
ones. And we kind of went andsold together to a bunch of
companies.
And this is where I met mycofounder, Rishi. And the
business was, like, verysuccessful, and then it's just
naturally progressed to the nextstage, I guess.
Ross Haleliuk (09:53):
Yeah. As you've mentioned, the acquisition
sponsor at McAfee, Rishi, andyou became friends and
eventually, cofounders ofDemisto. Demisto was not a
normal Silicon Valleycybersecurity startup. 4 of the
cofounders were spread acrossdifferent continents coming
together. What are the mainchallenges in building a company
culture under suchcircumstances?
Slavik Markovich (10:14):
Yeah. So we it it's kind of funny because, say,
2 of us were here in the BayArea, 2 of us were in the
Israel, and I think it works orit can only work if you have
full trust between the founders.And in my case, I worked with
the the Israeli founders, in onecase since 1997, and in the
(10:38):
other case since 2,006. And so Iknew them really really well,
and we would just work together.The other aspect is that it's
there is sacrifice here.
Right? You you get to go oncalls at, like, midnight, and
they get to go on calls atmidnight, so it only works if
(10:59):
everybody is just pulling in andworking together. And the third
I would say is that we had fulltrust because we, from the get
go, said, we're not gonna worryabout how we split the pie and
everything, we'll be equal ineverything throughout this
entire journey. And so that waslike, there was no thinking, oh,
(11:20):
he gets more shares than me, orhe gets more salary than me. It
was all very, kind of completelyopen and and very collaborate.
And, yeah, Rishi and I, I liketo think that I seduced him away
from McAfee just by getting himhooked on good coffee. So when
my office had, like, a decentcoffee machine in the office,
(11:42):
because the McAfee coffee wasshit. So I had a private machine
in in my office, and his officewas next to mine. And I would
say, hey. Come on.
Yeah. Let's drink coffee in themorning and so on. And we
started chatting. This is how wekind of, you know, created a
strong connection, and wecontinued the to to start
something together. But, yeah,it was it was pretty funny
(12:04):
because prior to McAfee, Ididn't know Rishi.
Mahendra Ramsinghani (12:07):
And to this day, Slavik, Kiro, I I
remember the first meeting wehad, you, Rishi, and me. And I
asked you, so how did you guysmeet? And you both look at each
other and at the same time say,I guess because we love good
coffee.
Slavik Markovich (12:22):
So it's it's actually a bidirectional
process. Right? Because I gothim to appreciate, like, good
coffee, And he slowly trains meto eat more spicy food. So I you
know, Indian food is somewhatspicy, and I did eat spicy at
all. And slowly, I'm kind ofgetting there.
I'm still a wuss, but I'mgetting there.
Sid Trivedi (12:43):
Any advice for the founders on coffee machines that
you'd recommend?
Slavik Markovich (12:47):
I I think, generally, invest in that. You
know, coffee makes the the startup work. We have a Breville
here, which is pretty decent, Ithink. It, you know, it dumps,
it does the grinding, the mill,frothing, everything. But, you
know, find your right beans,find your right coffee machine,
(13:08):
and invest in it because that'simportant.
Sid Trivedi (13:11):
Well, you know, let's move on from your
background to talking a littlebit about achieving product
market fit. And, you know,Demisto aspired initially to
focus on endpoints and endpointsecurity and then pivoted into
security orchestration. Walk usthrough that light bulb moment
when you realized, hey, we'renot gonna look at endpoints
anymore, no more endpoints, andhow you found the groove for an
(13:34):
integrated SOAR platform.
Slavik Markovich (13:36):
Yeah. So we initially started, I guess,
because we were at McAfee.McAfee is somewhat famous for
being an endpoint company. Weinitially said, you know,
endpoints are kind ofinteresting, and the EDR market
just started, you know, going.And they there were, like, some
(13:58):
really cool companies out there,and some of them actually had,
like, peer to peer databases,like Carbon Black was there, and
they had a challenge withperformance.
And, like, we said, you know, wecan probably solve it better
from a technology perspective.And so this was the the the
thing that we started with, andwe created, like, a really cool
(14:19):
peer to peer databasedistributed queries, like super
smart. We were very happy aboutit. And then our sales 2015, we
could have said, okay. Let'sschedule a bunch of meetings
with CISOs.
And we had probably, I think,like, 35 meetings with the
different CISOs where wepresented the idea and the
(14:41):
overwhelming response wasanother endpoint. No, thank you.
And we were like, oh, shit,that's it. That's not good. So
during those meetings, weactually started people thinking
and asking them, okay, so whatare the big problems that you're
facing and what's challengingyou?
What's keeping you awake atnight? And they're all talked
(15:03):
about, like, this huge amount ofalerts, not enough manpower, and
the need to do something smartabout that. And we looked at
each other. I remember Rishi andI kind of looking at each other
and saying, wow. That's actuallya pretty good idea.
Let's, you know, invest in that. And so we
we started with, this idea ofplaybooks and automation and the
(15:26):
connectors to various securitytools, And we did a lot of our
ideation at the time. Slackbasically started, like, getting
traction. And we did a lot ofideation with Slack team that we
created. And the, you know,during one of those ideations,
we looked at Slack and we said,oh, you know what?
This interface actually isamazing. Let's bring it into the
(15:51):
this space as well. And so wekind of invented the whole chat
ops for security in the sourcespace, and it almost all came
came up, like, via accidents.Right? A lot of people from
seesaw, like, just inspirationas we went and ideated, and,
this is, you know, this is howhow it started.
(16:12):
I think that we basicallyconvinced both Gartner and the
customers that it's not onlyabout automation. It's the whole
incident management. It'sautomation. It's chat ops. It's
the war room, and theintegration together, And we we
basically kind of led the chargewhere all the other players kind
(16:34):
of copied us.
And so we we were really happy.Like, oh my god, they're copying
us. That's good. We're like,we're leading. So, this is how
it started.
Sid Trivedi (16:43):
Slavic, you mentioned kind of talking to
those 35 CSOs and getting theirfeedback and them helping you
kind of move from endpoint to toto SOAR. Any advice for founders
who don't have those you know,CISO connections on how they
should get that type offeedback? Because that was very
much critical. You know, you youmay have gone down the endpoint
road and then competed withCrowdStrike and Cylance and
Cyber Reason, all of whom werekinda built a few years before
(17:06):
you. Yeah.
So it would have been you know,you'd be trying to catch up. And
that advice was very helpful.
Slavik Markovich (17:12):
Yeah. I think, it's super important to get
feedback. Like, one of the earlythings, and I have an amazing
story about that in the army.One of the most amazing things
that we learned is always to getout into the field and ask the
practitioners, like, the realquestions. So in the army, we
(17:32):
had, like, this huge distributedsystem that did something.
It doesn't matter what. But wesaw one army base where every
morning at 8 a. M, the systemwould reset. And we didn't
understand what's going on. Wewent, we did like log analysis,
we tried to do remote debugging.
(17:54):
We just couldn't understand. Andthen, we said, you know what? We
just don't know what'shappening. Let's go and visit
that army base, which was upnorth. And, we went there, and
we're looking at the system.
Like, we're sitting in front ofit. It's like old boxes. We're
sitting in front of it, and,like, we're waiting for
something to happen, and thenthis older gentleman, like, one
(18:17):
of the the commanders there,just comes in and says good
morning to us. We say goodmorning to to him, and he goes
to the coffee machine, thenunplugs our system, plugs in the
coffee machine, and then makescoffee for itself. And
apparently, that was hisroutine.
Like, every morning, he wouldplug the the system and and plug
the coffee machine. And, thatkind of I still remember it
(18:40):
because it kind of landed thiswhole thing that unless you
actually visit and go to thefield, you just cannot
understand what's really goingon. And so even if you don't
have the right connections,even, like, there's ways to get
to those, would be customers.VCs can help. You know, other
(19:02):
founders will be happy to helpyou.
There's, like, multiple routesto get those opinions. And in
fact, what I saw is that a lotof the thesis actually are happy
to talk with you. They're happyto talk with founders because
you actually eventually solvetheir problem. So I would
recommend never to buildsomething, like, inside your
(19:24):
own, like, office and just buildsomething without talking with
your prospect.
Ross Haleliuk (19:29):
100%. Like, having done product for for
quite some time, yeah, I'velearned it very early in my
career that you have to get out.You have to you have to get real
feedback, understand how peoplein the in the trenches are using
different products, like, whatproblems they're facing and so
on and so forth. Because it's sotempting especially now in the
age of social media, it's justso tempting to listen what
(19:50):
people say, you know, publiclyand then assume that those are
the real problems, but thereality is very different. Like,
there is so much noise, and thevast majority of the people who
are sharing about their problemsare not really talking about the
real problems, but talking aboutthe problems that impact
probably 0.1% of the market.
Anyway, let's go back to theproduct management. Tell us
more. How did the teamprioritize on early features and
(20:13):
navigated trade offs andnavigated also the customer
feedback? In particular, the onepiece that would be quite
interesting to hear about is howdid you navigate the conflicting
feedback? Because, yes, asyou're right.
Right? Talking to sisters isimportant, but you talk to 10
people, and you will get 10different opinions. How did you
how did you make sense of all ofthat?
Slavik Markovich (20:31):
Yeah. It's a it's a pretty funny. There's,
obviously, a lot of your ownexperience and your own opinions
that, you know, you have to takeinto account. Sometimes, you
would need to dive deep into thefeedback to understand, like,
the core of the feedback, but weactually simplified it a lot,
and we basically prioritized ourfirst customers. So we would do
(20:56):
a POC, and the feedback wouldbe, okay, you need to do x, y,
and z, and you have to have,like, those connectors.
So we actually prioritize basedon those POCs, early customers,
and we were really, like,ravaged, crazy about those, that
(21:17):
first engagement to make itsuccessful. And so I still
remember, like me and Rishiwould used to seek at the, you
know, at the stock of thecustomer, just see what they're
doing and just go back withhomework and just implement and
run from there. So it's a likethe first enthusiasts, early
(21:37):
adopters, customers, I think arereally important. And then as
like if you got conflictingfeedback, you you basically just
I think use some of yourexperience here. There's a I
don't know if there's, like, asilver bullet here to just, you
know, how you know, rule ofthumb that that's how you you
take this feedback and not thatfeedback.
Ross Haleliuk (21:56):
That does make sense. And I'm curious, sort of
taking it taking a step further,how did you know that the
feedback you're building upon isgoing to have a broad
applicability to the marketversus you would be building,
like, a very niche product for avery small segment of customers,
which does happen so often incybersecurity. Like, it's just
(22:17):
so common to see foundersidentify an angle, go out, get
some feedback, and it soundslike they're on the right track
until they learn that maybe 2years later that there is only
15 companies on the planet thatactually have that problem.
Slavik Markovich (22:30):
Yeah. Yeah. I think it's a you know, I I'd
love to take a lot of creditfor, you know, what what we did.
A lot of it is just lack becausewhat we did was very applicable,
very widely because allcompanies need automation,
efficiencies, you know, and theyall kind of face the same
things. What we did do is try tofirst have this north star of
(22:56):
where we're aiming and kind ofgo through the features kind of
that will get us to that northstar.
That's one thing. And the other,we super emphasized platform
capabilities. Sometimes to toour I think disadvantage. So we
try to build as generic aspossible, and then if one
(23:18):
customer wants to use it likethat and the other wants to use
it a different way, it stillwould work because the platform
was super generic. So we built ageneric workflow.
We built a generic like a dragand drop a wizzy wig at the door
that you can build the incidentpages, whatever, however you
want it. And we built thegeneric incident management
(23:41):
platform. And so, and fromthere, on the one hand, we could
actually solve a lot of the usecases without having to redo a
bunch of things. But on theother hand, because it was so
open ended, until we learned howto be very opinionated, we went
into very long POC processesbecause customers just said, oh,
(24:04):
I want to do that. And said,sure.
Yeah. You can do that. And then,oh, I want to do the other
thing. Yeah. Sure.
You can do that. And so youcould do so many things that it
just was never ending. And sountil we learn to focus and be
very opinionated about what wecould do, it just kind of went
all over the place. So I'd sayhave a North Star, build a
(24:25):
generic platform, but haveopinions.
Sid Trivedi (24:28):
Talking a little bit about, you know, category
creation versus going afterexisting categories that are
crowded, you've kind of doneboth. With Demisto, you were
helping to create the SOARcategory alongside a few others
like Phantom Cyber, you know,Oliver Fredricks and Saurabh
Satish were building thatcompany. We are small investors
there. Paul Nguyen was buildingInvotas, if you remember. So
(24:49):
there were a few players inSOAR, but it was new.
It was a relatively newcategory, and you were helping
to educate the market, and thatwas an uphill task. And when you
compare that to Dscope today,you're going after a very
established market, and there'ssome pretty established players
like Okta and Pig and Microsoftthat are out there, and the
market understands what's goingon. And your goal is really
around, how do I differentiatefrom the market and how do I
(25:12):
explain to the customer whereI'm different? What's your
advice for founders on how topick between these 2 effectively
necessary evils? It's kind of,you know, a no win scenario, but
how should they pick between the2?
Slavik Markovich (25:23):
We don't necessarily kind of thought like
that. Like, hey. It's a newcategory or, hey. It's, like an
established market. So we kindof looked at the problem.
We like the problem. We like thespace. And then we kind of said,
can we do it better than what'sexisting? And obviously, if it's
(25:45):
completely new category, thenyou say, oh, you know what?
Yeah.
We can do better because there'snot a lot of things out there.
And when we looked at thecustomer identity and access
management space here in theschool, we actually saw that
they're, like, really, I'd say,older companies, like, Bing and,
(26:08):
you know, Microsoft in a sense,and Okta, and and and so on. And
there is, like, a bunch of newstartups, but the old companies
are old. So in a sense, youknow, if you innovate and then
you can easily out execute them,and a lot of a lot of them, I
think, are are just very hard towork with and were not very
(26:29):
developer friendly. I think alot of the new companies, they
didn't have the enterpriseexperience, and so they were,
like, really cool kids, but theydon't know anything about
selling to enterprise andenterprise features, and so and
so I think we we we took a hardlook at the market and saw that
the market is huge, and we canreally execute much better than
(26:54):
the others.
And, that was our, like,thinking of, hey, let's do that.
This is also one of the reasonswhere it's a different funding.
Anyway, I guess it's anothersection of this podcast, but
it's a different fundingdynamic. Because for an existing
market, when you know exactlywhat you want to do, this is why
(27:14):
we raised so much money in thebeginning because we didn't want
to worry about hiring morepeople or, like, getting enough
breathing room to to build theright product versus when you're
just building a category, it'sall about experimenting. And so
you don't know exactly what willwork and where you're gonna go
and what what you'll do.
(27:35):
And so you raise way less thanthat and don't over hire and and
so on. So from my perspective,it was mostly about, oh, this is
a cool problem. And then can wecan we build something better?
Mahendra Ramsinghani (27:47):
That's a very interesting, you know,
segue into our fundingconversation, Slavik. You know,
when you're looking at a bigmarket, you're going after
solving a mega, mega problem.And especially when the legacy
innovators have not yetinnovated as fast enough,
especially now that you look atthe world of AI and how things
are changing so rapidly, it'sgood to be in that place. And
(28:10):
also the logic of raising a$50,000,000 seed round. You
know, Dscope raised a seed roundthat made headlines everywhere,
right, compared to the$6,000,000 seed round that you
raised with Excel, that Iremember being a part of that
conversation when, you know, wewere sitting at the table.
By the way, when 3 of us met, wedid not eat Indian food even
(28:32):
though there were 2 Indians. Andone of you, I think we went to a
burger joint, if I rememberwhere we are. I still have the
picture of that burger, by theway, and the T shirt as well
that we saw, right? So thequestion for our founders and
our audience is as follows.There is an art form and a
science of raising money.
The science is very simple.Everybody knows that. Hey, you
get your pitch deck, there is acam, there is, the tea,
(28:55):
etcetera, etcetera. Right?Everybody knows the formula.
But the art form is somewhat,you know, way at times. It is
dependent on market conditions.It's dependent on your
background as a founder. You'vealready sold a century ago in
your 1st cycle, etcetera,etcetera. So help our audience
to understand the art form ofraising capital.
Slavik Markovich (29:16):
Yes. Again, I don't want to claim too much
credit here. I think a lot of itis just timing and luck and
being at the right place at theright time. But I think it's all
about, like, the story you tell.Right?
You have to have a convincingstory of why, why now, why you,
(29:38):
all of those things. And I thinkI think we had that both in the
Demisto and in Discove. So it'sall about the story. And then
it's slightly about playingpoker. So I don't know if you
know, but I I play poker quite alot, and I play every Thursday
(29:58):
with a team of folks.
And and so the there's a bit ofa poker going on between you and
the investors, and, you know,juggling a bunch of investors
and so on. And that's also a a,I I think, a kind of an art,
where I'll give you an exampleand, you know, Jake knows that.
(30:21):
In the beginning, when we talkedwith Accel so we we like Jake a
lot. He was, like, you know,young, did a lot of, you know,
operational work. He understoodwhat we're trying to build, and
and and so on.
And so we said, oh, we we wouldlove to work with Excel. It's
really good. And then,internally, we said, okay. What
are the terms of the deal thatwe would want to accept if we,
(30:45):
you know, they're given wherewe're where we're aiming, and,
you know, what are the laws thatwe were willing be willing to
accept. And when we came tothose discussions with Jake, I
remember he started with ourhighest option, right, which was
really nice of him.
But, at the time, like, I lookedat Rishi, and Rishi looked at
(31:06):
me, and I immediately got tosaid, oh, Jake, you know what?
It's like very disappointing. Iexpected much more from Excel. I
expected, like, you know, and,you know, I think that you
really understood what we'reaiming for. And and and so there
there's really poker going on.
And, he he then raised the offerby a lot, but I also think he
(31:26):
played poker with us. And he's,so we didn't go all the way to
where he was willing to go. Andso there's kind of an art there
as well in negotiations.
Mahendra Ramsinghani (31:36):
And so besides coffee and playing
poker, you know, making surethat you cast a wide net. You
mentioned as a product journey,you talked to 35 CISOs.
Slavik Markovich (31:48):
How many VCs were in the mix here as you were
playing this game? I think atthe time, we're probably like 8
that we were serious with thatwe we kind of engaged. And,
honestly, we were very closewith, you know, signing a
different term sheet, and, Jakewas just moving so fast, and we
(32:09):
liked the interaction with himso fast that we kind of stopped
some of the other processes. ButI'd say we probably were serious
with, like, 8 of them, and gotto, like, a partner meeting
with, like, 4 or something likethat. Very cool.
And then and then kind ofjuggled between them.
Mahendra Ramsinghani (32:29):
Very cool. Very cool. You know, I want to
share a story here for ouraudience about how, you know,
there is this dynamic that, VCsversus founders, and somewhat
the dynamic ends up being, manytimes it ends up being somewhat
negative. And the story here isas follows. So Jake calls me,
Jake Flomenberg, Tri Accel, he'snow with Wing Ventures.
You know, he's a dear friend toa lot of us now. Jake calls me
(32:51):
and says, Hey, Mayankra, haveyou raised your fund yet? So
this was the time when I wasraising my fund well. And, you
know, I played poker with him.
Slavik Markovich (32:59):
I said,
Mahendra Ramsinghani (33:00):
What's up? I didn't give him that. So I
said, What's up? He said, It wasa great opportunity. Axel is
putting in 5 and a half 1000000.
It's a $6,000,000 round, and youhave, like, 1 week. So I
remember, like, talking to Rishiand you that day, and then
driving down to, Montague orsomewhere where we met. And then
on the way back, the I wasthinking like, oh, shit, I don't
have the capital to invest. Soso I remember calling a friend
(33:24):
in India. I said, I need somemoney, and my friend is
bantering with me saying, hey.
We're a developing country.Money comes from America to
India, and you're asking me formoney. But he was a childhood
friend, a dear friend. And so hewired me the money the next day,
and 48 hours later, the moneywas in your account. And so, you
know, the story the lesson hereis that founders help VCs to
(33:46):
become successful, too.
You know, it's not just the oneway around where so my fund won
the best performing company isDivisto. Thank you, Slavic
Rishi. And that that allowed meto raise my fund too. So, you
know, the lesson here is that,you know, we are all human
beings. We're trying to solveproblems.
And many times, founders look atVCs as, like, ah, whatever,
money. You know, there is anegative sentiment. But
(34:07):
sometimes, you know, people likeyou and Rishi were kind to, you
know, VCs like me or founderslike me. You know, it's a great
dynamic. So I want the foundersto also understand that in your
success lies success forinvestors, life success for your
customers, life success for thecommunity.
So think about theresponsibility that you carry
and work with any everybody in ain a nice way. I mean, here you
(34:29):
are. Your next seed round was$50,000,000 So no wonder
investors were chasing you soaggressively for your next stop.
So thank you for all
Slavik Markovich (34:35):
your help. We kind of had this oh, for sure.
We kind of had this rule of,like, no assholes. Life is too
short. Just be kind and enjoythe journey.
I think it actually reflected,throughout both for employees,
and, you know, we keep closeconnections with our VCs, you
know, with the with the prettymuch everyone we work with, and
(34:57):
they I think you can see it alsowhen we started the scope. The
first, like, 20 employees justcame from the previous, you
know, work that we did withDemisto. So, so we we basically
just got a lot of the old gangback together, and they
continued to do it together aswell. So, you know, I think
(35:18):
we're all kind of well, maybesome of us are, like, too old
to, you know, to not enjoy thejourney.
Sid Trivedi (35:25):
Let's talk about the series a Slavic. You raised
the series a at Demisto just ayear after that seed round that
you raised from from JAIC andExcel, and you bought in
$20,000,000 in that series around. What milestones had you
accomplished? Was it somethingthat you were planning to raise
or were you preempted? And howdid those milestones differ from
(35:48):
your initial projections?
Slavik Markovich (35:49):
Yeah. I think it was like almost a mistake. So
when we when we kind of startedeventually going to market, it
was Q4 of 2016, and we actuallygot amazing traction. We did
have sales guys, like it's justme and Rishi selling, and, you
(36:11):
know, Sisush wanted to talk withus, and we closed the decent
amount of business just byourselves. And so we said, oh,
you know what?
We actually have product marketfit. It's all amazing. And I
think we closed the quarter,like like, 640 k ARR, which is
an amazing Q1 for any company.And then we said, that's it.
(36:34):
Like, we we found the productmarket fit.
Let's go raise money. And so wewe actually started a process,
and we raised $20,000,000towards the end of q 4. And, we
brought in the time clear sky.And, also a funny story because
I was visiting the Israelioffice, going up the elevator,
(36:57):
and I had the backpack ofsilence for some reason. And,
this guy approaches me and says,oh, silence.
I know this guy. I've beeninvestor in them. And, we kind
of got talking, and the this wasAlex from Clear Sky, and this is
how we got basically to knoweach other. So it's completely
coincidence. But anyways, webrought the money, and we
(37:17):
immediately said, oh, we havethe $20,000,000.
Let's hire a bunch of salesguys, and just let them run.
And, guess what? We actuallyfailed completely. So q one of
2017, we closed a single deal,100 k. That was, you know so we
went from 640 to a 100 k becausewe didn't understand it's a
(37:41):
completely different story whereyou have founders selling, who
fully understand the problem andthe product, and CISOs are happy
to talk with, and it's acompletely different dynamic
where you have sales guys goingand selling.
And so it was really funny, thefirst board meeting that they
have with now the new investorswith this guy, and we're saying
(38:02):
we're sitting there and saying,you know what? None of our, you
know, theories and none of ourprojections actually worked out.
It was terrible. So, from fromthat perspective, we actually
raised before we found therepeatability in our go to
market, which was a pretty funnyand stressful and stressful. And
(38:23):
I have to say that the ourinvestors were super patient
with us.
They were super, like, guidingand understanding and so on. So
I it could have been a verydifferent discussion, but it was
actually a very good discussionbecause they still believed in
the vision, believed in theNorth Star. And then, you know,
then it was just execution. Andwe actually finished that 1st
(38:45):
year with 4,400,000 of ARR. So1st year outstanding was
actually amazing for us, but itstarted very badly.
Ross Haleliuk (38:53):
So knowing what you know now, what would you
have done differently if youwere to go back to that time?
Slavik Markovich (39:00):
I mean, generally, you know, it worked
out really well for us. It itdidn't work out badly. But I
would actually say that you needto find the repeatability. You
need to find to move away fromfounder led to, like, process
led where you find some like, areal go to, you know, product
(39:23):
market fit, and then you canactually raise without having
this huge dip in the in themiddle. So first is we all know
that first, like, 10 deals, the10 customers, they're all closed
by the founders.
Right? The founders have tohassle, do whatever it needs to
be to happen, and just closethose deals. But that doesn't
say anything about thescalability and and the
(39:46):
repeatability of the pieces. Andthen starting that engine, I
think, is important before youpour more money into it, which
we didn't. Right?
We we we poured a lot of money,and then we saw the engine
doesn't work. We need to kind ofbacktrack and and kind of build
the engine from the ground up.And so that, I think, is an
interesting lesson to learn.But, again, because the timing
(40:10):
for our product was really good,we we could afford making a lot
of those mistakes because thetrajectory was just going up
anyways. So those mistakes werekind of fixed on the fly while,
you know, while running and, youknow, it worked really well.
Ross Haleliuk (40:25):
Interesting. Yeah. So going back going to the
series b, 2 years into theDemisto's journey, you have
already raised a 40,000,000series b round led by Greylock.
Did you feel at the time thatthe company was overvalued? And
how did this funding roundchange your company's
trajectory?
Slavik Markovich (40:43):
So it was really funny. That was one of
the most, I think, competitiverounds because we were chased by
everybody. And, honestly, like,even looking back, I think we
were undervalued, notovervalued. Like, when we
raised, this 40, 43,000,000, weactually had, like, really good
(41:07):
visibility into, like, 15,1,000,000 of ARR. And,
eventually, we ended the year at21.
So the the growth and, like, thetrajectory was the hockey stick.
And so, you know, I think it wasfirst of all, everybody was
chasing us in terms of business,but we really loved the
(41:29):
interaction with Braidock. Youknow, Sarah and Nasim, they were
like really smart, did their alot of their homework without
bothering us, and and, like, wethe interaction with them was
great. And so we decided to takemoney from them even though we
had higher valuations and higherterm sheets in in our hands.
And, unfortunately, we didn'thave a lot of time to enjoy
(41:53):
interacting with them because 3months after, we already had the
conversation with the Palo AltoNetworks and and were acquired.
So I think we closed around in,like, October of 2018 and, like,
in the in January of, 2019, wealready had, like, handshake
with Palo Alto Networks. So wewe had all the money in the bank
(42:13):
still, and we we made the andfor them, I think the return on
investment was pretty nicebecause they we tripled their
money in, like, 4 months. Sothey invested, like, 31, I
think, of the round, and theygot, like, 93 of the round in,
like, few months.
Sid Trivedi (42:31):
You talked a little bit about Palo. So let's let's
talk about exits. And Demistowas acquired by Palo Alto
Networks for $560,000,000, andthat was about 4 years from from
when you originally founded thecompany. Give us the inside
scoop on those negotiations, whyyou made the decision to sell,
(42:52):
what were the challenging parts,what were the exciting parts.
It's not obvious, you know, whenyou describe all the numbers
being at 20,000,000 of ARR,growing the company at the rate
that you were having raised$43,000,000 more, that you
should go and sell.
So I'm I'm very curious to heara little bit about what was
going on between the 4 of youand the board as you are trying
(43:13):
to go through that process ofdeciding.
Slavik Markovich (43:15):
Great question. Honestly, I think, you
know, hindsight, we probablymade a mistake. You know, we
shouldn't have sold it. Now thebusiness is huge with Palo Alto
Networks. They're like I thinkthat probably they're one of
their best acquisitions forsure.
At the time, we didn't evenenvision selling. Right? So when
(43:37):
Nikesh approached us and said,hey, let's meet for, like, we
want to learn about yourbusiness and so on. Again, I I
didn't even think about, youknow, acquisition at this point,
and in my head, Palo AltoNetworks was always like a
firewall, like, next genfirewall company. So, okay.
Sure. Yeah. The best I I Ithought, hey, Maybe we can
(43:59):
actually do some work togetherand, maybe go to market together
and co sell or do something likethat. And that that was, the
best. So I didn't even preparefor the week.
I came to the meeting, and I'mgoing into this huge boardroom,
of Palo Alto Networks, and I seea lot of people. And then, like,
I I thought I'm meeting Nikesh,but I apparently, there were,
(44:21):
like, 6 people in the room, youknow, the cofounder Nir and the
VP of Corp Dev, and Lee who wasthe chief product officer and
the cash app engineer, and abunch of folks. And I'm like, I
didn't prepare anything. Then webasically went presented the the
(44:43):
regular customer presentationthat we had. And right in that
meeting, Nikesh is like, whileI'm presenting, I presented the
stuff, and then Nikesh is like,would you think about doing
something more strategic?
And I will say, we just finishedthe the round, with, great. We
(45:04):
sold, like, a huge trajectoryfor us, and we and so I said,
no. Look. Talk with us in, like,a year where we were, like, much
bigger and so on, and we justleft like that. And and I
thought, okay, that's that'spretty much it.
And then the guys started, likeso he sent me WhatsApp message.
The big WhatsApp pay user sendsme WhatsApp message. Hey, man.
(45:25):
Come to my house. Let's eatbreakfast.
You know? Let's talk and so on.And they eventually, you know,
he started kind of mentioningsome numbers. And when when,
like, you throw numbers, thensuddenly I have the duty to kind
of talk with the board, and,like, discuss it internally, and
(45:45):
it became suddenly it becameserious. I didn't even expect it
to be.
And in our head, we ascofounders, we said, Look, Palo
Alto has tons of customers. Withthem, our product can actually
reach many more. It's going tobe like huge. So that was one
(46:08):
thing, and, like, even the theintegration with all the product
products and so on was reallyinteresting to us. Then we also
had the financial, you know,aspect.
If it's a internally, we said ifit's above half a
$1,000,000,000, we'llcontemplate it. If it's below,
we're we're not. So that wouldthat was the line in the sand
for us. And at at the time,look, we're talking about 2018.
(46:30):
Right?
So the multipliers were notlike, 2021. The like, having,
like, 25, with 30 multiplier wasconsidered amazing. Right? So
that was kind of the 9% and Ihave to say that our VCs
basically didn't want us tosell. They actually pitched and
(46:51):
told us, don't do it.
Don't make a mistake. A hint toit again, they were probably
right, but we as as cofoundersfelt some pressure because it
was a big financial number. So,you know, life changing for most
of us or even all of us. And theother thing that, you know, Palo
(47:11):
Alto did really well, they said,look, if we're not going to buy
you, we're going to buy yourcompetitor. And so, think about
it.
Our biggest competitor wasacquired by Splunk, a huge
company. Now, the secondcompetitor is going to be
acquired with Palo AltoNetworks, And you're suddenly
facing those huge companies, andyou're like the last man
(47:32):
standing. It's not a comfortableposition to be in. And so we had
some concerns. And and theyhonestly also, they were very
generous financially, you know,both in a founder extra
retention and whatnot, and theyand and also in terms of all the
(47:55):
employees.
So everybody basically landed inPalo Alto Networks, and
everybody found a place, and sothat was really important for us
as well. And so we eventuallydecided to actually sell, which
was a, you know, I don't regretit, by the way. So just just to
be clear, I think it was theright decision at the time. It
(48:17):
was very hard to predict 2020and 2021 in terms of, like,
valuations and craziness.
Mahendra Ramsinghani (48:24):
I know that, you know, some of the VCs
tried to stop you from thatexit. I was not at that table,
but I'm very glad that you sold.I mean, speaking of life
changing, you know, it has adownstream effect on many of us,
so thank you again. You also didsomething very interesting. You
know, a lot of founders, afterthey get this whole acquisition
(48:45):
process done, whenever we talkto them, there is this, like, I
can't wait to get out.
You know, I've got my goldenhandcuffs, and I hate this
mothership, blah blah blah. Butyou're consistently even at,
McAfee, you spend a lot morethan 6 months or 1 year. And
there, you seduced Rishi withyour good copy, but you you
(49:06):
stayed with the mothership tohelp them. And then even at Palo
Alto, I remember severalconversations I would have with
Rishi. You, post acquisition,and you would share that, no.
These guys are good. They'rethey're treating us well. We are
enjoying. And most importantly,we're building a fine trajectory
here. What advice do you havefor founders on post
acquisition, you know, dynamics?
(49:27):
How should we see the mothershipwith both strategy and joy and
compassion?
Slavik Markovich (49:32):
Yeah. I guess, you know, I I had multiple
experiences by being acquiredand I think Palo Alto Networks
actually is a really goodacquirer in the sense that for
the most part, in the beginningat least, they live alone and
they're very thoughtful in howto integrate into their like
main business. So from thatperspective, I think I have only
(49:55):
like compliments to them. Sothat was actually a really good
experience. And I think for thefirst probably, like, year and a
half or maybe even beyond that,I think I I found myself being,
like, extremely busy justlanding the ship, integrating,
thinking about the next step ofthe journey within Paro Alto,
(50:17):
and then training all the salesguys, meeting customers that
they wouldn't have met otherwisebecause they they have a huge
reach, and so they really keptme busy from that perspective.
Obviously. And I was very open,and I think we were all open
with them. We said, this is notlike a life like, we're not
(50:37):
gonna stay there forever. But wedid. We stayed there for almost
3 years.
Rishi actually stayed the full 3years. And they I think we
generally enjoyed our our timethere. So if I compare it to,
like, McAfee as as an acquirer,McAfee was not doing a great job
(50:58):
there. Like really, it was itwas pretty terrible. And even
though I felt responsible forfor my team and I had to stay
and land everything and so on, Icouldn't wait to just move on.
Here in Palo, I think the theexperience was much better, and
you can feel that they are stillvery hungry to win and to go out
(51:18):
there and just grow the companyand and and continue just
winning. So the hunger aspectwas was was there. Having having
said that, you know, I think myskill set is much better
utilized in a startup versus alarger company. I like to make
decisions fast and move fasterthan even like Apollo Alto will
(51:41):
move. If you have a large ship,just changing direction or or
adding more stuff just takes along time.
In the startup, you can make a decision
and tomorrow it happens. In apart of after that, once you
make a decision and like 6months down the road, it
actually happened, which whichis fine. I mean, it's this is
just the nature of the of thebusiness. But I feel I enjoy
(52:06):
startups much more than a biggercompany.
Mahendra Ramsinghani (52:10):
You are now investing as well as serving
on the boards of many startups.What is your advice to founders?
And what are some observationsthat you have experienced in
this role?
Slavik Markovich (52:21):
So first of all, I think as investors, we
are probably pretty stupidinvestors, I have to say. So all
I care about is that the problemactually is interesting. The
technology is cool, and I wantto be part of the journey. I
think we're again, we're prettylucky in the sense that we don't
(52:43):
invest other people's money.It's just our money.
And so we can afford beingstupid about, like, oh, maybe
the go to market is not gonna bethat great, and maybe, you know,
the founder is not asexperienced and and so on. And,
we don't care because we want tobe part of the journey. So for
from that perspective, we thinkwe are not making the same the
(53:07):
same decisions as a like atraditional investor or
traditional VC would make. Butwe do invest quite a lot in
areas that interest us, be thatlike cyber, AI, enterprise
software, all of those things.And I think what I really care
about is seeing the passion ofthe founders about the problem,
(53:30):
and, you know, seeing in theireyes that they just want to, you
know, devour the problem andthen solve it and just go about
it and and hustle around it anddo whatever necessary just to
make the problem go away.
And so that is, I think, themost important thing, just
having the the team passionateand understanding and and so on.
(53:54):
Obviously, all the other thingsare super important, the TAM
and, like, go to market and andand and so on are critical, but
the first thing that we reallywant to see is the the hunger in
the founders' eye. That's Ithink is is super important. And
that would be my advice, like,try to solve something that you
care about. That you know, thatyou care, that you're passionate
(54:16):
about.
Life is too short. Don't sufferthrough something that you don't
really care about and justbecause you think it would make
a good business. That's thatwould be my my advice.
Ross Haleliuk (54:27):
That is a good advice. And as we're moving
towards the end of the episode,I'm curious, if you could go
back in time and give yourselfone piece of advice when
starting the scope or let orlet's just say when starting
Demisto, what would that be?
Slavik Markovich (54:41):
So I actually had the benefit of doing another
startup before the Centrico thatwe talked about. And I think I
actually learned the rightlessons from that startup to my
future career startups. InCentrico, I actually did not
know a lot about, you know, whatit means to be a founder and
(55:04):
startup founder and so on. And Ihonestly burned myself out. So
the first two years of Centrico,I worked, like, probably, like,
18 hours a day nonstop for,like, 2 years straight.
And then I had a completemeltdown, and, I just couldn't
see or couldn't sit in front andlike think about, you know, the
(55:28):
business or the technology oranything like that. And I think
when we started Demisto, weactually talked among us, the
founders, and we said, let's tryto make something different.
Let's have a much better worklife balance, come home, see the
family, work out a bit, thingslike that, and I think that's
(55:49):
completely changed how we wentabout both the and how we go
about the scope. So kind ofthink of it as everybody says
that think of it as a marathonand so on, but you actually have
to be conscious about it and doit. And so that is one thing
that I think I learned a lot.
Now if I again, hindsight iseasy. I think if if I would now
(56:15):
have advice for my, you know,demistole self, I would
probably, like, do my fundingdifferently, as I mentioned. I
might have not sold the companyat the time that I sold it. You
know? All of those are decisionsthat you can, in hindsight,
probably think differentlyabout.
(56:36):
But I think the most importantfor me was this approach of,
hey, you know, 5 pm, let's gohome. Let's go work out, let's
talk with the family, and so on.You can work at 10, you can go
at 10 pm and go back to, youknow, working, but have this
window of time to actually takea breather. So I think that
(56:58):
that's probably one of my mostimportant advice to founders is
just make sure to take care ofyourself. Otherwise, nobody's
going to do it for you.
Right? So that's superimportant.
Mahendra Ramsinghani (57:09):
Yeah. Thank you, Slavik. And I think
this notion of work life balanceand founders especially caring
for their own selves, if thatawareness does not trigger in,
you know, we've seen situationsof burnout. We've seen
situations of frustration andimpaired decision making as
well. So that's great advice.
And as we wrap up our episode,let's take a look at the crystal
(57:31):
ball here. Your journey in IDFand going back in time to the
gentleman who would unplug themachine because his coffee was
more important was a classicinsight of how, you know,
staying in touch with customersis important. But that was
database, then you got intoorchestration and automation.
(57:53):
Now you looked at identity. Butthe world is changing.
You know, you look at the amountof capital that's flowing into
cyber. You look at thegeopolitical forces. You look at
how regulators are paying a lotmore attention. In fact, in one
of our previous episodes, Siddescribed that RSA, there were
several people from Washington,DC spending time at RSA. So you
(58:16):
have this confluence of macro,micro, and a lot of competition.
If you look at the next 5 yearsin cybersecurity, what are some
things that you see or what doyou predict?
Slavik Markovich (58:27):
So first of all, I think that, and it's no
surprise to anyone, AI is goingto be more prevalent in every
aspect of your life, I guess,not just the of of cyber.
Autonomous agents that make alot of, like, work done for you,
(58:48):
I think, is very interesting.Identity, in that case, becomes
very interesting as well Becausethen authorization and what can
the agent do on your behalf isis suddenly, like, very
interesting. Like, you want togive him something, but you
don't want to give himeverything. Not your passwords,
but maybe so so that becomes,like, super interesting.
(59:09):
I think generally, I would see a lot of,
you know, in my particular areaof, it's and and and space, I
would see a lot of, moving awayfrom passwords to other means of
authentication, which, you know,one of the big reasons we
started the scope, I think. Andif you see my shirt, like, kill
(59:31):
dash 9 passwords, that's whatwe're trying to do generally. So
things like passkeys and otheroptions, I think, would be the
future. And so that's anotherthing. And what you know?
And we all know that it's veryhard to predict 5 years ahead.
The way that AI changes, like, 6months ago, Things were
(59:54):
completely different than today.And so we'll we'll see, I think,
a lot of, innovation, but also alot of, like, wasted, how shall
I say it, a lot of burned moneyon thin wrappers around AI,
which don't have necessarily anysubstance. And so I would
(01:00:15):
probably advise a lot of cautionhere not to overinvest, burn
money on things that notnecessarily have the right
values. But overall, I I think,you know, AI is is going to be
prevalent across the board in inmany of the, you know, new
innovations that are coming.
Mahendra Ramsinghani (01:00:34):
Wonderful. On that note, Slavik, thank you
again for the inspiration, thedecades of work you've done as a
founder, and most importantly,being so open in sharing, your
journey. Thank you so much.
Slavik Markovich (01:00:47):
Of course. Happy to do that and happy to be
here, and thank you guys forhosting me.
Sid Trivedi (01:00:51):
Thanks, Lami. Thank you for joining us Inside the
Network.
Ross Haleliuk (01:00:57):
If you like this episode, please leave us a
review and share it with others.
Mahendra Ramsinghani (01:01:02):
If you really, really liked it and you
have some feedback for us, wrapit on a bottle of Yamazaki and
send it to me first.
Sid Trivedi (01:01:11):
No. Don't do that. Mahendra gets too many gifts
already. Please reach out byemail or LinkedIn.
Welcome to Inside the Network. I'm Sid Trivedi.
Ross Haleliuk (00:07):
I'm Ross Haleliuk.
Mahendra Ramsinghani (00:09):
And I am Mahendra Ramsingani. We've spent
decades building, investing, andresearching cybersecurity
companies.
Sid Trivedi (00:18):
On this podcast, we invite you to join us inside the
network, where we bring the bestfounders, operators, and
investors building the future ofcyber.
Mahendra Ramsinghani (00:30):
Today, we are joined by Slavik Markovich,
CEO and cofounder of Descope, anidentity and authentication
startup that launched with a$53,000,000 seed round. Slavik
is a seasoned cybersecurityfounder with a passion for
tackling complex challenges.With 2 decades of experience,
(00:51):
Dscope is his 3rd startup. Mostrecently, he was the cofounder
and CEO of Demisto, a leader inthe security orchestration and
automation space. Within 4 yearsof its launch, Palo Alto
Networks acquired Demisto for$560,000,000 Prior to Demisto,
(01:12):
Slavik co founded Centrico, adatabase security startup that
was acquired by McAfee.
In our conversation today,Slavik shares some practical
advice on building products,raising capital, and managing
globally distributed teams. Inthis episode, you will hear some
interesting stories about boardpivots. For example, Demisto
(01:35):
started off as an endpointsecurity company, but then ended
up as a leader in the securityorchestration space. How did
that happen? What is theimportance of engaging with
prospective customers?
And most importantly, how didthe team draw insights from
evolving technologies likeSlack? Slavik also shares the
(01:57):
importance of a good game ofpoker and how that is helpful in
raising capital and, of course,good coffee and how that might
help you to land a greatcofounder. Today at Descope,
Slavik and his cofounders are onto the next challenge, identity
and authentication. Tscopesolves the password problem
(02:23):
while focusing on developers andengineering teams. It sells with
a bottoms up self serve adoptionmotion.
Now this is very different fromDevasto which focused on
cybersecurity teams and sold topdown. Here, you will find out
how Slavic and its cofounderscontinue to challenge themselves
(02:44):
and grow and evolve as marketsand technologies change. Get
ready for an episode packed withinsights, wisdom, and practical
advice from a proven founder whois embarking on his 3rd and
potentially the largestopportunity. Let's dive in.
Ross Haleliuk (03:03):
Welcome to the network, Slavik.
Slavik Markovich (03:05):
Thank you for having me. Happy to be here.
Ross Haleliuk (03:07):
We will split today's episode into 4 parts. We
will start by discussing yourbackground. Then we will cover
achieving product market fit,raising capital, and finally,
what all founders want to hearabout, getting to an exit. Let's
kick things off with your originstory. What got you intrigued
(03:27):
about cybersecurity?
Slavik Markovich (03:29):
I think, like, a lot of, folks, my age at
least, we all started by tryingto hack games to remove, like,
protections from the games. So Ithink a lot of folks basically
started there with your early,you know, commodores, and then
like the the 86 instruction set.And I think I got introduced
(03:51):
this whole thing by playinggames on my compatible IBM 86
instruction set and learning theassembly there and just hacking
away by patching the game andremoving stuff and so on. So it
was all kind of a PPS systems,and the like minded people that
(04:13):
just stay you spend nights onthat while, you know, going to
school, I guess. So, yeah, thatwas the start, but I think the
official kind of cyber journeystarted in the Israeli Defense
Forces where, you know, you hadto emphasize cybersecurity and,
which was part of kind of yourjob there, I guess.
Mahendra Ramsinghani (04:37):
So IDF, was sort of a training ground
for you, Slavic. And then overthe past 2 decades, you've built
3 separate startups. The firstone was Sentrygo, database
security. The second one wasDemisto, SOAR or security
orchestration automationremediation. And now the third
(04:58):
one is Dscope. So you've beendoing this for 20 years. How is
it different this time?
Slavik Markovich (05:03):
I guess, first of all, I guess I'm a very
boring person. That's what Iknow to do. So I don't even try
to do anything else, trying tocreate something in cyber and
and so on. I think, generally, Ialways went to ideas that
interested me and were, youknow, a bit of a challenge from
(05:25):
a technological perspective orfrom a process perspective and
so on. And the early days ofdatabase security, that was,
like, super interesting to mebecause, say, at the time, there
were no good products thatprotected database activity.
So that was interesting. Thentalking about, SOAR, security
orchestration, automation andresponse, it was basically about
(05:49):
the process and how there wasnot enough manpower and the, you
know, the automation aspect ofit, but also the chat ops and so
on. And this scope, I think, isprobably our largest, like, term
in a sense that this is like,the identity space is so
important, and it also toucheseach and every one of us
(06:12):
because, say, everybody hatespasswords. You know? Everybody
hates doing, like, these wholechallenges of security and
multifactor and so on.
And so if you can make it assecure but less frictionless and
help companies build that likethat, I think that is an
interesting challenge. So,generally, each of my start ups
(06:35):
was something that I wasinterested in, and the scope is
slightly different in the sensethat it doesn't even sell to
cyber people. We actually sell alot to the to the engineering
folks, to the CTOs, VPNs, andand and so on. So it's slightly
different, but it's still, youknow, the challenge is what kind
of got me started here.
Sid Trivedi (06:56):
Your first startup, Slavik, you talked a little bit
about it. It was calledCentrico, and it was a database
security company. What problemswere you solving, and and how
did McAfee, which ended upacquiring the business, how did
they hear about you?
Slavik Markovich (07:08):
The reason I think it's a kind of a lesson
for a lot of founders is try tosolve things that, you know, you
understand are painful for you.And so I did some consulting to
Sony PlayStation at the timehere in Foster City, and we
(07:28):
implemented the bidding system,the 1st online gaming system for
PlayStation, which was actuallypretty interesting. And one of
my bragging rights is I have myname on a lot of the games that
were out in the in the creditdraw at the time. I'm talking
2003, 2004, and so on. Sothat's, that's my bragging.
(07:48):
Right? But beyond that, whatreally surprised me was that I,
as a consultant, could accessthe database of all Sony
customers with, like, billinginformation. And it wasn't
encrypted, and it wasn'tprotected against
administrators, basically. Andso I said, oh, that can't be
(08:10):
right. And how can we protect itin a way that is as close to the
database as possible, but notbeing controlled by the database
administrators?
And so this is a Sentrygo wasactually a very challenging
technology because what we did,we reverse engineered all the
(08:31):
relational databases likeOracle, Cypress, DB 2, SQL, SQL
Server, and and so on. And theywe attached directly to the
memory of the database to derivethe activity. So I will say for,
like, 3, 4 years, I wasbasically dreaming in assembly,
like, seeing memory structures,living inside IDA Pro, and and
(08:54):
and all of that. So it was verytechnologically challenging, But
the problem that we solved isstill super interesting. How do
you monitor database activity,especially for privileged
access?
And so if your DBA looks at yoursalaries or there's a SQL
injection hack and then yourapplication becomes done, it
(09:14):
does things that they theyshouldn't do, I I you know, it's
still very relevant. So, that'show we we kind of started. And
we actually approached McAfeebecause they had like a server
security kind of unit. Anddatabases were like a lot of the
data center were like one of thecrown jewels, the most important
(09:36):
ones. And we kind of went andsold together to a bunch of
companies.
And this is where I met mycofounder, Rishi. And the
business was, like, verysuccessful, and then it's just
naturally progressed to the nextstage, I guess.
Ross Haleliuk (09:53):
Yeah. As you've mentioned, the acquisition
sponsor at McAfee, Rishi, andyou became friends and
eventually, cofounders ofDemisto. Demisto was not a
normal Silicon Valleycybersecurity startup. 4 of the
cofounders were spread acrossdifferent continents coming
together. What are the mainchallenges in building a company
culture under suchcircumstances?
Slavik Markovich (10:14):
Yeah. So we it it's kind of funny because, say,
2 of us were here in the BayArea, 2 of us were in the
Israel, and I think it works orit can only work if you have
full trust between the founders.And in my case, I worked with
the the Israeli founders, in onecase since 1997, and in the
(10:38):
other case since 2,006. And so Iknew them really really well,
and we would just work together.The other aspect is that it's
there is sacrifice here.
Right? You you get to go oncalls at, like, midnight, and
they get to go on calls atmidnight, so it only works if
(10:59):
everybody is just pulling in andworking together. And the third
I would say is that we had fulltrust because we, from the get
go, said, we're not gonna worryabout how we split the pie and
everything, we'll be equal ineverything throughout this
entire journey. And so that waslike, there was no thinking, oh,
(11:20):
he gets more shares than me, orhe gets more salary than me. It
was all very, kind of completelyopen and and very collaborate.
And, yeah, Rishi and I, I liketo think that I seduced him away
from McAfee just by getting himhooked on good coffee. So when
my office had, like, a decentcoffee machine in the office,
(11:42):
because the McAfee coffee wasshit. So I had a private machine
in in my office, and his officewas next to mine. And I would
say, hey. Come on.
Yeah. Let's drink coffee in themorning and so on. And we
started chatting. This is how wekind of, you know, created a
strong connection, and wecontinued the to to start
something together. But, yeah,it was it was pretty funny
(12:04):
because prior to McAfee, Ididn't know Rishi.
Mahendra Ramsinghani (12:07):
And to this day, Slavik, Kiro, I I
remember the first meeting wehad, you, Rishi, and me. And I
asked you, so how did you guysmeet? And you both look at each
other and at the same time say,I guess because we love good
coffee.
Slavik Markovich (12:22):
So it's it's actually a bidirectional
process. Right? Because I gothim to appreciate, like, good
coffee, And he slowly trains meto eat more spicy food. So I you
know, Indian food is somewhatspicy, and I did eat spicy at
all. And slowly, I'm kind ofgetting there.
I'm still a wuss, but I'mgetting there.
Sid Trivedi (12:43):
Any advice for the founders on coffee machines that
you'd recommend?
Slavik Markovich (12:47):
I I think, generally, invest in that. You
know, coffee makes the the startup work. We have a Breville
here, which is pretty decent, Ithink. It, you know, it dumps,
it does the grinding, the mill,frothing, everything. But, you
know, find your right beans,find your right coffee machine,
(13:08):
and invest in it because that'simportant.
Sid Trivedi (13:11):
Well, you know, let's move on from your
background to talking a littlebit about achieving product
market fit. And, you know,Demisto aspired initially to
focus on endpoints and endpointsecurity and then pivoted into
security orchestration. Walk usthrough that light bulb moment
when you realized, hey, we'renot gonna look at endpoints
anymore, no more endpoints, andhow you found the groove for an
(13:34):
integrated SOAR platform.
Slavik Markovich (13:36):
Yeah. So we initially started, I guess,
because we were at McAfee.McAfee is somewhat famous for
being an endpoint company. Weinitially said, you know,
endpoints are kind ofinteresting, and the EDR market
just started, you know, going.And they there were, like, some
(13:58):
really cool companies out there,and some of them actually had,
like, peer to peer databases,like Carbon Black was there, and
they had a challenge withperformance.
And, like, we said, you know, wecan probably solve it better
from a technology perspective.And so this was the the the
thing that we started with, andwe created, like, a really cool
(14:19):
peer to peer databasedistributed queries, like super
smart. We were very happy aboutit. And then our sales 2015, we
could have said, okay. Let'sschedule a bunch of meetings
with CISOs.
And we had probably, I think,like, 35 meetings with the
different CISOs where wepresented the idea and the
(14:41):
overwhelming response wasanother endpoint. No, thank you.
And we were like, oh, shit,that's it. That's not good. So
during those meetings, weactually started people thinking
and asking them, okay, so whatare the big problems that you're
facing and what's challengingyou?
What's keeping you awake atnight? And they're all talked
(15:03):
about, like, this huge amount ofalerts, not enough manpower, and
the need to do something smartabout that. And we looked at
each other. I remember Rishi andI kind of looking at each other
and saying, wow. That's actuallya pretty good idea.
Let's, you know, invest in that. And so we
we started with, this idea ofplaybooks and automation and the
(15:26):
connectors to various securitytools, And we did a lot of our
ideation at the time. Slackbasically started, like, getting
traction. And we did a lot ofideation with Slack team that we
created. And the, you know,during one of those ideations,
we looked at Slack and we said,oh, you know what?
This interface actually isamazing. Let's bring it into the
(15:51):
this space as well. And so wekind of invented the whole chat
ops for security in the sourcespace, and it almost all came
came up, like, via accidents.Right? A lot of people from
seesaw, like, just inspirationas we went and ideated, and,
this is, you know, this is howhow it started.
(16:12):
I think that we basicallyconvinced both Gartner and the
customers that it's not onlyabout automation. It's the whole
incident management. It'sautomation. It's chat ops. It's
the war room, and theintegration together, And we we
basically kind of led the chargewhere all the other players kind
(16:34):
of copied us.
And so we we were really happy.Like, oh my god, they're copying
us. That's good. We're like,we're leading. So, this is how
it started.
Sid Trivedi (16:43):
Slavic, you mentioned kind of talking to
those 35 CSOs and getting theirfeedback and them helping you
kind of move from endpoint to toto SOAR. Any advice for founders
who don't have those you know,CISO connections on how they
should get that type offeedback? Because that was very
much critical. You know, you youmay have gone down the endpoint
road and then competed withCrowdStrike and Cylance and
Cyber Reason, all of whom werekinda built a few years before
(17:06):
you. Yeah.
So it would have been you know,you'd be trying to catch up. And
that advice was very helpful.
Slavik Markovich (17:12):
Yeah. I think, it's super important to get
feedback. Like, one of the earlythings, and I have an amazing
story about that in the army.One of the most amazing things
that we learned is always to getout into the field and ask the
practitioners, like, the realquestions. So in the army, we
(17:32):
had, like, this huge distributedsystem that did something.
It doesn't matter what. But wesaw one army base where every
morning at 8 a. M, the systemwould reset. And we didn't
understand what's going on. Wewent, we did like log analysis,
we tried to do remote debugging.
(17:54):
We just couldn't understand. Andthen, we said, you know what? We
just don't know what'shappening. Let's go and visit
that army base, which was upnorth. And, we went there, and
we're looking at the system.
Like, we're sitting in front ofit. It's like old boxes. We're
sitting in front of it, and,like, we're waiting for
something to happen, and thenthis older gentleman, like, one
(18:17):
of the the commanders there,just comes in and says good
morning to us. We say goodmorning to to him, and he goes
to the coffee machine, thenunplugs our system, plugs in the
coffee machine, and then makescoffee for itself. And
apparently, that was hisroutine.
Like, every morning, he wouldplug the the system and and plug
the coffee machine. And, thatkind of I still remember it
(18:40):
because it kind of landed thiswhole thing that unless you
actually visit and go to thefield, you just cannot
understand what's really goingon. And so even if you don't
have the right connections,even, like, there's ways to get
to those, would be customers.VCs can help. You know, other
(19:02):
founders will be happy to helpyou.
There's, like, multiple routesto get those opinions. And in
fact, what I saw is that a lotof the thesis actually are happy
to talk with you. They're happyto talk with founders because
you actually eventually solvetheir problem. So I would
recommend never to buildsomething, like, inside your
(19:24):
own, like, office and just buildsomething without talking with
your prospect.
Ross Haleliuk (19:29):
100%. Like, having done product for for
quite some time, yeah, I'velearned it very early in my
career that you have to get out.You have to you have to get real
feedback, understand how peoplein the in the trenches are using
different products, like, whatproblems they're facing and so
on and so forth. Because it's sotempting especially now in the
age of social media, it's justso tempting to listen what
(19:50):
people say, you know, publiclyand then assume that those are
the real problems, but thereality is very different. Like,
there is so much noise, and thevast majority of the people who
are sharing about their problemsare not really talking about the
real problems, but talking aboutthe problems that impact
probably 0.1% of the market.
Anyway, let's go back to theproduct management. Tell us
more. How did the teamprioritize on early features and
(20:13):
navigated trade offs andnavigated also the customer
feedback? In particular, the onepiece that would be quite
interesting to hear about is howdid you navigate the conflicting
feedback? Because, yes, asyou're right.
Right? Talking to sisters isimportant, but you talk to 10
people, and you will get 10different opinions. How did you
how did you make sense of all ofthat?
Slavik Markovich (20:31):
Yeah. It's a it's a pretty funny. There's,
obviously, a lot of your ownexperience and your own opinions
that, you know, you have to takeinto account. Sometimes, you
would need to dive deep into thefeedback to understand, like,
the core of the feedback, but weactually simplified it a lot,
and we basically prioritized ourfirst customers. So we would do
(20:56):
a POC, and the feedback wouldbe, okay, you need to do x, y,
and z, and you have to have,like, those connectors.
So we actually prioritize basedon those POCs, early customers,
and we were really, like,ravaged, crazy about those, that
(21:17):
first engagement to make itsuccessful. And so I still
remember, like me and Rishiwould used to seek at the, you
know, at the stock of thecustomer, just see what they're
doing and just go back withhomework and just implement and
run from there. So it's a likethe first enthusiasts, early
(21:37):
adopters, customers, I think arereally important. And then as
like if you got conflictingfeedback, you you basically just
I think use some of yourexperience here. There's a I
don't know if there's, like, asilver bullet here to just, you
know, how you know, rule ofthumb that that's how you you
take this feedback and not thatfeedback.
Ross Haleliuk (21:56):
That does make sense. And I'm curious, sort of
taking it taking a step further,how did you know that the
feedback you're building upon isgoing to have a broad
applicability to the marketversus you would be building,
like, a very niche product for avery small segment of customers,
which does happen so often incybersecurity. Like, it's just
(22:17):
so common to see foundersidentify an angle, go out, get
some feedback, and it soundslike they're on the right track
until they learn that maybe 2years later that there is only
15 companies on the planet thatactually have that problem.
Slavik Markovich (22:30):
Yeah. Yeah. I think it's a you know, I I'd
love to take a lot of creditfor, you know, what what we did.
A lot of it is just lack becausewhat we did was very applicable,
very widely because allcompanies need automation,
efficiencies, you know, and theyall kind of face the same
things. What we did do is try tofirst have this north star of
(22:56):
where we're aiming and kind ofgo through the features kind of
that will get us to that northstar.
That's one thing. And the other,we super emphasized platform
capabilities. Sometimes to toour I think disadvantage. So we
try to build as generic aspossible, and then if one
(23:18):
customer wants to use it likethat and the other wants to use
it a different way, it stillwould work because the platform
was super generic. So we built ageneric workflow.
We built a generic like a dragand drop a wizzy wig at the door
that you can build the incidentpages, whatever, however you
want it. And we built thegeneric incident management
(23:41):
platform. And so, and fromthere, on the one hand, we could
actually solve a lot of the usecases without having to redo a
bunch of things. But on theother hand, because it was so
open ended, until we learned howto be very opinionated, we went
into very long POC processesbecause customers just said, oh,
(24:04):
I want to do that. And said,sure.
Yeah. You can do that. And then,oh, I want to do the other
thing. Yeah. Sure.
You can do that. And so youcould do so many things that it
just was never ending. And sountil we learn to focus and be
very opinionated about what wecould do, it just kind of went
all over the place. So I'd sayhave a North Star, build a
(24:25):
generic platform, but haveopinions.
Sid Trivedi (24:28):
Talking a little bit about, you know, category
creation versus going afterexisting categories that are
crowded, you've kind of doneboth. With Demisto, you were
helping to create the SOARcategory alongside a few others
like Phantom Cyber, you know,Oliver Fredricks and Saurabh
Satish were building thatcompany. We are small investors
there. Paul Nguyen was buildingInvotas, if you remember. So
(24:49):
there were a few players inSOAR, but it was new.
It was a relatively newcategory, and you were helping
to educate the market, and thatwas an uphill task. And when you
compare that to Dscope today,you're going after a very
established market, and there'ssome pretty established players
like Okta and Pig and Microsoftthat are out there, and the
market understands what's goingon. And your goal is really
around, how do I differentiatefrom the market and how do I
(25:12):
explain to the customer whereI'm different? What's your
advice for founders on how topick between these 2 effectively
necessary evils? It's kind of,you know, a no win scenario, but
how should they pick between the2?
Slavik Markovich (25:23):
We don't necessarily kind of thought like
that. Like, hey. It's a newcategory or, hey. It's, like an
established market. So we kindof looked at the problem.
We like the problem. We like thespace. And then we kind of said,
can we do it better than what'sexisting? And obviously, if it's
(25:45):
completely new category, thenyou say, oh, you know what?
Yeah.
We can do better because there'snot a lot of things out there.
And when we looked at thecustomer identity and access
management space here in theschool, we actually saw that
they're, like, really, I'd say,older companies, like, Bing and,
(26:08):
you know, Microsoft in a sense,and Okta, and and and so on. And
there is, like, a bunch of newstartups, but the old companies
are old. So in a sense, youknow, if you innovate and then
you can easily out execute them,and a lot of a lot of them, I
think, are are just very hard towork with and were not very
(26:29):
developer friendly. I think alot of the new companies, they
didn't have the enterpriseexperience, and so they were,
like, really cool kids, but theydon't know anything about
selling to enterprise andenterprise features, and so and
so I think we we we took a hardlook at the market and saw that
the market is huge, and we canreally execute much better than
(26:54):
the others.
And, that was our, like,thinking of, hey, let's do that.
This is also one of the reasonswhere it's a different funding.
Anyway, I guess it's anothersection of this podcast, but
it's a different fundingdynamic. Because for an existing
market, when you know exactlywhat you want to do, this is why
(27:14):
we raised so much money in thebeginning because we didn't want
to worry about hiring morepeople or, like, getting enough
breathing room to to build theright product versus when you're
just building a category, it'sall about experimenting. And so
you don't know exactly what willwork and where you're gonna go
and what what you'll do.
(27:35):
And so you raise way less thanthat and don't over hire and and
so on. So from my perspective,it was mostly about, oh, this is
a cool problem. And then can wecan we build something better?
Mahendra Ramsinghani (27:47):
That's a very interesting, you know,
segue into our fundingconversation, Slavik. You know,
when you're looking at a bigmarket, you're going after
solving a mega, mega problem.And especially when the legacy
innovators have not yetinnovated as fast enough,
especially now that you look atthe world of AI and how things
are changing so rapidly, it'sgood to be in that place. And
(28:10):
also the logic of raising a$50,000,000 seed round. You
know, Dscope raised a seed roundthat made headlines everywhere,
right, compared to the$6,000,000 seed round that you
raised with Excel, that Iremember being a part of that
conversation when, you know, wewere sitting at the table.
By the way, when 3 of us met, wedid not eat Indian food even
(28:32):
though there were 2 Indians. Andone of you, I think we went to a
burger joint, if I rememberwhere we are. I still have the
picture of that burger, by theway, and the T shirt as well
that we saw, right? So thequestion for our founders and
our audience is as follows.There is an art form and a
science of raising money.
The science is very simple.Everybody knows that. Hey, you
get your pitch deck, there is acam, there is, the tea,
(28:55):
etcetera, etcetera. Right?Everybody knows the formula.
But the art form is somewhat,you know, way at times. It is
dependent on market conditions.It's dependent on your
background as a founder. You'vealready sold a century ago in
your 1st cycle, etcetera,etcetera. So help our audience
to understand the art form ofraising capital.
Slavik Markovich (29:16):
Yes. Again, I don't want to claim too much
credit here. I think a lot of itis just timing and luck and
being at the right place at theright time. But I think it's all
about, like, the story you tell.Right?
You have to have a convincingstory of why, why now, why you,
(29:38):
all of those things. And I thinkI think we had that both in the
Demisto and in Discove. So it'sall about the story. And then
it's slightly about playingpoker. So I don't know if you
know, but I I play poker quite alot, and I play every Thursday
(29:58):
with a team of folks.
And and so the there's a bit ofa poker going on between you and
the investors, and, you know,juggling a bunch of investors
and so on. And that's also a a,I I think, a kind of an art,
where I'll give you an exampleand, you know, Jake knows that.
(30:21):
In the beginning, when we talkedwith Accel so we we like Jake a
lot. He was, like, you know,young, did a lot of, you know,
operational work. He understoodwhat we're trying to build, and
and and so on.
And so we said, oh, we we wouldlove to work with Excel. It's
really good. And then,internally, we said, okay. What
are the terms of the deal thatwe would want to accept if we,
(30:45):
you know, they're given wherewe're where we're aiming, and,
you know, what are the laws thatwe were willing be willing to
accept. And when we came tothose discussions with Jake, I
remember he started with ourhighest option, right, which was
really nice of him.
But, at the time, like, I lookedat Rishi, and Rishi looked at
(31:06):
me, and I immediately got tosaid, oh, Jake, you know what?
It's like very disappointing. Iexpected much more from Excel. I
expected, like, you know, and,you know, I think that you
really understood what we'reaiming for. And and and so there
there's really poker going on.
And, he he then raised the offerby a lot, but I also think he
(31:26):
played poker with us. And he's,so we didn't go all the way to
where he was willing to go. Andso there's kind of an art there
as well in negotiations.
Mahendra Ramsinghani (31:36):
And so besides coffee and playing
poker, you know, making surethat you cast a wide net. You
mentioned as a product journey,you talked to 35 CISOs.
Slavik Markovich (31:48):
How many VCs were in the mix here as you were
playing this game? I think atthe time, we're probably like 8
that we were serious with thatwe we kind of engaged. And,
honestly, we were very closewith, you know, signing a
different term sheet, and, Jakewas just moving so fast, and we
(32:09):
liked the interaction with himso fast that we kind of stopped
some of the other processes. ButI'd say we probably were serious
with, like, 8 of them, and gotto, like, a partner meeting
with, like, 4 or something likethat. Very cool.
And then and then kind ofjuggled between them.
Mahendra Ramsinghani (32:29):
Very cool. Very cool. You know, I want to
share a story here for ouraudience about how, you know,
there is this dynamic that, VCsversus founders, and somewhat
the dynamic ends up being, manytimes it ends up being somewhat
negative. And the story here isas follows. So Jake calls me,
Jake Flomenberg, Tri Accel, he'snow with Wing Ventures.
You know, he's a dear friend toa lot of us now. Jake calls me
(32:51):
and says, Hey, Mayankra, haveyou raised your fund yet? So
this was the time when I wasraising my fund well. And, you
know, I played poker with him.
Slavik Markovich (32:59):
I said,
Mahendra Ramsinghani (33:00):
What's up? I didn't give him that. So I
said, What's up? He said, It wasa great opportunity. Axel is
putting in 5 and a half 1000000.
It's a $6,000,000 round, and youhave, like, 1 week. So I
remember, like, talking to Rishiand you that day, and then
driving down to, Montague orsomewhere where we met. And then
on the way back, the I wasthinking like, oh, shit, I don't
have the capital to invest. Soso I remember calling a friend
(33:24):
in India. I said, I need somemoney, and my friend is
bantering with me saying, hey.
We're a developing country.Money comes from America to
India, and you're asking me formoney. But he was a childhood
friend, a dear friend. And so hewired me the money the next day,
and 48 hours later, the moneywas in your account. And so, you
know, the story the lesson hereis that founders help VCs to
(33:46):
become successful, too.
You know, it's not just the oneway around where so my fund won
the best performing company isDivisto. Thank you, Slavic
Rishi. And that that allowed meto raise my fund too. So, you
know, the lesson here is that,you know, we are all human
beings. We're trying to solveproblems.
And many times, founders look atVCs as, like, ah, whatever,
money. You know, there is anegative sentiment. But
(34:07):
sometimes, you know, people likeyou and Rishi were kind to, you
know, VCs like me or founderslike me. You know, it's a great
dynamic. So I want the foundersto also understand that in your
success lies success forinvestors, life success for your
customers, life success for thecommunity.
So think about theresponsibility that you carry
and work with any everybody in ain a nice way. I mean, here you
(34:29):
are. Your next seed round was$50,000,000 So no wonder
investors were chasing you soaggressively for your next stop.
So thank you for all
Slavik Markovich (34:35):
your help. We kind of had this oh, for sure.
We kind of had this rule of,like, no assholes. Life is too
short. Just be kind and enjoythe journey.
I think it actually reflected,throughout both for employees,
and, you know, we keep closeconnections with our VCs, you
know, with the with the prettymuch everyone we work with, and
(34:57):
they I think you can see it alsowhen we started the scope. The
first, like, 20 employees justcame from the previous, you
know, work that we did withDemisto. So, so we we basically
just got a lot of the old gangback together, and they
continued to do it together aswell. So, you know, I think
(35:18):
we're all kind of well, maybesome of us are, like, too old
to, you know, to not enjoy thejourney.
Sid Trivedi (35:25):
Let's talk about the series a Slavic. You raised
the series a at Demisto just ayear after that seed round that
you raised from from JAIC andExcel, and you bought in
$20,000,000 in that series around. What milestones had you
accomplished? Was it somethingthat you were planning to raise
or were you preempted? And howdid those milestones differ from
(35:48):
your initial projections?
Slavik Markovich (35:49):
Yeah. I think it was like almost a mistake. So
when we when we kind of startedeventually going to market, it
was Q4 of 2016, and we actuallygot amazing traction. We did
have sales guys, like it's justme and Rishi selling, and, you
(36:11):
know, Sisush wanted to talk withus, and we closed the decent
amount of business just byourselves. And so we said, oh,
you know what?
We actually have product marketfit. It's all amazing. And I
think we closed the quarter,like like, 640 k ARR, which is
an amazing Q1 for any company.And then we said, that's it.
(36:34):
Like, we we found the productmarket fit.
Let's go raise money. And so wewe actually started a process,
and we raised $20,000,000towards the end of q 4. And, we
brought in the time clear sky.And, also a funny story because
I was visiting the Israelioffice, going up the elevator,
(36:57):
and I had the backpack ofsilence for some reason. And,
this guy approaches me and says,oh, silence.
I know this guy. I've beeninvestor in them. And, we kind
of got talking, and the this wasAlex from Clear Sky, and this is
how we got basically to knoweach other. So it's completely
coincidence. But anyways, webrought the money, and we
(37:17):
immediately said, oh, we havethe $20,000,000.
Let's hire a bunch of salesguys, and just let them run.
And, guess what? We actuallyfailed completely. So q one of
2017, we closed a single deal,100 k. That was, you know so we
went from 640 to a 100 k becausewe didn't understand it's a
(37:41):
completely different story whereyou have founders selling, who
fully understand the problem andthe product, and CISOs are happy
to talk with, and it's acompletely different dynamic
where you have sales guys goingand selling.
And so it was really funny, thefirst board meeting that they
have with now the new investorswith this guy, and we're saying
(38:02):
we're sitting there and saying,you know what? None of our, you
know, theories and none of ourprojections actually worked out.
It was terrible. So, from fromthat perspective, we actually
raised before we found therepeatability in our go to
market, which was a pretty funnyand stressful and stressful. And
(38:23):
I have to say that the ourinvestors were super patient
with us.
They were super, like, guidingand understanding and so on. So
I it could have been a verydifferent discussion, but it was
actually a very good discussionbecause they still believed in
the vision, believed in theNorth Star. And then, you know,
then it was just execution. Andwe actually finished that 1st
(38:45):
year with 4,400,000 of ARR. So1st year outstanding was
actually amazing for us, but itstarted very badly.
Ross Haleliuk (38:53):
So knowing what you know now, what would you
have done differently if youwere to go back to that time?
Slavik Markovich (39:00):
I mean, generally, you know, it worked
out really well for us. It itdidn't work out badly. But I
would actually say that you needto find the repeatability. You
need to find to move away fromfounder led to, like, process
led where you find some like, areal go to, you know, product
(39:23):
market fit, and then you canactually raise without having
this huge dip in the in themiddle. So first is we all know
that first, like, 10 deals, the10 customers, they're all closed
by the founders.
Right? The founders have tohassle, do whatever it needs to
be to happen, and just closethose deals. But that doesn't
say anything about thescalability and and the
(39:46):
repeatability of the pieces. Andthen starting that engine, I
think, is important before youpour more money into it, which
we didn't. Right?
We we we poured a lot of money,and then we saw the engine
doesn't work. We need to kind ofbacktrack and and kind of build
the engine from the ground up.And so that, I think, is an
interesting lesson to learn.But, again, because the timing
(40:10):
for our product was really good,we we could afford making a lot
of those mistakes because thetrajectory was just going up
anyways. So those mistakes werekind of fixed on the fly while,
you know, while running and, youknow, it worked really well.
Ross Haleliuk (40:25):
Interesting. Yeah. So going back going to the
series b, 2 years into theDemisto's journey, you have
already raised a 40,000,000series b round led by Greylock.
Did you feel at the time thatthe company was overvalued? And
how did this funding roundchange your company's
trajectory?
Slavik Markovich (40:43):
So it was really funny. That was one of
the most, I think, competitiverounds because we were chased by
everybody. And, honestly, like,even looking back, I think we
were undervalued, notovervalued. Like, when we
raised, this 40, 43,000,000, weactually had, like, really good
(41:07):
visibility into, like, 15,1,000,000 of ARR. And,
eventually, we ended the year at21.
So the the growth and, like, thetrajectory was the hockey stick.
And so, you know, I think it wasfirst of all, everybody was
chasing us in terms of business,but we really loved the
(41:29):
interaction with Braidock. Youknow, Sarah and Nasim, they were
like really smart, did their alot of their homework without
bothering us, and and, like, wethe interaction with them was
great. And so we decided to takemoney from them even though we
had higher valuations and higherterm sheets in in our hands.
And, unfortunately, we didn'thave a lot of time to enjoy
(41:53):
interacting with them because 3months after, we already had the
conversation with the Palo AltoNetworks and and were acquired.
So I think we closed around in,like, October of 2018 and, like,
in the in January of, 2019, wealready had, like, handshake
with Palo Alto Networks. So wewe had all the money in the bank
(42:13):
still, and we we made the andfor them, I think the return on
investment was pretty nicebecause they we tripled their
money in, like, 4 months. Sothey invested, like, 31, I
think, of the round, and theygot, like, 93 of the round in,
like, few months.
Sid Trivedi (42:31):
You talked a little bit about Palo. So let's let's
talk about exits. And Demistowas acquired by Palo Alto
Networks for $560,000,000, andthat was about 4 years from from
when you originally founded thecompany. Give us the inside
scoop on those negotiations, whyyou made the decision to sell,
(42:52):
what were the challenging parts,what were the exciting parts.
It's not obvious, you know, whenyou describe all the numbers
being at 20,000,000 of ARR,growing the company at the rate
that you were having raised$43,000,000 more, that you
should go and sell.
So I'm I'm very curious to heara little bit about what was
going on between the 4 of youand the board as you are trying
(43:13):
to go through that process ofdeciding.
Slavik Markovich (43:15):
Great question. Honestly, I think, you
know, hindsight, we probablymade a mistake. You know, we
shouldn't have sold it. Now thebusiness is huge with Palo Alto
Networks. They're like I thinkthat probably they're one of
their best acquisitions forsure.
At the time, we didn't evenenvision selling. Right? So when
(43:37):
Nikesh approached us and said,hey, let's meet for, like, we
want to learn about yourbusiness and so on. Again, I I
didn't even think about, youknow, acquisition at this point,
and in my head, Palo AltoNetworks was always like a
firewall, like, next genfirewall company. So, okay.
Sure. Yeah. The best I I Ithought, hey, Maybe we can
(43:59):
actually do some work togetherand, maybe go to market together
and co sell or do something likethat. And that that was, the
best. So I didn't even preparefor the week.
I came to the meeting, and I'mgoing into this huge boardroom,
of Palo Alto Networks, and I seea lot of people. And then, like,
I I thought I'm meeting Nikesh,but I apparently, there were,
(44:21):
like, 6 people in the room, youknow, the cofounder Nir and the
VP of Corp Dev, and Lee who wasthe chief product officer and
the cash app engineer, and abunch of folks. And I'm like, I
didn't prepare anything. Then webasically went presented the the
(44:43):
regular customer presentationthat we had. And right in that
meeting, Nikesh is like, whileI'm presenting, I presented the
stuff, and then Nikesh is like,would you think about doing
something more strategic?
And I will say, we just finishedthe the round, with, great. We
(45:04):
sold, like, a huge trajectoryfor us, and we and so I said,
no. Look. Talk with us in, like,a year where we were, like, much
bigger and so on, and we justleft like that. And and I
thought, okay, that's that'spretty much it.
And then the guys started, likeso he sent me WhatsApp message.
The big WhatsApp pay user sendsme WhatsApp message. Hey, man.
(45:25):
Come to my house. Let's eatbreakfast.
You know? Let's talk and so on.And they eventually, you know,
he started kind of mentioningsome numbers. And when when,
like, you throw numbers, thensuddenly I have the duty to kind
of talk with the board, and,like, discuss it internally, and
(45:45):
it became suddenly it becameserious. I didn't even expect it
to be.
And in our head, we ascofounders, we said, Look, Palo
Alto has tons of customers. Withthem, our product can actually
reach many more. It's going tobe like huge. So that was one
(46:08):
thing, and, like, even the theintegration with all the product
products and so on was reallyinteresting to us. Then we also
had the financial, you know,aspect.
If it's a internally, we said ifit's above half a
$1,000,000,000, we'llcontemplate it. If it's below,
we're we're not. So that wouldthat was the line in the sand
for us. And at at the time,look, we're talking about 2018.
(46:30):
Right?
So the multipliers were notlike, 2021. The like, having,
like, 25, with 30 multiplier wasconsidered amazing. Right? So
that was kind of the 9% and Ihave to say that our VCs
basically didn't want us tosell. They actually pitched and
(46:51):
told us, don't do it.
Don't make a mistake. A hint toit again, they were probably
right, but we as as cofoundersfelt some pressure because it
was a big financial number. So,you know, life changing for most
of us or even all of us. And theother thing that, you know, Palo
(47:11):
Alto did really well, they said,look, if we're not going to buy
you, we're going to buy yourcompetitor. And so, think about
it.
Our biggest competitor wasacquired by Splunk, a huge
company. Now, the secondcompetitor is going to be
acquired with Palo AltoNetworks, And you're suddenly
facing those huge companies, andyou're like the last man
(47:32):
standing. It's not a comfortableposition to be in. And so we had
some concerns. And and theyhonestly also, they were very
generous financially, you know,both in a founder extra
retention and whatnot, and theyand and also in terms of all the
(47:55):
employees.
So everybody basically landed inPalo Alto Networks, and
everybody found a place, and sothat was really important for us
as well. And so we eventuallydecided to actually sell, which
was a, you know, I don't regretit, by the way. So just just to
be clear, I think it was theright decision at the time. It
(48:17):
was very hard to predict 2020and 2021 in terms of, like,
valuations and craziness.
Mahendra Ramsinghani (48:24):
I know that, you know, some of the VCs
tried to stop you from thatexit. I was not at that table,
but I'm very glad that you sold.I mean, speaking of life
changing, you know, it has adownstream effect on many of us,
so thank you again. You also didsomething very interesting. You
know, a lot of founders, afterthey get this whole acquisition
(48:45):
process done, whenever we talkto them, there is this, like, I
can't wait to get out.
You know, I've got my goldenhandcuffs, and I hate this
mothership, blah blah blah. Butyou're consistently even at,
McAfee, you spend a lot morethan 6 months or 1 year. And
there, you seduced Rishi withyour good copy, but you you
(49:06):
stayed with the mothership tohelp them. And then even at Palo
Alto, I remember severalconversations I would have with
Rishi. You, post acquisition,and you would share that, no.
These guys are good. They'rethey're treating us well. We are
enjoying. And most importantly,we're building a fine trajectory
here. What advice do you havefor founders on post
acquisition, you know, dynamics?
(49:27):
How should we see the mothershipwith both strategy and joy and
compassion?
Slavik Markovich (49:32):
Yeah. I guess, you know, I I had multiple
experiences by being acquiredand I think Palo Alto Networks
actually is a really goodacquirer in the sense that for
the most part, in the beginningat least, they live alone and
they're very thoughtful in howto integrate into their like
main business. So from thatperspective, I think I have only
(49:55):
like compliments to them. Sothat was actually a really good
experience. And I think for thefirst probably, like, year and a
half or maybe even beyond that,I think I I found myself being,
like, extremely busy justlanding the ship, integrating,
thinking about the next step ofthe journey within Paro Alto,
(50:17):
and then training all the salesguys, meeting customers that
they wouldn't have met otherwisebecause they they have a huge
reach, and so they really keptme busy from that perspective.
Obviously. And I was very open,and I think we were all open
with them. We said, this is notlike a life like, we're not
(50:37):
gonna stay there forever. But wedid. We stayed there for almost
3 years.
Rishi actually stayed the full 3years. And they I think we
generally enjoyed our our timethere. So if I compare it to,
like, McAfee as as an acquirer,McAfee was not doing a great job
(50:58):
there. Like really, it was itwas pretty terrible. And even
though I felt responsible forfor my team and I had to stay
and land everything and so on, Icouldn't wait to just move on.
Here in Palo, I think the theexperience was much better, and
you can feel that they are stillvery hungry to win and to go out
(51:18):
there and just grow the companyand and and continue just
winning. So the hunger aspectwas was was there. Having having
said that, you know, I think myskill set is much better
utilized in a startup versus alarger company. I like to make
decisions fast and move fasterthan even like Apollo Alto will
(51:41):
move. If you have a large ship,just changing direction or or
adding more stuff just takes along time.
In the startup, you can make a decision
and tomorrow it happens. In apart of after that, once you
make a decision and like 6months down the road, it
actually happened, which whichis fine. I mean, it's this is
just the nature of the of thebusiness. But I feel I enjoy
(52:06):
startups much more than a biggercompany.
Mahendra Ramsinghani (52:10):
You are now investing as well as serving
on the boards of many startups.What is your advice to founders?
And what are some observationsthat you have experienced in
this role?
Slavik Markovich (52:21):
So first of all, I think as investors, we
are probably pretty stupidinvestors, I have to say. So all
I care about is that the problemactually is interesting. The
technology is cool, and I wantto be part of the journey. I
think we're again, we're prettylucky in the sense that we don't
(52:43):
invest other people's money.It's just our money.
And so we can afford beingstupid about, like, oh, maybe
the go to market is not gonna bethat great, and maybe, you know,
the founder is not asexperienced and and so on. And,
we don't care because we want tobe part of the journey. So for
from that perspective, we thinkwe are not making the same the
(53:07):
same decisions as a like atraditional investor or
traditional VC would make. Butwe do invest quite a lot in
areas that interest us, be thatlike cyber, AI, enterprise
software, all of those things.And I think what I really care
about is seeing the passion ofthe founders about the problem,
(53:30):
and, you know, seeing in theireyes that they just want to, you
know, devour the problem andthen solve it and just go about
it and and hustle around it anddo whatever necessary just to
make the problem go away.
And so that is, I think, themost important thing, just
having the the team passionateand understanding and and so on.
(53:54):
Obviously, all the other thingsare super important, the TAM
and, like, go to market and andand and so on are critical, but
the first thing that we reallywant to see is the the hunger in
the founders' eye. That's Ithink is is super important. And
that would be my advice, like,try to solve something that you
care about. That you know, thatyou care, that you're passionate
(54:16):
about.
Life is too short. Don't sufferthrough something that you don't
really care about and justbecause you think it would make
a good business. That's thatwould be my my advice.
Ross Haleliuk (54:27):
That is a good advice. And as we're moving
towards the end of the episode,I'm curious, if you could go
back in time and give yourselfone piece of advice when
starting the scope or let orlet's just say when starting
Demisto, what would that be?
Slavik Markovich (54:41):
So I actually had the benefit of doing another
startup before the Centrico thatwe talked about. And I think I
actually learned the rightlessons from that startup to my
future career startups. InCentrico, I actually did not
know a lot about, you know, whatit means to be a founder and
(55:04):
startup founder and so on. And Ihonestly burned myself out. So
the first two years of Centrico,I worked, like, probably, like,
18 hours a day nonstop for,like, 2 years straight.
And then I had a completemeltdown, and, I just couldn't
see or couldn't sit in front andlike think about, you know, the
(55:28):
business or the technology oranything like that. And I think
when we started Demisto, weactually talked among us, the
founders, and we said, let's tryto make something different.
Let's have a much better worklife balance, come home, see the
family, work out a bit, thingslike that, and I think that's
(55:49):
completely changed how we wentabout both the and how we go
about the scope. So kind ofthink of it as everybody says
that think of it as a marathonand so on, but you actually have
to be conscious about it and doit. And so that is one thing
that I think I learned a lot.
Now if I again, hindsight iseasy. I think if if I would now
(56:15):
have advice for my, you know,demistole self, I would
probably, like, do my fundingdifferently, as I mentioned. I
might have not sold the companyat the time that I sold it. You
know? All of those are decisionsthat you can, in hindsight,
probably think differentlyabout.
(56:36):
But I think the most importantfor me was this approach of,
hey, you know, 5 pm, let's gohome. Let's go work out, let's
talk with the family, and so on.You can work at 10, you can go
at 10 pm and go back to, youknow, working, but have this
window of time to actually takea breather. So I think that
(56:58):
that's probably one of my mostimportant advice to founders is
just make sure to take care ofyourself. Otherwise, nobody's
going to do it for you.
Right? So that's superimportant.
Mahendra Ramsinghani (57:09):
Yeah. Thank you, Slavik. And I think
this notion of work life balanceand founders especially caring
for their own selves, if thatawareness does not trigger in,
you know, we've seen situationsof burnout. We've seen
situations of frustration andimpaired decision making as
well. So that's great advice.
And as we wrap up our episode,let's take a look at the crystal
(57:31):
ball here. Your journey in IDFand going back in time to the
gentleman who would unplug themachine because his coffee was
more important was a classicinsight of how, you know,
staying in touch with customersis important. But that was
database, then you got intoorchestration and automation.
(57:53):
Now you looked at identity. Butthe world is changing.
You know, you look at the amountof capital that's flowing into
cyber. You look at thegeopolitical forces. You look at
how regulators are paying a lotmore attention. In fact, in one
of our previous episodes, Siddescribed that RSA, there were
several people from Washington,DC spending time at RSA. So you
(58:16):
have this confluence of macro,micro, and a lot of competition.
If you look at the next 5 yearsin cybersecurity, what are some
things that you see or what doyou predict?
Slavik Markovich (58:27):
So first of all, I think that, and it's no
surprise to anyone, AI is goingto be more prevalent in every
aspect of your life, I guess,not just the of of cyber.
Autonomous agents that make alot of, like, work done for you,
(58:48):
I think, is very interesting.Identity, in that case, becomes
very interesting as well Becausethen authorization and what can
the agent do on your behalf isis suddenly, like, very
interesting. Like, you want togive him something, but you
don't want to give himeverything. Not your passwords,
but maybe so so that becomes,like, super interesting.
(59:09):
I think generally, I would see a lot of,
you know, in my particular areaof, it's and and and space, I
would see a lot of, moving awayfrom passwords to other means of
authentication, which, you know,one of the big reasons we
started the scope, I think. Andif you see my shirt, like, kill
(59:31):
dash 9 passwords, that's whatwe're trying to do generally. So
things like passkeys and otheroptions, I think, would be the
future. And so that's anotherthing. And what you know?
And we all know that it's veryhard to predict 5 years ahead.
The way that AI changes, like, 6months ago, Things were
(59:54):
completely different than today.And so we'll we'll see, I think,
a lot of, innovation, but also alot of, like, wasted, how shall
I say it, a lot of burned moneyon thin wrappers around AI,
which don't have necessarily anysubstance. And so I would
(01:00:15):
probably advise a lot of cautionhere not to overinvest, burn
money on things that notnecessarily have the right
values. But overall, I I think,you know, AI is is going to be
prevalent across the board in inmany of the, you know, new
innovations that are coming.
Mahendra Ramsinghani (01:00:34):
Wonderful. On that note, Slavik, thank you
again for the inspiration, thedecades of work you've done as a
founder, and most importantly,being so open in sharing, your
journey. Thank you so much.
Slavik Markovich (01:00:47):
Of course. Happy to do that and happy to be
here, and thank you guys forhosting me.
Sid Trivedi (01:00:51):
Thanks, Lami. Thank you for joining us Inside the
Network.
Ross Haleliuk (01:00:57):
If you like this episode, please leave us a
review and share it with others.
Mahendra Ramsinghani (01:01:02):
If you really, really liked it and you
have some feedback for us, wrapit on a bottle of Yamazaki and
send it to me first.
Sid Trivedi (01:01:11):
No. Don't do that. Mahendra gets too many gifts
already. Please reach out byemail or LinkedIn.
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