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Oct 9, 2021 · 15m · top-founders

Security Software Adolus Breaks $600k ARR, $4m Valuation

Eric Byers · 9m spoken Nathan Latka · 3m spoken
0:00 / 0:00

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Cybersecurity veteran and Adolus CTO Eric Byers explains how the company reached $600,000 in ARR by solving enterprise software supply chain vulnerabilities and capitalizing on federal SBOM mandates.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 27% of the talking time here. How this is scored →

Nathan as informed peer 4.0 Guest teaching 2.8 Guest disagreement 1.4 Nathan pushing back 3.6
05100:0010:001:12–4:11 · Nathan as informed peer 4/10 Understanding the Software Supply Chain Security Problem Eric gently reframes Nathan's initial question about finding active threats by explaining that supply chain security is about cataloging deep software dependencies rather than zero-day detection. Nathan focuses on funding history and cap valuations, asking standard financial diligence questions.4:11–7:51 · Nathan as informed peer 6/10 Headcount Growth and Technical Team Composition Nathan catches a discrepancy between Eric's stated customer count and revenue, quickly calculating that $600k ARR means an average contract value much higher than $5k monthly. Eric acknowledges the mathematical correction and notes enterprise annual billing dynamics.7:52–10:35 · Nathan as informed peer 4/10 Inbound Lead Generation and Keynote Speaking Strategy Eric details his inbound conference strategy and upcoming fundraising targets of $1.5M at a $10M-$15M valuation. Nathan asks whether Eric is comfortable with 15% dilution, leading Eric to emphasize company momentum over percentage ownership.10:35–13:01 · Nathan as informed peer 5/10 Cap Table Structure, Founder Ownership, and CEO Recruitment When asked for his exact ownership, Eric attempts to park the question before conceding a 50% to 80% range. Nathan presses on the cap table composition and questions why Eric has not bought out early inactive founders.13:02–15:24 · Nathan as informed peer 1/10 The Famous Five: Personal Habits and Founder Reflections Nathan runs through his standard Famous Five rapid-fire closing questions. Eric shares personal reflections on work-life balance, sleep, and company building at age 63 in a friendly closing exchange.1:12–4:11 · Guest teaching 6/10 Understanding the Software Supply Chain Security Problem Eric gently reframes Nathan's initial question about finding active threats by explaining that supply chain security is about cataloging deep software dependencies rather than zero-day detection. Nathan focuses on funding history and cap valuations, asking standard financial diligence questions.4:11–7:51 · Guest teaching 2/10 Headcount Growth and Technical Team Composition Nathan catches a discrepancy between Eric's stated customer count and revenue, quickly calculating that $600k ARR means an average contract value much higher than $5k monthly. Eric acknowledges the mathematical correction and notes enterprise annual billing dynamics.7:52–10:35 · Guest teaching 3/10 Inbound Lead Generation and Keynote Speaking Strategy Eric details his inbound conference strategy and upcoming fundraising targets of $1.5M at a $10M-$15M valuation. Nathan asks whether Eric is comfortable with 15% dilution, leading Eric to emphasize company momentum over percentage ownership.10:35–13:01 · Guest teaching 2/10 Cap Table Structure, Founder Ownership, and CEO Recruitment When asked for his exact ownership, Eric attempts to park the question before conceding a 50% to 80% range. Nathan presses on the cap table composition and questions why Eric has not bought out early inactive founders.13:02–15:24 · Guest teaching 1/10 The Famous Five: Personal Habits and Founder Reflections Nathan runs through his standard Famous Five rapid-fire closing questions. Eric shares personal reflections on work-life balance, sleep, and company building at age 63 in a friendly closing exchange.1:12–4:11 · Guest disagreement 2/10 Understanding the Software Supply Chain Security Problem Eric gently reframes Nathan's initial question about finding active threats by explaining that supply chain security is about cataloging deep software dependencies rather than zero-day detection. Nathan focuses on funding history and cap valuations, asking standard financial diligence questions.4:11–7:51 · Guest disagreement 1/10 Headcount Growth and Technical Team Composition Nathan catches a discrepancy between Eric's stated customer count and revenue, quickly calculating that $600k ARR means an average contract value much higher than $5k monthly. Eric acknowledges the mathematical correction and notes enterprise annual billing dynamics.7:52–10:35 · Guest disagreement 1/10 Inbound Lead Generation and Keynote Speaking Strategy Eric details his inbound conference strategy and upcoming fundraising targets of $1.5M at a $10M-$15M valuation. Nathan asks whether Eric is comfortable with 15% dilution, leading Eric to emphasize company momentum over percentage ownership.10:35–13:01 · Guest disagreement 3/10 Cap Table Structure, Founder Ownership, and CEO Recruitment When asked for his exact ownership, Eric attempts to park the question before conceding a 50% to 80% range. Nathan presses on the cap table composition and questions why Eric has not bought out early inactive founders.13:02–15:24 · Guest disagreement 0/10 The Famous Five: Personal Habits and Founder Reflections Nathan runs through his standard Famous Five rapid-fire closing questions. Eric shares personal reflections on work-life balance, sleep, and company building at age 63 in a friendly closing exchange.1:12–4:11 · Nathan pushing back 3/10 Understanding the Software Supply Chain Security Problem Eric gently reframes Nathan's initial question about finding active threats by explaining that supply chain security is about cataloging deep software dependencies rather than zero-day detection. Nathan focuses on funding history and cap valuations, asking standard financial diligence questions.4:11–7:51 · Nathan pushing back 6/10 Headcount Growth and Technical Team Composition Nathan catches a discrepancy between Eric's stated customer count and revenue, quickly calculating that $600k ARR means an average contract value much higher than $5k monthly. Eric acknowledges the mathematical correction and notes enterprise annual billing dynamics.7:52–10:35 · Nathan pushing back 3/10 Inbound Lead Generation and Keynote Speaking Strategy Eric details his inbound conference strategy and upcoming fundraising targets of $1.5M at a $10M-$15M valuation. Nathan asks whether Eric is comfortable with 15% dilution, leading Eric to emphasize company momentum over percentage ownership.10:35–13:01 · Nathan pushing back 5/10 Cap Table Structure, Founder Ownership, and CEO Recruitment When asked for his exact ownership, Eric attempts to park the question before conceding a 50% to 80% range. Nathan presses on the cap table composition and questions why Eric has not bought out early inactive founders.13:02–15:24 · Nathan pushing back 1/10 The Famous Five: Personal Habits and Founder Reflections Nathan runs through his standard Famous Five rapid-fire closing questions. Eric shares personal reflections on work-life balance, sleep, and company building at age 63 in a friendly closing exchange.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 42.7% · guest 57.3%0:00 · Nathan 42.7% · guest 57.3%3:00 · Nathan 22.5% · guest 77.5%3:00 · Nathan 22.5% · guest 77.5%6:00 · Nathan 23.8% · guest 76.2%6:00 · Nathan 23.8% · guest 76.2%9:00 · Nathan 18.1% · guest 81.9%9:00 · Nathan 18.1% · guest 81.9%12:00 · Nathan 19.5% · guest 80.5%12:00 · Nathan 19.5% · guest 80.5%15:00 · Nathan 52.1% · guest 47.9%15:00 · Nathan 52.1% · guest 47.9%
Sharpest disagreement ▶ 10:35 Resistance to revealing cap table details

Eric attempts to dodge Nathan's direct question about his equity stake by asking to park it, before giving a broad 50% to 80% range.

 Hardest push from Nathan ▶ 12:20 Challenging inactive founder equity retention

Nathan directly challenges why Eric has not bought out early silent founders to reclaim their sub-10% equity for the active cap table.

 Biggest teaching moment ▶ 1:18 Correcting misconceptions of threat detection

Eric clarifies that supply chain security tools do not hunt active zero-day attacks like SolarWinds directly, but map deep multi-tier component dependencies so enterprises know what code they are running.

 Nathan holds their own ▶ 6:04 Reconciling ARR with monthly customer revenue

Nathan spots an inconsistency in Eric's arithmetic, proving that three customers generating $600k ARR equates to $50k MRR rather than the previously implied $15k.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Understanding the Software Supply Chain Security Problem 4623 Eric gently reframes Nathan's initial question about finding active threats by explaining that supply chain security is about cataloging deep software dependencies rather than zero-day detection. Nathan focuses on funding history and cap valuations, asking standard financial diligence questions.
Headcount Growth and Technical Team Composition 6216 Nathan catches a discrepancy between Eric's stated customer count and revenue, quickly calculating that $600k ARR means an average contract value much higher than $5k monthly. Eric acknowledges the mathematical correction and notes enterprise annual billing dynamics.
Inbound Lead Generation and Keynote Speaking Strategy 4313 Eric details his inbound conference strategy and upcoming fundraising targets of $1.5M at a $10M-$15M valuation. Nathan asks whether Eric is comfortable with 15% dilution, leading Eric to emphasize company momentum over percentage ownership.
Cap Table Structure, Founder Ownership, and CEO Recruitment 5235 When asked for his exact ownership, Eric attempts to park the question before conceding a 50% to 80% range. Nathan presses on the cap table composition and questions why Eric has not bought out early inactive founders.
The Famous Five: Personal Habits and Founder Reflections 1101 Nathan runs through his standard Famous Five rapid-fire closing questions. Eric shares personal reflections on work-life balance, sleep, and company building at age 63 in a friendly closing exchange.

Statements from this episode (14)

Assertion Partly supported
Latka: Eric Byers Invented the Tofino Firewall
“He invented the Tofino Firewall, the world's most widely deployed ICS security appliance.”
Nathan Latka Oct 9, 2021 ▶ 0:57
Assertion Not checkable as stated
Byers: Companies often do not know if they run SolarWinds
“Nobody you know, nobody has a silver bullet to solve a problem like solar winds, but what we've seen in our customer base and we've heard in government disclosures is the companies don't even know if they run solar winds.”
Eric Byers Oct 9, 2021 ▶ 1:27
Assertion Not checkable as stated
Byers: Adolus customers pay between $5K and over $40K monthly
“Customers will pay as little as 5000 a month. Some of them are paying, oh, probably north of about 40,000 a month.”
Eric Byers Oct 9, 2021 ▶ 2:12
Assertion Supported
Byers: Adolus raised $800k in DHS grants before generating revenue
“We got U.S. Department of Homeland Security so Silicon Valley Initiative Program grants, about 800,000 dollars worth of research grants, so that kept us alive for the first couple of years.”
Eric Byers Oct 9, 2021 ▶ 2:39
Opinion
Byers: Adolus's $4M valuation was an absolute bargain in hindsight
“I think it was a bargain, actually. You know but, you know, I didn't have a crystal ball to know that President Biden would be releasing executive orders about supply chain. I didn't know that SolarWinds was going to happen, so it was, yeah, it was it was an a…”
Eric Byers Oct 9, 2021 ▶ 3:28
Disclosure
Byers: Adolus has 20 employees, hiring roughly one monthly
“So I think we have 19 people, maybe 20. I guess maybe we have 20 on Monday. So yeah, we've been growing our team pretty aggressively. We've been bringing somebody in just about every month for the last eight months.”
Eric Byers Oct 9, 2021 ▶ 4:16
Disclosure
Eric Byers: Adolus Has Three Primary Customers and Six Large Pilots
“We've got three primary customers and about six large pilots running right now.”
Eric Byers Oct 9, 2021 ▶ 5:56
Disclosure
Eric Byers: Adolus Generates Just Under $600K in Annual Revenue
“We're doing a little less than 600,000 a year.”
Eric Byers Oct 9, 2021 ▶ 6:16
Disclosure
Eric Byers: Adolus Counts Honeywell and Caterpillar Among Enterprise Contracts
“Our large contracts are, you know, our contracts include people like Honeywell and Caterpillar.”
Eric Byers Oct 9, 2021 ▶ 6:22
Prediction Not checkable as stated
Eric Byers: Adolus Forecasts Under $1M ARR by End of Year
“We're expecting to close probably two more pilots this year. And we expect to be somewhere below a million annual recurring revenue by the end of the year.”
Eric Byers Oct 9, 2021 ▶ 7:23
Disclosure
Eric Byers: Adolus plans seed round followed by spring Series A
“We're probably going to, well, not probably, we plan to do over the next month or two on one more seed round and then go for an A this spring.”
Eric Byers Oct 9, 2021 ▶ 8:56
Assertion Contradicted
Eric Byers: Software vendors are now regulated to supply SBOMs to US government
“I mean, just the dynamics of the supply chain software bill of materials market is, you know, a year ago, nobody knew what a software bill of materials is. Now people are regulated to supply them to the U S government.”
Eric Byers Oct 9, 2021 ▶ 10:04
Disclosure
Eric Byers Owns Between 50% and 80% of Adolus
“I own more than 50% and I own less than 80.”
Eric Byers Oct 9, 2021 ▶ 10:44
Assertion Not checkable as stated
Eric Byers: Adolus Seed Investors Own Approximately 20% of the Company
“About 20%.”
Eric Byers Oct 9, 2021 ▶ 12:21
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