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Apr 7, 2020 · 19m · top-founders

1718 CyberSecurity CEO: US Election Interference Happening Right Now, Virus Plans and more from RedSeal

Ray Rothrock · 9m spoken Nathan Latka · 7m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this interview, RedSeal CEO Ray Rothrock joins Nathan Latka to discuss navigating enterprise SaaS operations through the COVID-19 crisis, detailing proactive workforce preservation strategies, conservative financial forecasting, and the critical role of network risk modeling in combating foreign election interference.

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 43% of the talking time here. How this is scored →

Nathan as informed peer 4.6 Guest teaching 3.0 Guest disagreement 2.0 Nathan pushing back 2.9
05100:0010:000:00–3:21 · Nathan as informed peer 4/10 Podcast Schedule Updates and iTunes Review Campaign Nathan introduces the episode and details RedSeal's background, citing specific customer metrics and previous data points before asking Ray to explain the platform's core network modeling capabilities.3:21–5:24 · Nathan as informed peer 5/10 Navigating COVID-19: Financial Forecasts and Runway Adjustments Nathan cites RedSeal's historical ACV and PE backing to ask about runway adjustments. Ray draws on his VC background across four capital market crises to explain their proactive expense reductions.5:24–9:08 · Nathan as informed peer 4/10 Crisis Leadership, Internal Communication, and Technical Support Nathan presses Ray for specifics on company headcount, role distribution, and the exact percentage of the team-wide pay cuts, while Ray emphasizes keeping all employees on payroll rather than doing furloughs.9:10–11:49 · Nathan as informed peer 5/10 Evaluating VC Playbooks: Equity Swaps Versus Headcount Cuts Nathan presents two layoff and compensation playbooks used by other founders. Ray uses his VC experience to push back on both, detailing the slippery slope of equity swaps and explaining why cutting salespeople is counterproductive compared to trimming long-term engineering bets.11:49–14:11 · Nathan as informed peer 5/10 Product Evolution, Router-Based Pricing, and 2020 Outlook Nathan demonstrates familiarity with RedSeal's router-based pricing model and historical accounts like Apple, asking how PE sponsor STG reacted to revised flat revenue guidance for 2020.14:13–17:21 · Nathan as informed peer 5/10 M&A Pipeline and Acquisition Strategy in Downturns Nathan pushes Ray on taking advantage of market panic to acquire discounted assets. Ray rejects the framing as predatory before Nathan defends distressed M&A, followed by Ray detailing real-time nation-state election interference techniques.17:21–19:14 · Nathan as informed peer 4/10 The Famous Five Rapid-Fire Questions During the rapid-fire questions, Nathan interjects his technical knowledge regarding Zoom's infrastructure and security concerns when Ray mentions studying Zoom's CEO.0:00–3:21 · Guest teaching 1/10 Podcast Schedule Updates and iTunes Review Campaign Nathan introduces the episode and details RedSeal's background, citing specific customer metrics and previous data points before asking Ray to explain the platform's core network modeling capabilities.3:21–5:24 · Guest teaching 3/10 Navigating COVID-19: Financial Forecasts and Runway Adjustments Nathan cites RedSeal's historical ACV and PE backing to ask about runway adjustments. Ray draws on his VC background across four capital market crises to explain their proactive expense reductions.5:24–9:08 · Guest teaching 3/10 Crisis Leadership, Internal Communication, and Technical Support Nathan presses Ray for specifics on company headcount, role distribution, and the exact percentage of the team-wide pay cuts, while Ray emphasizes keeping all employees on payroll rather than doing furloughs.9:10–11:49 · Guest teaching 6/10 Evaluating VC Playbooks: Equity Swaps Versus Headcount Cuts Nathan presents two layoff and compensation playbooks used by other founders. Ray uses his VC experience to push back on both, detailing the slippery slope of equity swaps and explaining why cutting salespeople is counterproductive compared to trimming long-term engineering bets.11:49–14:11 · Guest teaching 2/10 Product Evolution, Router-Based Pricing, and 2020 Outlook Nathan demonstrates familiarity with RedSeal's router-based pricing model and historical accounts like Apple, asking how PE sponsor STG reacted to revised flat revenue guidance for 2020.14:13–17:21 · Guest teaching 5/10 M&A Pipeline and Acquisition Strategy in Downturns Nathan pushes Ray on taking advantage of market panic to acquire discounted assets. Ray rejects the framing as predatory before Nathan defends distressed M&A, followed by Ray detailing real-time nation-state election interference techniques.17:21–19:14 · Guest teaching 1/10 The Famous Five Rapid-Fire Questions During the rapid-fire questions, Nathan interjects his technical knowledge regarding Zoom's infrastructure and security concerns when Ray mentions studying Zoom's CEO.0:00–3:21 · Guest disagreement 1/10 Podcast Schedule Updates and iTunes Review Campaign Nathan introduces the episode and details RedSeal's background, citing specific customer metrics and previous data points before asking Ray to explain the platform's core network modeling capabilities.3:21–5:24 · Guest disagreement 1/10 Navigating COVID-19: Financial Forecasts and Runway Adjustments Nathan cites RedSeal's historical ACV and PE backing to ask about runway adjustments. Ray draws on his VC background across four capital market crises to explain their proactive expense reductions.5:24–9:08 · Guest disagreement 2/10 Crisis Leadership, Internal Communication, and Technical Support Nathan presses Ray for specifics on company headcount, role distribution, and the exact percentage of the team-wide pay cuts, while Ray emphasizes keeping all employees on payroll rather than doing furloughs.9:10–11:49 · Guest disagreement 4/10 Evaluating VC Playbooks: Equity Swaps Versus Headcount Cuts Nathan presents two layoff and compensation playbooks used by other founders. Ray uses his VC experience to push back on both, detailing the slippery slope of equity swaps and explaining why cutting salespeople is counterproductive compared to trimming long-term engineering bets.11:49–14:11 · Guest disagreement 1/10 Product Evolution, Router-Based Pricing, and 2020 Outlook Nathan demonstrates familiarity with RedSeal's router-based pricing model and historical accounts like Apple, asking how PE sponsor STG reacted to revised flat revenue guidance for 2020.14:13–17:21 · Guest disagreement 4/10 M&A Pipeline and Acquisition Strategy in Downturns Nathan pushes Ray on taking advantage of market panic to acquire discounted assets. Ray rejects the framing as predatory before Nathan defends distressed M&A, followed by Ray detailing real-time nation-state election interference techniques.17:21–19:14 · Guest disagreement 1/10 The Famous Five Rapid-Fire Questions During the rapid-fire questions, Nathan interjects his technical knowledge regarding Zoom's infrastructure and security concerns when Ray mentions studying Zoom's CEO.0:00–3:21 · Nathan pushing back 1/10 Podcast Schedule Updates and iTunes Review Campaign Nathan introduces the episode and details RedSeal's background, citing specific customer metrics and previous data points before asking Ray to explain the platform's core network modeling capabilities.3:21–5:24 · Nathan pushing back 2/10 Navigating COVID-19: Financial Forecasts and Runway Adjustments Nathan cites RedSeal's historical ACV and PE backing to ask about runway adjustments. Ray draws on his VC background across four capital market crises to explain their proactive expense reductions.5:24–9:08 · Nathan pushing back 4/10 Crisis Leadership, Internal Communication, and Technical Support Nathan presses Ray for specifics on company headcount, role distribution, and the exact percentage of the team-wide pay cuts, while Ray emphasizes keeping all employees on payroll rather than doing furloughs.9:10–11:49 · Nathan pushing back 4/10 Evaluating VC Playbooks: Equity Swaps Versus Headcount Cuts Nathan presents two layoff and compensation playbooks used by other founders. Ray uses his VC experience to push back on both, detailing the slippery slope of equity swaps and explaining why cutting salespeople is counterproductive compared to trimming long-term engineering bets.11:49–14:11 · Nathan pushing back 2/10 Product Evolution, Router-Based Pricing, and 2020 Outlook Nathan demonstrates familiarity with RedSeal's router-based pricing model and historical accounts like Apple, asking how PE sponsor STG reacted to revised flat revenue guidance for 2020.14:13–17:21 · Nathan pushing back 5/10 M&A Pipeline and Acquisition Strategy in Downturns Nathan pushes Ray on taking advantage of market panic to acquire discounted assets. Ray rejects the framing as predatory before Nathan defends distressed M&A, followed by Ray detailing real-time nation-state election interference techniques.17:21–19:14 · Nathan pushing back 2/10 The Famous Five Rapid-Fire Questions During the rapid-fire questions, Nathan interjects his technical knowledge regarding Zoom's infrastructure and security concerns when Ray mentions studying Zoom's CEO.

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

0:00 · Nathan 71.7% · guest 28.3%0:00 · Nathan 71.7% · guest 28.3%3:00 · Nathan 32.5% · guest 67.5%3:00 · Nathan 32.5% · guest 67.5%6:00 · Nathan 19% · guest 81%6:00 · Nathan 19% · guest 81%9:00 · Nathan 54.5% · guest 45.5%9:00 · Nathan 54.5% · guest 45.5%12:00 · Nathan 30.8% · guest 69.2%12:00 · Nathan 30.8% · guest 69.2%15:00 · Nathan 41.5% · guest 58.5%15:00 · Nathan 41.5% · guest 58.5%18:00 · Nathan 60.8% · guest 39.2%18:00 · Nathan 60.8% · guest 39.2%
Sharpest disagreement ▶ 14:55 Ray rejects predatory downturn acquisition strategy

Ray firmly dismisses Nathan's suggestion to buy distressed competitors at steep discounts during peak uncertainty, stating he will not take advantage of people when they are down.

 Hardest push from Nathan ▶ 15:05 Nathan defends distressed M&A as a mutual win

Nathan directly challenges Ray's characterization of downturn acquisitions, arguing that founders facing severe uncertainty are often happy to sell at lower valuations.

 Biggest teaching moment ▶ 11:00 Ray breaks down why startups should protect sales over R&D in a downturn

Ray refutes Nathan's layoff playbook of cutting ramped sales reps first, schooling him on startup survival dynamics where maintaining top-line sales is far more critical than speculative engineering projects.

 Nathan holds their own ▶ 3:21 Nathan calculates RedSeal revenue from ACV and customer numbers

Nathan shows sharp SaaS domain expertise by linking RedSeal's 250 enterprise customers and $200k ACVs to estimate revenue and frame the company's financial cushion under PE ownership.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Podcast Schedule Updates and iTunes Review Campaign 4111 Nathan introduces the episode and details RedSeal's background, citing specific customer metrics and previous data points before asking Ray to explain the platform's core network modeling capabilities.
Navigating COVID-19: Financial Forecasts and Runway Adjustments 5312 Nathan cites RedSeal's historical ACV and PE backing to ask about runway adjustments. Ray draws on his VC background across four capital market crises to explain their proactive expense reductions.
Crisis Leadership, Internal Communication, and Technical Support 4324 Nathan presses Ray for specifics on company headcount, role distribution, and the exact percentage of the team-wide pay cuts, while Ray emphasizes keeping all employees on payroll rather than doing furloughs.
Evaluating VC Playbooks: Equity Swaps Versus Headcount Cuts 5644 Nathan presents two layoff and compensation playbooks used by other founders. Ray uses his VC experience to push back on both, detailing the slippery slope of equity swaps and explaining why cutting salespeople is counterproductive compared to trimming long-term engineering bets.
Product Evolution, Router-Based Pricing, and 2020 Outlook 5212 Nathan demonstrates familiarity with RedSeal's router-based pricing model and historical accounts like Apple, asking how PE sponsor STG reacted to revised flat revenue guidance for 2020.
M&A Pipeline and Acquisition Strategy in Downturns 5545 Nathan pushes Ray on taking advantage of market panic to acquire discounted assets. Ray rejects the framing as predatory before Nathan defends distressed M&A, followed by Ray detailing real-time nation-state election interference techniques.
The Famous Five Rapid-Fire Questions 4112 During the rapid-fire questions, Nathan interjects his technical knowledge regarding Zoom's infrastructure and security concerns when Ray mentions studying Zoom's CEO.

Statements from this episode (15)

Assertion Not checkable as stated
US government accounts for roughly 100 of RedSeal's 250 enterprise customers
“A large part of our base is U.S. Government. They represented about a hundred in those two 50.”
Ray Rothrock Apr 7, 2020 ▶ 3:11
Assertion Not checkable as stated
RedSeal is deployed across all US intel agencies and military branches
“We're in all the intel agencies, all the military, and most of the civilian side of the government.”
Ray Rothrock Apr 7, 2020 ▶ 3:15
Prediction Not checkable as stated
RedSeal expected Q2 2020 revenue to drop 20% to 25%
“We expect Q two to be down 20, 25%.”
Ray Rothrock Apr 7, 2020 ▶ 4:14
Assertion Not checkable as stated
RedSeal did not take additional private equity capital during early COVID
“They've not put another dollar in, not necessary, and we're going to get through it on our own.”
Ray Rothrock Apr 7, 2020 ▶ 4:52
Disclosure
RedSeal extended its zero-revenue runway to two quarters during COVID-19
“We've given ourselves two quarters. You know well, without, without revenue, yeah, it's about two quarters.”
Ray Rothrock Apr 7, 2020 ▶ 5:09
Disclosure
RedSeal chose company-wide pay cuts over furloughs to preserve jobs
“Well, no furlough, just reduction in pay. Part of my strategy was to keep everybody employed, Keep everybody working on the problems to keep supporting our customer base.”
Ray Rothrock Apr 7, 2020 ▶ 5:30
Assertion Not checkable as stated
RedSeal operates with about 200 total staff including 50 offshore workers
“A 150 on my payroll here in the United States, Canada, and Japan, and UK. But we have about 50 people also offshore in various organizations in India and Vietnam. So about 200 all in.”
Ray Rothrock Apr 7, 2020 ▶ 7:19
Assertion Not checkable as stated
RedSeal implemented uniform, across-the-board pay cuts with zero executive exemptions
“No, everybody took the same. My goal was that we're gonna, we're all gonna sacrifice a little bit in order to survive. There are no special dispensations.”
Ray Rothrock Apr 7, 2020 ▶ 8:06
Insight
Startups facing layoffs should cut engineering before sales, says Rothrock
“Well, I mean, there's only two things to do in a startup company. You make product or sell product. And to reduce either of those seems to me a little foolhardy. If you have to, I would actually reduce the engineering because you really do need that top line f…”
Ray Rothrock Apr 7, 2020 ▶ 11:01
Assertion Not checkable as stated
RedSeal maintains enterprise ACVs around $200,000 to $300,000
“No, yeah, actually it's, that's all running about the same.”
Ray Rothrock Apr 7, 2020 ▶ 12:00
Disclosure
RedSeal continues pricing its cybersecurity software based on router unit counts
“It's still by the unit.”
Ray Rothrock Apr 7, 2020 ▶ 13:09
Prediction Not checkable as stated
Rothrock: RedSeal expects flat revenue growth in 2020
“No, we're, we think it'll be flat.”
Ray Rothrock Apr 7, 2020 ▶ 13:29
Assertion Not checkable as stated
RedSeal's enterprise and government clients are experiencing foreign cyber interference
“I actually have customers that are dealing with some of this international interference and we're seeing it in their, they're seeing it in their networks commercial and government.”
Ray Rothrock Apr 7, 2020 ▶ 15:46
Assertion Supported
Foreign attackers are deploying observation malware and routing backdoors
“What they're doing, they are putting in observers malware that sits and observes primarily being able to alter routing, for example just like what Sony did, you know, at the Sony situation, they put in malware that was, had a back door that was shipping every …”
Ray Rothrock Apr 7, 2020 ▶ 16:35
Assertion Not checkable as stated
Latka's internal developers banned Zoom over server security architecture concerns
“My developers don't let me use Zoom because they know how Zoom structures their servers and they have serious security concerns.”
Nathan Latka Apr 7, 2020 ▶ 17:47
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