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May 9, 2019 · 20m · top-founders

1384 CyberSecurity SaaS CarbonBlack Passes $200m ARR Charging $30/Device/per

Patrick Morley · 9m spoken Nathan Latka · 8m spoken
0:00 / 0:00

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In this episode of The Top Entrepreneurs, host Nathan Latka interviews Patrick Morley, CEO of Carbon Black, exploring how the cybersecurity firm scaled from $100,000 to over $200 million in ARR. Morley discusses transitioning to a cloud SaaS model at $30 per device per year, raising $191 million before completing an IPO, and key operational metrics for sustainable enterprise growth.

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 46.3% of the talking time here. How this is scored →

Nathan as informed peer 3.6 Guest teaching 2.0 Guest disagreement 1.1 Nathan pushing back 2.1
05100:0010:0020:000:00–2:25 · Nathan as informed peer 0/10 Promotional Announcement: Latka's Capitalist Book on Audible Solo promotional intro and ad read for Latka's book on Audible, followed by summary clips of the interview. Because this is a monologue and preview, all dynamic scores remain at zero.2:26–6:03 · Nathan as informed peer 4/10 Patrick Morley's Background and Joining Carbon Black Latka questions Morley on his entry as CEO, funding history, and contract pricing. Morley declines to disclose average revenue per customer but redirects to their standard $30 per device per year metric.6:03–8:32 · Nathan as informed peer 4/10 Target Devices, Expansion Mechanics, and Retention Strategy Morley clarifies what counts as an endpoint device and explains the expansion model. When pressed on net retention cohort figures, Morley sets a firm boundary, citing public company disclosure caution.8:32–10:48 · Nathan as informed peer 3/10 Reaching $200M ARR and Scaling Executive Experience A cordial exchange discussing quarterly run-rate milestones and Morley's unique track record of scaling a business from sub-$100k to over $200M ARR through multiple IPOs.10:48–13:55 · Nathan as informed peer 5/10 Transitioning from On-Premises TCV to SaaS ARR Latka inquires about shifting from customer-based to dollar-based CAC metrics. Morley reframes the inquiry by educating on Carbon Black's multi-stage evolution from on-premise TCV deals to cloud SaaS ARR.13:55–16:15 · Nathan as informed peer 6/10 IPO Strategy, Capital Raised, and Resisting M&A Arbitrage Latka articulates how public software companies can use valuation multiple arbitrage to engineer inorganic growth. Morley agrees with the market dynamics but explains Carbon Black's focus on long-term organic product strategy.16:15–19:06 · Nathan as informed peer 3/10 Valuation Perspectives and Vital Metrics for Scaling Morley diplomatically deflects a question on whether their market cap is overvalued, highlights critical internal metrics like gross margins and retention, and concludes with standard rapid-fire questions.0:00–2:25 · Guest teaching 0/10 Promotional Announcement: Latka's Capitalist Book on Audible Solo promotional intro and ad read for Latka's book on Audible, followed by summary clips of the interview. Because this is a monologue and preview, all dynamic scores remain at zero.2:26–6:03 · Guest teaching 2/10 Patrick Morley's Background and Joining Carbon Black Latka questions Morley on his entry as CEO, funding history, and contract pricing. Morley declines to disclose average revenue per customer but redirects to their standard $30 per device per year metric.6:03–8:32 · Guest teaching 3/10 Target Devices, Expansion Mechanics, and Retention Strategy Morley clarifies what counts as an endpoint device and explains the expansion model. When pressed on net retention cohort figures, Morley sets a firm boundary, citing public company disclosure caution.8:32–10:48 · Guest teaching 1/10 Reaching $200M ARR and Scaling Executive Experience A cordial exchange discussing quarterly run-rate milestones and Morley's unique track record of scaling a business from sub-$100k to over $200M ARR through multiple IPOs.10:48–13:55 · Guest teaching 5/10 Transitioning from On-Premises TCV to SaaS ARR Latka inquires about shifting from customer-based to dollar-based CAC metrics. Morley reframes the inquiry by educating on Carbon Black's multi-stage evolution from on-premise TCV deals to cloud SaaS ARR.13:55–16:15 · Guest teaching 2/10 IPO Strategy, Capital Raised, and Resisting M&A Arbitrage Latka articulates how public software companies can use valuation multiple arbitrage to engineer inorganic growth. Morley agrees with the market dynamics but explains Carbon Black's focus on long-term organic product strategy.16:15–19:06 · Guest teaching 1/10 Valuation Perspectives and Vital Metrics for Scaling Morley diplomatically deflects a question on whether their market cap is overvalued, highlights critical internal metrics like gross margins and retention, and concludes with standard rapid-fire questions.0:00–2:25 · Guest disagreement 0/10 Promotional Announcement: Latka's Capitalist Book on Audible Solo promotional intro and ad read for Latka's book on Audible, followed by summary clips of the interview. Because this is a monologue and preview, all dynamic scores remain at zero.2:26–6:03 · Guest disagreement 2/10 Patrick Morley's Background and Joining Carbon Black Latka questions Morley on his entry as CEO, funding history, and contract pricing. Morley declines to disclose average revenue per customer but redirects to their standard $30 per device per year metric.6:03–8:32 · Guest disagreement 2/10 Target Devices, Expansion Mechanics, and Retention Strategy Morley clarifies what counts as an endpoint device and explains the expansion model. When pressed on net retention cohort figures, Morley sets a firm boundary, citing public company disclosure caution.8:32–10:48 · Guest disagreement 0/10 Reaching $200M ARR and Scaling Executive Experience A cordial exchange discussing quarterly run-rate milestones and Morley's unique track record of scaling a business from sub-$100k to over $200M ARR through multiple IPOs.10:48–13:55 · Guest disagreement 2/10 Transitioning from On-Premises TCV to SaaS ARR Latka inquires about shifting from customer-based to dollar-based CAC metrics. Morley reframes the inquiry by educating on Carbon Black's multi-stage evolution from on-premise TCV deals to cloud SaaS ARR.13:55–16:15 · Guest disagreement 1/10 IPO Strategy, Capital Raised, and Resisting M&A Arbitrage Latka articulates how public software companies can use valuation multiple arbitrage to engineer inorganic growth. Morley agrees with the market dynamics but explains Carbon Black's focus on long-term organic product strategy.16:15–19:06 · Guest disagreement 1/10 Valuation Perspectives and Vital Metrics for Scaling Morley diplomatically deflects a question on whether their market cap is overvalued, highlights critical internal metrics like gross margins and retention, and concludes with standard rapid-fire questions.0:00–2:25 · Nathan pushing back 0/10 Promotional Announcement: Latka's Capitalist Book on Audible Solo promotional intro and ad read for Latka's book on Audible, followed by summary clips of the interview. Because this is a monologue and preview, all dynamic scores remain at zero.2:26–6:03 · Nathan pushing back 3/10 Patrick Morley's Background and Joining Carbon Black Latka questions Morley on his entry as CEO, funding history, and contract pricing. Morley declines to disclose average revenue per customer but redirects to their standard $30 per device per year metric.6:03–8:32 · Nathan pushing back 3/10 Target Devices, Expansion Mechanics, and Retention Strategy Morley clarifies what counts as an endpoint device and explains the expansion model. When pressed on net retention cohort figures, Morley sets a firm boundary, citing public company disclosure caution.8:32–10:48 · Nathan pushing back 1/10 Reaching $200M ARR and Scaling Executive Experience A cordial exchange discussing quarterly run-rate milestones and Morley's unique track record of scaling a business from sub-$100k to over $200M ARR through multiple IPOs.10:48–13:55 · Nathan pushing back 3/10 Transitioning from On-Premises TCV to SaaS ARR Latka inquires about shifting from customer-based to dollar-based CAC metrics. Morley reframes the inquiry by educating on Carbon Black's multi-stage evolution from on-premise TCV deals to cloud SaaS ARR.13:55–16:15 · Nathan pushing back 3/10 IPO Strategy, Capital Raised, and Resisting M&A Arbitrage Latka articulates how public software companies can use valuation multiple arbitrage to engineer inorganic growth. Morley agrees with the market dynamics but explains Carbon Black's focus on long-term organic product strategy.16:15–19:06 · Nathan pushing back 2/10 Valuation Perspectives and Vital Metrics for Scaling Morley diplomatically deflects a question on whether their market cap is overvalued, highlights critical internal metrics like gross margins and retention, and concludes with standard rapid-fire questions.

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

0:00 · Nathan 87.1% · guest 12.9%0:00 · Nathan 87.1% · guest 12.9%3:00 · Nathan 36.8% · guest 63.2%3:00 · Nathan 36.8% · guest 63.2%6:00 · Nathan 33.6% · guest 66.4%6:00 · Nathan 33.6% · guest 66.4%9:00 · Nathan 45.5% · guest 54.5%9:00 · Nathan 45.5% · guest 54.5%12:00 · Nathan 17.9% · guest 82.1%12:00 · Nathan 17.9% · guest 82.1%15:00 · Nathan 42.5% · guest 57.5%15:00 · Nathan 42.5% · guest 57.5%18:00 · Nathan 68.1% · guest 31.9%18:00 · Nathan 68.1% · guest 31.9%
Sharpest disagreement ▶ 8:03 Refusal to disclose net retention rates

Morley directly checks Latka's line of questioning regarding year-over-year expansion percentages, stating that as a newly public CEO he will not reveal unreported metrics.

 Hardest push from Nathan ▶ 11:45 Pushing on the operational switch to dollar-based CAC

Latka refuses to let the CAC question pass generically, probing the exact operational and mindset shift from per-customer acquisition cost to per-dollar ARR acquisition cost.

 Biggest teaching moment ▶ 13:09 Explaining the optics and reality of TCV vs ACV

Morley provides a clear, practical masterclass on why early-stage on-premises software companies relied on total contract value to inflate perceived size before maturing into ACV and ARR.

 Nathan holds their own ▶ 15:07 Detailing public market valuation multiple arbitrage

Latka demonstrates sophisticated domain knowledge by breaking down financial engineering mechanisms where public SaaS companies acquire private revenue streams at lower multiples to capture immediate market upside.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Promotional Announcement: Latka's Capitalist Book on Audible 0000 Solo promotional intro and ad read for Latka's book on Audible, followed by summary clips of the interview. Because this is a monologue and preview, all dynamic scores remain at zero.
Patrick Morley's Background and Joining Carbon Black 4223 Latka questions Morley on his entry as CEO, funding history, and contract pricing. Morley declines to disclose average revenue per customer but redirects to their standard $30 per device per year metric.
Target Devices, Expansion Mechanics, and Retention Strategy 4323 Morley clarifies what counts as an endpoint device and explains the expansion model. When pressed on net retention cohort figures, Morley sets a firm boundary, citing public company disclosure caution.
Reaching $200M ARR and Scaling Executive Experience 3101 A cordial exchange discussing quarterly run-rate milestones and Morley's unique track record of scaling a business from sub-$100k to over $200M ARR through multiple IPOs.
Transitioning from On-Premises TCV to SaaS ARR 5523 Latka inquires about shifting from customer-based to dollar-based CAC metrics. Morley reframes the inquiry by educating on Carbon Black's multi-stage evolution from on-premise TCV deals to cloud SaaS ARR.
IPO Strategy, Capital Raised, and Resisting M&A Arbitrage 6213 Latka articulates how public software companies can use valuation multiple arbitrage to engineer inorganic growth. Morley agrees with the market dynamics but explains Carbon Black's focus on long-term organic product strategy.
Valuation Perspectives and Vital Metrics for Scaling 3112 Morley diplomatically deflects a question on whether their market cap is overvalued, highlights critical internal metrics like gross margins and retention, and concludes with standard rapid-fire questions.

Statements from this episode (11)

Assertion Not checkable as stated
Morley: Carbon Black had 20 employees and beta customers upon joining
“When I came to Carbon Black, we had 20 employees and Full of what I would call beta customers.”
Patrick Morley May 9, 2019 ▶ 2:49
Assertion Partly supported
Morley: Carbon Black had raised about $24 million before his arrival
“The distant history, I think the company had raised about twenty four million dollars. Okay. Before I came on board.”
Patrick Morley May 9, 2019 ▶ 3:22
Assertion Supported
Patrick Morley: Carbon Black Serves 4,300 Global Customers and 35+ Fortune 100
“I just give you a sense that we have 4300 customers globally. We have 35 or 36 of the Fortune 100.”
Patrick Morley May 9, 2019 ▶ 5:04
Assertion Supported
Patrick Morley: Carbon Black Charges About $30 Per Device Per Year
“The way to think about it is we charge about 30 dollars per device per year.”
Patrick Morley May 9, 2019 ▶ 5:47
Insight
Morley: Hackers Use IoT as Bridges to Target Enterprise Laptops and Servers
“The way we think about IoT and about cell is those are primarily bridges into the enterprise, but where the adversary wants to get, they want to get on your laptop, or they want to get on the server, where the intellectual property is, the credit card data is,…”
Patrick Morley May 9, 2019 ▶ 6:26
Assertion Partly supported
Morley: Carbon Black is under $200M ARR, passed $51M quarterly revenue
“We're just under two hundred million in ARR. Company just passed just passed 50, in our last quarter, we just passed fifty-one million in, in revenue and .”
Patrick Morley May 9, 2019 ▶ 9:19
Assertion Supported
Morley: Carbon Black transitioned from on-prem perpetual licenses to SaaS in 2013
“The company started as a perpetual company. So for a number of years, perpetual software licenses in 2013, we switched to a SLA agreements, all that jazz. Yeah. Yeah. And then we switched to a subscription business and then, and we were on frame original offer…”
Patrick Morley May 9, 2019 ▶ 12:02
Insight
Early-stage startups commonly focus on Total Contract Value over ACV
“Look, when we were small, we focused on TCV as opposed to ACV which I think is very common. Total contract value. So, you know, a lot of early stage companies focus on this, which is especially the way you pay your salespeople and it makes you feel bigger beca…”
Patrick Morley May 9, 2019 ▶ 13:04
Assertion Supported
Morley: Carbon Black raised $191M prior to IPO
“One hundred and ninety one million.”
Patrick Morley May 9, 2019 ▶ 14:00
Assertion Supported
Morley: Carbon Black raised roughly $160M on IPO day
“A 160. Rough. A hundred and sixty million.”
Patrick Morley May 9, 2019 ▶ 14:03
Opinion
Morley: Cloud Companies Do Not Talk Enough About Gross Margins
“And then gross margins as a cloud company, a lot of people don't talk enough in our opinion about gross margins. Obviously gross margins are really, really important for internal employees to understand.”
Patrick Morley May 9, 2019 ▶ 17:28
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