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Feb 19, 2018 · 24m · top-founders

940 5000 Enterprises Pay Him $100m+ in ARR To Battle CyberSecurity Threats

Tom Kemp · 16m spoken Nathan Latka · 5m spoken
0:00 / 0:00

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

Centrify co-founder and CEO Tom Kemp joins Nathan Latka to detail how the cybersecurity company scaled past $100 million in annual recurring revenue while remaining cash-flow positive. Kemp shares insights into enterprise identity management, SaaS retention dynamics, segmented customer acquisition costs, and modern cyber threat defense.

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 27.3% of the talking time here. How this is scored →

Nathan as informed peer 4.5 Guest teaching 2.7 Guest disagreement 1.8 Nathan pushing back 3.0
05100:0010:0020:003:17–6:18 · Nathan as informed peer 4/10 Founding Story, NetIQ Background, and Venture Capital Journey Nathan inquires about Kemp's previous venture NetIQ and early capital strategy. The tone is conversational and collaborative, with Nathan probing on personal equity investment and bootstrap timeline.6:18–10:51 · Nathan as informed peer 5/10 Scaling Beyond $100 Million ARR and Operational Profitability Nathan presses Kemp to convert his fiscal year metrics into calendar year ARR and milestone timelines. Kemp jokingly groans at doing on-the-fly mental math while outlining their cashflow positivity.10:51–12:58 · Nathan as informed peer 4/10 Competitive Landscape, Blockchain Disruption, and Cyber Threats Nathan brings up crypto-backed Civic as a potential competitor. Kemp admits he has never heard of them and explains that consumer identity is irrelevant to their enterprise identity access management market.13:01–16:12 · Nathan as informed peer 4/10 Sponsor Break: Acuity Scheduling Free Trial Offer Following a sponsor read, Nathan asks if Centrify writes code specifically targeting state-sponsored cyber groups. Kemp refrains from naming specific entities and re-centers on stolen credentials as the universal threat vector.16:12–21:45 · Nathan as informed peer 8/10 SaaS Retention Dynamics and Customer Expansion Strategy Nathan digs deep into unit economics, asking Kemp how he prevents undisciplined CAC spending. Kemp educates Nathan on breaking CAC into pure renewals, expansion, and net-new cohorts, allowing Nathan to model out a 24-month payback calculation.21:46–23:29 · Nathan as informed peer 2/10 The Famous Five Rapid-Fire Questions Nathan guides Kemp through the standard Famous Five rapid-fire questions, closing out the interview pleasantly with zero friction.3:17–6:18 · Guest teaching 1/10 Founding Story, NetIQ Background, and Venture Capital Journey Nathan inquires about Kemp's previous venture NetIQ and early capital strategy. The tone is conversational and collaborative, with Nathan probing on personal equity investment and bootstrap timeline.6:18–10:51 · Guest teaching 2/10 Scaling Beyond $100 Million ARR and Operational Profitability Nathan presses Kemp to convert his fiscal year metrics into calendar year ARR and milestone timelines. Kemp jokingly groans at doing on-the-fly mental math while outlining their cashflow positivity.10:51–12:58 · Guest teaching 5/10 Competitive Landscape, Blockchain Disruption, and Cyber Threats Nathan brings up crypto-backed Civic as a potential competitor. Kemp admits he has never heard of them and explains that consumer identity is irrelevant to their enterprise identity access management market.13:01–16:12 · Guest teaching 4/10 Sponsor Break: Acuity Scheduling Free Trial Offer Following a sponsor read, Nathan asks if Centrify writes code specifically targeting state-sponsored cyber groups. Kemp refrains from naming specific entities and re-centers on stolen credentials as the universal threat vector.16:12–21:45 · Guest teaching 4/10 SaaS Retention Dynamics and Customer Expansion Strategy Nathan digs deep into unit economics, asking Kemp how he prevents undisciplined CAC spending. Kemp educates Nathan on breaking CAC into pure renewals, expansion, and net-new cohorts, allowing Nathan to model out a 24-month payback calculation.21:46–23:29 · Guest teaching 0/10 The Famous Five Rapid-Fire Questions Nathan guides Kemp through the standard Famous Five rapid-fire questions, closing out the interview pleasantly with zero friction.3:17–6:18 · Guest disagreement 1/10 Founding Story, NetIQ Background, and Venture Capital Journey Nathan inquires about Kemp's previous venture NetIQ and early capital strategy. The tone is conversational and collaborative, with Nathan probing on personal equity investment and bootstrap timeline.6:18–10:51 · Guest disagreement 2/10 Scaling Beyond $100 Million ARR and Operational Profitability Nathan presses Kemp to convert his fiscal year metrics into calendar year ARR and milestone timelines. Kemp jokingly groans at doing on-the-fly mental math while outlining their cashflow positivity.10:51–12:58 · Guest disagreement 3/10 Competitive Landscape, Blockchain Disruption, and Cyber Threats Nathan brings up crypto-backed Civic as a potential competitor. Kemp admits he has never heard of them and explains that consumer identity is irrelevant to their enterprise identity access management market.13:01–16:12 · Guest disagreement 3/10 Sponsor Break: Acuity Scheduling Free Trial Offer Following a sponsor read, Nathan asks if Centrify writes code specifically targeting state-sponsored cyber groups. Kemp refrains from naming specific entities and re-centers on stolen credentials as the universal threat vector.16:12–21:45 · Guest disagreement 2/10 SaaS Retention Dynamics and Customer Expansion Strategy Nathan digs deep into unit economics, asking Kemp how he prevents undisciplined CAC spending. Kemp educates Nathan on breaking CAC into pure renewals, expansion, and net-new cohorts, allowing Nathan to model out a 24-month payback calculation.21:46–23:29 · Guest disagreement 0/10 The Famous Five Rapid-Fire Questions Nathan guides Kemp through the standard Famous Five rapid-fire questions, closing out the interview pleasantly with zero friction.3:17–6:18 · Nathan pushing back 2/10 Founding Story, NetIQ Background, and Venture Capital Journey Nathan inquires about Kemp's previous venture NetIQ and early capital strategy. The tone is conversational and collaborative, with Nathan probing on personal equity investment and bootstrap timeline.6:18–10:51 · Nathan pushing back 4/10 Scaling Beyond $100 Million ARR and Operational Profitability Nathan presses Kemp to convert his fiscal year metrics into calendar year ARR and milestone timelines. Kemp jokingly groans at doing on-the-fly mental math while outlining their cashflow positivity.10:51–12:58 · Nathan pushing back 3/10 Competitive Landscape, Blockchain Disruption, and Cyber Threats Nathan brings up crypto-backed Civic as a potential competitor. Kemp admits he has never heard of them and explains that consumer identity is irrelevant to their enterprise identity access management market.13:01–16:12 · Nathan pushing back 3/10 Sponsor Break: Acuity Scheduling Free Trial Offer Following a sponsor read, Nathan asks if Centrify writes code specifically targeting state-sponsored cyber groups. Kemp refrains from naming specific entities and re-centers on stolen credentials as the universal threat vector.16:12–21:45 · Nathan pushing back 5/10 SaaS Retention Dynamics and Customer Expansion Strategy Nathan digs deep into unit economics, asking Kemp how he prevents undisciplined CAC spending. Kemp educates Nathan on breaking CAC into pure renewals, expansion, and net-new cohorts, allowing Nathan to model out a 24-month payback calculation.21:46–23:29 · Nathan pushing back 1/10 The Famous Five Rapid-Fire Questions Nathan guides Kemp through the standard Famous Five rapid-fire questions, closing out the interview pleasantly with zero friction.

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

0:00 · Nathan 46% · guest 54%0:00 · Nathan 46% · guest 54%3:00 · Nathan 19.2% · guest 80.8%3:00 · Nathan 19.2% · guest 80.8%6:00 · Nathan 16.1% · guest 83.9%6:00 · Nathan 16.1% · guest 83.9%9:00 · Nathan 17.3% · guest 82.7%9:00 · Nathan 17.3% · guest 82.7%12:00 · Nathan 54% · guest 46%12:00 · Nathan 54% · guest 46%15:00 · Nathan 10.6% · guest 89.4%15:00 · Nathan 10.6% · guest 89.4%18:00 · Nathan 22% · guest 78%18:00 · Nathan 22% · guest 78%21:00 · Nathan 33.1% · guest 66.9%21:00 · Nathan 33.1% · guest 66.9%24:00 · Nathan 0% · guest 0%24:00 · Nathan 0% · guest 0%
Sharpest disagreement ▶ 14:35 Kemp shuts down nation-state client questions

Kemp firmly declines to confirm or deny writing code for specific state-backed threat actors or intelligence agencies.

 Hardest push from Nathan ▶ 18:01 Nathan challenges rational CAC limits

Nathan pushes back against Kemp's high LTV assumptions, questioning how Centrify prevents overspending on customer acquisition.

 Biggest teaching moment ▶ 19:17 Kemp corrects Nathan on CAC cohort segmentation

Kemp steps in to correct Nathan's conflation of renewal CAC with expansion revenue, detailing the three distinct cost tiers of SaaS acquisition.

 Nathan holds their own ▶ 20:43 Nathan synthesizes Kemp's CAC into payback metrics

Nathan demonstrates sharp SaaS financial modeling by synthesizing Kemp's 2:1 new customer acquisition ratio into a $100k cost and 24-month payback model.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Founding Story, NetIQ Background, and Venture Capital Journey 4112 Nathan inquires about Kemp's previous venture NetIQ and early capital strategy. The tone is conversational and collaborative, with Nathan probing on personal equity investment and bootstrap timeline.
Scaling Beyond $100 Million ARR and Operational Profitability 5224 Nathan presses Kemp to convert his fiscal year metrics into calendar year ARR and milestone timelines. Kemp jokingly groans at doing on-the-fly mental math while outlining their cashflow positivity.
Competitive Landscape, Blockchain Disruption, and Cyber Threats 4533 Nathan brings up crypto-backed Civic as a potential competitor. Kemp admits he has never heard of them and explains that consumer identity is irrelevant to their enterprise identity access management market.
Sponsor Break: Acuity Scheduling Free Trial Offer 4433 Following a sponsor read, Nathan asks if Centrify writes code specifically targeting state-sponsored cyber groups. Kemp refrains from naming specific entities and re-centers on stolen credentials as the universal threat vector.
SaaS Retention Dynamics and Customer Expansion Strategy 8425 Nathan digs deep into unit economics, asking Kemp how he prevents undisciplined CAC spending. Kemp educates Nathan on breaking CAC into pure renewals, expansion, and net-new cohorts, allowing Nathan to model out a 24-month payback calculation.
The Famous Five Rapid-Fire Questions 2001 Nathan guides Kemp through the standard Famous Five rapid-fire questions, closing out the interview pleasantly with zero friction.

Statements from this episode (12)

Disclosure
Kemp: Centrify Initial Enterprise Deals Exceed $100K
“I mean, if you look at large enterprises the initial deal is well over a 100,000 dollars for small and medium sized organizations, the initial deal is maybe 30, 40, 50,000 dollars.”
Tom Kemp Feb 19, 2018 ▶ 2:57
Assertion Supported
Centrify raised $40M in its last round and $90M total
“The last round we raised was four years ago where we raised forty million dollars, but all told, we have about ninety million dollars into the business”
Tom Kemp Feb 19, 2018 ▶ 4:37
Disclosure
Tom Kemp personally invested $1M to $2M into Centrify
“Oh boy, I've probably put in, in excess of over a million or two million dollars into this.”
Tom Kemp Feb 19, 2018 ▶ 5:24
Assertion Not checkable as stated
Centrify raised Series A from Mayfield and Accel pre-revenue
“No, we actually we bootstrapped the business for about four or six months, so we didn't actually get to revenue, but we had, we got far enough long with a proof of concept that the early investors, the A round investors, which were Mayfield and Excel felt good…”
Tom Kemp Feb 19, 2018 ▶ 5:38
Assertion Not checkable as stated
Centrify passed $100M in annual bookings while reaching cash-flow positivity
“So our last fiscal year ending June, we did well over a hundred million dollars in bookings and you know, been growing very nicely, but the other big milestone we hit was cashflow positive.”
Tom Kemp Feb 19, 2018 ▶ 8:39
Assertion Not checkable as stated
Centrify counts almost two-thirds of the Fortune 50 as customers
“We have almost two thirds, the fortune 50 as customers. So we're very much more focused on enterprises and selling to the global 2000. That's where the bulk of our revenue comes from.”
Tom Kemp Feb 19, 2018 ▶ 9:34
Opinion
Kemp: Legacy identity competitors like IBM and Oracle are not cloud-based
“Most of the competition we have are these legacy old time vendors, the CAs, the IBMs of the world. Historically, Oracle has some technology in this area as well. Those are the type of people that have historically been in enterprise identity but obviously they…”
Tom Kemp Feb 19, 2018 ▶ 11:22
Assertion Not checkable as stated
Kemp: Centrify collects over 95% gross dollar retention
“That's actually on a dollar amount. So we look at the annual contract value, what's due up and we actually collect over 95% of that.”
Tom Kemp Feb 19, 2018 ▶ 16:32
Assertion Not checkable as stated
Kemp: Two-thirds of Centrify's net new business comes from existing clients
“Yeah, we definitely in a given core, if you take away the subscription renewals and maintenance renewals, and then you look at the net new business, about two thirds of our net new business is existing customers.”
Tom Kemp Feb 19, 2018 ▶ 17:06
Assertion Not checkable as stated
Kemp: Centrify spends less than 10 cents per dollar on renewals
“What we do is we actually do a CAC based on what it costs to have people renew. And it turns out that's very cheap. It's less than 10 cents on a dollar because people are already hooked on the, Hooked on it, right?”
Tom Kemp Feb 19, 2018 ▶ 19:04
Assertion Not checkable as stated
Kemp: Expanding existing enterprise accounts costs Centrify 50 to 60 cents per dollar
“Then you've got new existing, which is people expanding and you still have to spend money. You have to have a sales rep talk to them and that may cost 50 or 60 cents for the dollar.”
Tom Kemp Feb 19, 2018 ▶ 19:39
Assertion Not checkable as stated
Acquiring net-new enterprise customers costs Centrify $2 per $1 of ARR
“You need to always bring on new, new customers. And that's where the CAC gets into maybe two to one, right? Where you spend two dollars to bring that one in.”
Tom Kemp Feb 19, 2018 ▶ 19:51
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