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Jul 10, 2017 · 22m · top-founders

716: Putin is Making This Man $50 Million Per Year

Stu Sjouwerman · 10m spoken Nathan Latka · 9m 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 episode of 'The Top,' host Nathan Latka interviews KnowBe4 founder and CEO Stu Sjouwerman to explore how the cybersecurity company achieved a $50 million revenue run rate through behavioral security training, outstanding SaaS unit economics, and strategic preparation for an IPO.

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 46.2% of the talking time here. How this is scored →

Nathan as informed peer 4.5 Guest teaching 3.7 Guest disagreement 1.2 Nathan pushing back 3.2
05100:0010:0020:000:00–4:14 · Nathan as informed peer 4/10 Episode Preview and Highlights Nathan introduces the interview and probes on the core business model and pricing. Stu immediately corrects Nathan's assumption about monthly pricing, explaining that the business model is annual upfront B2B seat subscriptions.4:14–8:47 · Nathan as informed peer 5/10 Company Origins, Revenue Milestones, and Inbound Growth Nathan digs into historical revenue milestones, list growth, and capital structure. Stu explains bringing in Kevin Mitnick for 50% equity and walking through the exact cap table splits with VC Elephant.8:48–12:36 · Nathan as informed peer 7/10 SaaS Metrics, Churn, and Unit Economics Nathan demonstrates strong SaaS fluency by rapidly calculating ARR, CAC payback, and LTV multiples from customer counts. He directly challenges Stu when his calculated ARR math deviates slightly from the reported $50M run-rate.12:36–16:36 · Nathan as informed peer 4/10 Geopolitical Cyber Threats and Human Vulnerability Stu provides deep domain expertise regarding nation-state cyber attacks, leaked NSA zero-day exploits, and the vulnerability of the human layer in IT security. Nathan actively listens and explores how KnowBe4 mitigates these attacks.16:36–19:16 · Nathan as informed peer 5/10 IPO Ambitions and Competitive Landscape Nathan presses Stu on his IPO motivations, competitive intelligence on peers like PhishMe and Wombat, and his previous $10M exit. Stu explains why public equity provides currency for aggressive M&A.19:16–21:56 · Nathan as informed peer 2/10 Sponsor Break: Online Course Platform Nathan delivers a mid-roll sponsor pitch followed by the standard rapid-fire Famous Five question segment, maintaining a lighthearted and cooperative atmosphere.0:00–4:14 · Guest teaching 5/10 Episode Preview and Highlights Nathan introduces the interview and probes on the core business model and pricing. Stu immediately corrects Nathan's assumption about monthly pricing, explaining that the business model is annual upfront B2B seat subscriptions.4:14–8:47 · Guest teaching 4/10 Company Origins, Revenue Milestones, and Inbound Growth Nathan digs into historical revenue milestones, list growth, and capital structure. Stu explains bringing in Kevin Mitnick for 50% equity and walking through the exact cap table splits with VC Elephant.8:48–12:36 · Guest teaching 3/10 SaaS Metrics, Churn, and Unit Economics Nathan demonstrates strong SaaS fluency by rapidly calculating ARR, CAC payback, and LTV multiples from customer counts. He directly challenges Stu when his calculated ARR math deviates slightly from the reported $50M run-rate.12:36–16:36 · Guest teaching 6/10 Geopolitical Cyber Threats and Human Vulnerability Stu provides deep domain expertise regarding nation-state cyber attacks, leaked NSA zero-day exploits, and the vulnerability of the human layer in IT security. Nathan actively listens and explores how KnowBe4 mitigates these attacks.16:36–19:16 · Guest teaching 3/10 IPO Ambitions and Competitive Landscape Nathan presses Stu on his IPO motivations, competitive intelligence on peers like PhishMe and Wombat, and his previous $10M exit. Stu explains why public equity provides currency for aggressive M&A.19:16–21:56 · Guest teaching 1/10 Sponsor Break: Online Course Platform Nathan delivers a mid-roll sponsor pitch followed by the standard rapid-fire Famous Five question segment, maintaining a lighthearted and cooperative atmosphere.0:00–4:14 · Guest disagreement 2/10 Episode Preview and Highlights Nathan introduces the interview and probes on the core business model and pricing. Stu immediately corrects Nathan's assumption about monthly pricing, explaining that the business model is annual upfront B2B seat subscriptions.4:14–8:47 · Guest disagreement 1/10 Company Origins, Revenue Milestones, and Inbound Growth Nathan digs into historical revenue milestones, list growth, and capital structure. Stu explains bringing in Kevin Mitnick for 50% equity and walking through the exact cap table splits with VC Elephant.8:48–12:36 · Guest disagreement 1/10 SaaS Metrics, Churn, and Unit Economics Nathan demonstrates strong SaaS fluency by rapidly calculating ARR, CAC payback, and LTV multiples from customer counts. He directly challenges Stu when his calculated ARR math deviates slightly from the reported $50M run-rate.12:36–16:36 · Guest disagreement 1/10 Geopolitical Cyber Threats and Human Vulnerability Stu provides deep domain expertise regarding nation-state cyber attacks, leaked NSA zero-day exploits, and the vulnerability of the human layer in IT security. Nathan actively listens and explores how KnowBe4 mitigates these attacks.16:36–19:16 · Guest disagreement 2/10 IPO Ambitions and Competitive Landscape Nathan presses Stu on his IPO motivations, competitive intelligence on peers like PhishMe and Wombat, and his previous $10M exit. Stu explains why public equity provides currency for aggressive M&A.19:16–21:56 · Guest disagreement 0/10 Sponsor Break: Online Course Platform Nathan delivers a mid-roll sponsor pitch followed by the standard rapid-fire Famous Five question segment, maintaining a lighthearted and cooperative atmosphere.0:00–4:14 · Nathan pushing back 3/10 Episode Preview and Highlights Nathan introduces the interview and probes on the core business model and pricing. Stu immediately corrects Nathan's assumption about monthly pricing, explaining that the business model is annual upfront B2B seat subscriptions.4:14–8:47 · Nathan pushing back 4/10 Company Origins, Revenue Milestones, and Inbound Growth Nathan digs into historical revenue milestones, list growth, and capital structure. Stu explains bringing in Kevin Mitnick for 50% equity and walking through the exact cap table splits with VC Elephant.8:48–12:36 · Nathan pushing back 5/10 SaaS Metrics, Churn, and Unit Economics Nathan demonstrates strong SaaS fluency by rapidly calculating ARR, CAC payback, and LTV multiples from customer counts. He directly challenges Stu when his calculated ARR math deviates slightly from the reported $50M run-rate.12:36–16:36 · Nathan pushing back 2/10 Geopolitical Cyber Threats and Human Vulnerability Stu provides deep domain expertise regarding nation-state cyber attacks, leaked NSA zero-day exploits, and the vulnerability of the human layer in IT security. Nathan actively listens and explores how KnowBe4 mitigates these attacks.16:36–19:16 · Nathan pushing back 4/10 IPO Ambitions and Competitive Landscape Nathan presses Stu on his IPO motivations, competitive intelligence on peers like PhishMe and Wombat, and his previous $10M exit. Stu explains why public equity provides currency for aggressive M&A.19:16–21:56 · Nathan pushing back 1/10 Sponsor Break: Online Course Platform Nathan delivers a mid-roll sponsor pitch followed by the standard rapid-fire Famous Five question segment, maintaining a lighthearted and cooperative atmosphere.

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

0:00 · Nathan 63.7% · guest 36.3%0:00 · Nathan 63.7% · guest 36.3%3:00 · Nathan 34.7% · guest 65.3%3:00 · Nathan 34.7% · guest 65.3%6:00 · Nathan 41.3% · guest 58.7%6:00 · Nathan 41.3% · guest 58.7%9:00 · Nathan 45.8% · guest 54.2%9:00 · Nathan 45.8% · guest 54.2%12:00 · Nathan 29.3% · guest 70.7%12:00 · Nathan 29.3% · guest 70.7%15:00 · Nathan 26% · guest 74%15:00 · Nathan 26% · guest 74%18:00 · Nathan 66.1% · guest 33.9%18:00 · Nathan 66.1% · guest 33.9%21:00 · Nathan 72% · guest 28%21:00 · Nathan 72% · guest 28%
Sharpest disagreement ▶ 2:44 Correcting billing frequency framing

Stu firmly dismisses Nathan's recurring monthly framing, clarifying that all billing is paid strictly annually upfront per seat.

 Hardest push from Nathan ▶ 9:45 Nathan challenges run-rate calculation discrepancies

Nathan refuses to accept hand-wavy numbers, multiplying 9,500 customers by 400 seats at $15/seat to challenge why the resulting figure doesn't match the projected $50M target.

 Biggest teaching moment ▶ 14:03 Breakdown of state-sponsored cyber warfare weapons

Stu educates Nathan on offensive cyber code programs, leaked NSA zero-day worms like WannaCry, and why technical defenses fail when humans remain phish-prone.

 Nathan holds their own ▶ 11:35 Nathan calculates LTV and instant CAC payback

Nathan instantly derives the $18,200 lifetime value from a 7x CAC ratio and demonstrates clear mastery over SaaS unit economics and upfront cash flow mechanics.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Episode Preview and Highlights 4523 Nathan introduces the interview and probes on the core business model and pricing. Stu immediately corrects Nathan's assumption about monthly pricing, explaining that the business model is annual upfront B2B seat subscriptions.
Company Origins, Revenue Milestones, and Inbound Growth 5414 Nathan digs into historical revenue milestones, list growth, and capital structure. Stu explains bringing in Kevin Mitnick for 50% equity and walking through the exact cap table splits with VC Elephant.
SaaS Metrics, Churn, and Unit Economics 7315 Nathan demonstrates strong SaaS fluency by rapidly calculating ARR, CAC payback, and LTV multiples from customer counts. He directly challenges Stu when his calculated ARR math deviates slightly from the reported $50M run-rate.
Geopolitical Cyber Threats and Human Vulnerability 4612 Stu provides deep domain expertise regarding nation-state cyber attacks, leaked NSA zero-day exploits, and the vulnerability of the human layer in IT security. Nathan actively listens and explores how KnowBe4 mitigates these attacks.
IPO Ambitions and Competitive Landscape 5324 Nathan presses Stu on his IPO motivations, competitive intelligence on peers like PhishMe and Wombat, and his previous $10M exit. Stu explains why public equity provides currency for aggressive M&A.
Sponsor Break: Online Course Platform 2101 Nathan delivers a mid-roll sponsor pitch followed by the standard rapid-fire Famous Five question segment, maintaining a lighthearted and cooperative atmosphere.

Statements from this episode (16)

Assertion Not checkable as stated
KnowBe4 charges an average of $15 per user per year
“The average user is about 15 dollars per user per year, not per month.”
Stu Sjouwerman Jul 10, 2017 ▶ 2:47
Assertion Not checkable as stated
KnowBe4 averages 400 to 500 seats per paying customer
“Yeah, four to 500 seats.”
Stu Sjouwerman Jul 10, 2017 ▶ 4:12
Prediction Held up
KnowBe4 expects to generate $50 million in revenue in 2017
“We're gonna do fifty million in this year, 2017.”
Stu Sjouwerman Jul 10, 2017 ▶ 5:06
Disclosure
KnowBe4 bootstrapped for five years before raising an $8M Series A
“No we bootstrapped for the first five years. I basically spent a million bucks building this company. And late, this was December, 2015, we took eight mil in venture capital. Because we wanted basically support and help to go public. Didn't really need the mon…”
Stu Sjouwerman Jul 10, 2017 ▶ 5:57
Disclosure
Sjouwerman gave hacker Kevin Mitnick 50% equity for his expertise
“Anyway four years ago, I said, listen, I can own A hundred percent of a muffin or I can own 50% of a really big pie. So I got in touch with Kevin and I said, I'll give you half the company in exchange for your 30 years of hacking experience. So we did that.”
Stu Sjouwerman Jul 10, 2017 ▶ 7:42
Disclosure
Cap table: Elephant owns 24%, Mitnick and Sjouwerman under 30%
“Elephant, our VC, owns 24%. Kevin owns just under 30. I own just under 30. And the rest is owned by You know, early employees.”
Stu Sjouwerman Jul 10, 2017 ▶ 8:36
Assertion Not checkable as stated
KnowBe4 has an annual customer churn rate of 15%
“Our churn is only 15%. Annually.”
Stu Sjouwerman Jul 10, 2017 ▶ 9:14
Assertion Not checkable as stated
KnowBe4 has over 9,500 paying customer companies
“9500 and dust.”
Stu Sjouwerman Jul 10, 2017 ▶ 9:44
Assertion Not checkable as stated
KnowBe4 booked $1M in a single day and $12M in Q1
“March 31st was the best day of my professional career. We did a million bucks that day. We did five mil that month, and we did 12 mil in the quarter.”
Stu Sjouwerman Jul 10, 2017 ▶ 10:23
Assertion Not checkable as stated
KnowBe4 has reached a total headcount of 290 employees
“280. Actually, no, we just got 10 people in today. Two 90.”
Stu Sjouwerman Jul 10, 2017 ▶ 11:10
Assertion Not checkable as stated
KnowBe4's customer acquisition cost is approximately $2,600
“CAC sits at the moment about 2600 bucks.”
Stu Sjouwerman Jul 10, 2017 ▶ 11:28
Assertion Not checkable as stated
KnowBe4 claims a 7x ratio of customer lifetime value to CAC
“If you look at CAC over lifetime value, it is, the ratio is seven.”
Stu Sjouwerman Jul 10, 2017 ▶ 11:36
Assertion Not checkable as stated
KnowBe4 makes $2,000 upfront on day one of every new sale
“The CAC is 2600 bucks, the ASP is 4600 bucks, so we make two grand on every sale right at day one.”
Stu Sjouwerman Jul 10, 2017 ▶ 12:05
Opinion
Putin wages asymmetrical cyber warfare due to a low defense budget
“Vladimir Putin is essentially waging a sort of a low-grade cyber war against the U.S., which is, in his perspective, asymmetrical warfare, because they only have 10% of the defense budget that we do, and so he's harassing U.S., you know, both profits and non-…”
Stu Sjouwerman Jul 10, 2017 ▶ 13:10
Assertion Not checkable as stated
Sjouwerman estimates competitor revenues: PhishMe at $50M-$60M, Wombat at $30M-$40M
“Fish Me is in the 50, sixty-ish, and Wombats is 30, forty-ish, but that's guesswork.”
Stu Sjouwerman Jul 10, 2017 ▶ 17:32
Disclosure
Sjouwerman made $10M from a prior exit before founding KnowBe4
“I walked out with ten million bucks. I was set for life. I didn't, I'm not doing this for money.”
Stu Sjouwerman Jul 10, 2017 ▶ 18:11
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