The Ledger
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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.”
Rothrock: RedSeal accepted majority takeover amid cash stress and employee attrition
“The stresses had to do with cash, cash flow we actually grew cash over the last year, but not without a lot of stress on the team.
I'd had some attrition that I didn't like cause I couldn't afford things as much as I wanted to.
And honestly growth rate was sa…”
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…”
Rothrock: Red Seal serves 240 clients, including all DoD and intel agencies
“About 240. Mostly all global 2000 and federal. We have every intel agency, all of the DOD, their services, and many of the civilian agencies are our customers.”
Rothrock: Red Seal achieved a 50% net margin in Q3
“I brought in twice in business in Q three that I spent on expenses two times. So if I made, yeah, if I made two dollars, I only had a dollar of expense and that's the bottom line, not the gross margin, but the net margin of the company.”
Rothrock: RedSeal faces churn playing catch-up with vendor updates
“Literally, so sometimes configuration information for all the routing equipment, those routing equipment guys, Cisco, Palo Alto, Checkpoint, Fortinet, Juniper, all of them, they change their stuff all the time. And occasionally we get So they upgrade our softw…”
Rothrock: Symphony Technology Group acquired over 50% of RedSeal
“It's the, they bought more than 50%, yeah.”
Rothrock: Bleeding-edge tech companies typically do not use RedSeal
“Interestingly, we're not people who have cutting edge capabilities and really are on the hairy bleeding edge of things. They don't typically use this.”
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 …”
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.”
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.”
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.”
Rothrock: RedSeal spent $2.5M–$3M acquiring $31M DISA contract
“So that customer is DISA and it is a five year deal. So 31,000,005 years. We probably spent two and a half, three million dollars to get that deal over two, three years.”
Rothrock: Deep network integration creates the greatest friction in cyber software deployment
“The biggest friction to deployment is how embedded is the technology. There's a lot of soft, there's a lot of cyber software that just sits in front of things. That's easy to install very quick. You download it, put it on a device and off you go.”
Rothrock: RedSeal is willing to spend first-year ACV on customer acquisition
“Probably on average, I'm willing to spend it when the first years yeah, I'll say yes.”
Rothrock: RedSeal raised $75 million prior to its Symphony transaction
“Total at that time was about seventy five million.”
Rothrock: RedSeal has surpassed $50 million in annual revenue
“And now we've grown to about, well, we're over fifty million now.”
Rothrock denies being in acquisition talks with CrowdStrike
“No, none. I'm building a company, building a business.”
Rothrock: RedSeal expects to reach $100 million ARR within three years
“That's our goal would be, you know, in that zone, a hundred million. We think we can do that in the next two to three years.”
Rothrock: RedSeal's typical entry contract generates $200,000 to $300,000
“Most people start small and expand over time. So a typical entry point would be 500 routers. And so that'll, you know, that'll generate, I don't know three, two or 300,000 dollars, and then as it expands, it gets bigger, and that's the way it works.”
Rothrock: RedSeal customer cohorts expand 20% to 30% annually
“Well, some of them doubled. Some of them, on average, probably, I'd say, 20 or 30%.”
Rothrock: RedSeal will achieve full-year profitability
“It depends on the quarter. We will be profitable this year. Last quarter, we're a little under this quarter. We'll be way up. And then Q four will be about a break even.”
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.”
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.”
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.”
Red Seal has raised $75 million total, mostly before Rothrock became CEO
“All in seventy-five million dollars. Most of that was raised before I became CEO.”
Rothrock: RedSeal profits primarily on expansions rather than $200K initial deals
“Most of our deals the 200,000 dollar average deal, we make a little money there. It's the renewal or really the expansion where we make our money.”
Rothrock: RedSeal Achieves ~90% Annual Revenue Renewal Rate
“We're getting renewals of about 90%. So churn's 10%. It's pretty good. Revenue, revenue.”
Rothrock: RedSeal will reach $40 million in revenue in 2018
“We're we'll do forty million this year. It's still kind of lumpy because some of our deals are quite large. Most of our deals are average as you point out, but we'll do forty million this year.”
Rothrock: Red Seal expanded one customer deal to $11M in year four
“We had one go to eleven million dollars in the fourth year.”
Rothrock: RedSeal employs 60 engineers and 30 quota-carrying sales reps
“About 60 engineers, 20 support engineering. Then there's about 80 people in the field. Of the people in the field, there are, I don't know, 30 quote acquiring people, but we all go as a team.”
Rothrock: RedSeal serves about 250 distinct enterprise customers
“And of course some customers have installations in different disparate places because they're located different places, but that all ends about 250 distinct customer names.”
Rothrock: RedSeal monitors approximately 1.2 to 1.3 million network devices
“The last time I looked, it was about a 1,000,002 1,000,003.”
Rothrock: RedSeal reached $17M-$18M in revenue around 2012-2013
“We got up to about 17, eighteen million dollars in 2012, 2013, and things kind of leveled out.”
RedSeal continues pricing its cybersecurity software based on router unit counts
“It's still by the unit.”