Thesis

My partner and I wanted to identify impersonation on email, where bad actors take info and act on it assuming a different identity (for example, having the CFO of a company supposedly reach out to the CEO who is about to board a plane with a request that the CEO answers quickly thinking it’s legitimate). We worked on a model that can identify fraud through a number of factors, including history and language, and create an alert when there might be a problem. 

We worked for about six months – without payment – with a big customer that became a Unicorn. We worked in their production environment and gave them insights into what was happening in their emails. The company really liked our  team and saw we were solving problems, but ultimately chose another company, despite the fact that we outperformed the others, because we hadn’t raised money. 

Validation

We spoke with a lot of people –  tens of CISOs. All agreed it was a problem, but either weren’t sure it was a big enough problem or weren’t sure we could solve it. 

Additional questions we got:

• Are you a standalone product or are you complimentary (complimentary products have lower multiples).
• What budget line would our product be in/which product would it replace? 
• What would we do if the big players – Microsoft, Google – decide they are taking on the same problem?

Why it didn’t progress 

My partner and I had too many disagreements – how to proceed, when to raise money etc. There was an issue of basic chemistry. Initially I thought it didn’t matter, but then realized it’s super important. We wasted a lot of time explaining things to each other, getting to agreements. 

One of the key issues was in how we responded to feedback from VCs. Many told us that email security is a red ocean and wondered how we would deal with competition. That made us realize that the VCs don’t understand the bigger vision of figuring out how to uncover impersonation and that it can go beyond email. 

We agreed that we needed to make a big change in how we talked to investors, but didn’t agree on how we would make the change. . Initially I thought we could get over it and suggested that he work on his plan for a given amount of time and then if it didn’t work we’d move to my plan. However, there was a moment when he showed me something I thought would damage the idea and I suggested we speak to someone we both trust to get his opinion. When that person had the same feedback as I did and my partner still wouldn’t listen, I realized we couldn’t work together.

Insights

1. The most important thing by far is the team and partnership. It sounds obvious, but even more than in a romantic relationship, there needs to be a very good and deep connection. You need to speak the same language but see things differently to bring different perspectives. Ideally, you work closely with someone for a few months, see that there’s a connection, and only then start something together. 

2. Ideas aren’t the main thing. I’m less focused on the idea and more on what I learned so I can bring it to the next idea, with a focus on the team.   

3. My goal as a founder is to see as much data as possible while writing minimum code (ideally no code). I thought it was a mistake that we got to the point of writing code without getting paid or raising money.

4. VCs have a very different perspective than companies, so the story needs to be different. A customer cares about what they get, how much it costs, which budgetary line it fits, and what it replaces. It’s practical and short term. VCs have a longer-term view, especially in Cyber. 

---