“To build a community, you need to focus much more on the user than on the buyer” - Snyk’s Guy Podjarny

 

Cybersecurity unicorn Snyk was founded in 2015 with the mission to help developers make their code secure. Just a few years on and Snyk has evolved from being an open source vulnerabilities scanner and to becoming the world’s first developer security platform that start-ups worldwide can build upon. Snyk customers and users collectively have run more than 300 million tests in the last 12 months and fixed more than 30 million vulnerabilities in the last 90 days.

 

As the company announces its $530 million Series F at a valuation of $8.5 billion, it’s clear that Snyk is driving the industry’s shift to a new developer-centric approach to security and is now the undeniable leader in this space. In 2021 so far, the company has:

 

• Increased annual recurring revenue by 154% year-over-year
• Grown its customer base to 1,200+ companies, including established enterprise leaders and emerging hypergrowth technology companies
• Hired and onboarded 320 employees, projecting 800+ by year end
• Delivered more than 40+ new product features
• Acquired FossID to expand license compliance and C/C++ capabilities

I sat down with co-founder Guy Podjarny to get his tips on building a community, how to deal with hypergrowth, the importance of having people across multiple offices and continents feel like one team and more…

 

Let’s start with your entrepreneurial journey. You’re a serial entrepreneur - some of your companies have been acquired and Snyk’s a great success. What attracted you to entrepreneurship, coming out of the 8200 Intelligence Unit?

 

I’ve always been interested in creation, in finding problems, and figuring out and creating solutions. That’s what I found most attractive about software development: building things. And I’ve always taken initiative. As an employee, I never waited for instructions to do something. So at some point I concluded it’d be an interesting adventure to try and actually found a company.

 

I was at IBM at the time. They’d acquired a company that had acquired a company I was at, and I didn’t want to stay there – it wasn’t the right environment for me. Founding my own company made sense. The idea, and how to tackle it, were secondary considerations. It was really all about building and creating solutions. 

 

Even within companies, I found myself constantly looking for the next mountain, and how I could learn something new. How could I grow my impact? That always brought me back to looking for bigger problems to solve. The specific idea would always come afterwards. 

 

What was your approach to picking co-founders, and what advice would you give entrepreneurs on this?

 

I think having a co-founder is very important. The entrepreneurship journey is hard. Founding companies is an emotional roller-coaster - you have highs and lows, sometimes several times a day, and they can get pretty extreme. You need close partners in that journey and you get many sorts of partners - investors, employees etc. - but you need someone who’s into the cause and all in with you. I’ve seen people succeed as solo founders – but I think not having a co-founder makes an already hard journey that much harder. For me, it was clear I needed a co-founder and that they could bring in a relevant skill set that I didn’t have.

 

Mike Weider, my co-founder at Blaze, was a much more experienced, technology-minded business person than me, and much better connected to the VC world. So, while he was CEO, leading the company and helping to fundraise, I focused on building the technology and product.

 

For Snyk, I was based in London, and wanted a branch in Tel Aviv, building a security company. I needed someone who was all in with me in Israel and wanted them to be the opposite of what I had with Mike at Blaze – I wanted someone who’d drive the technology while I could evolve as a CEO and build out the go-to-market strategy. A complementary relationship is important. You need to have enough overlap to communicate well and build the same thing together, but not so much that you’re both redundant.

 

It’s important, too, to have some background with your co-founder, or certainly a strong reason to believe you’ll enjoy spending a lot of time together. You’ll be persevering through some very hard times and it’s a long journey. The co-founder / marriage analogy is apt. If you fall out, the “divorce” can be very painful. I think not having any history together can be super risky.

 

You mentioned you first wanted to build a company and then try to find the idea. What was the lightbulb moment for Snyk?

 

The idea came to me in the shower! I’d been in security for over a decade, building application security solutions, but we weren’t successful in persuading developers to embrace them. In hindsight, I realise we built security solutions that we integrated into a development environment but we didn’t build the tools to be developer friendly. 

 

I left security and founded Blaze, a web performance company, where I spent seven years or so at the front line of the evolving DevOps movement. I learned to appreciate two things. The first was that DevOps changed the world of software. It really drives everything into these independent teams that will run, and security has to be a part of the movement, or we’re never going to be secure. The only way to scale security is to have security built into these development teams’ activities. The second thing was that DevOps gives us a playbook - it has taught us how to build great developer tools that are embraced by developers. That was my lightbulb moment - what if we build a DevOps tool that tackles security? 

 

I think ideas through by talking about them. The more I talked about this one, the more convinced I was that it was necessary. I wouldn’t let it go and it evolved into what we today call “dev first security”. The rest is history. 

 

Did you have to work hard to convince (co-founders) Assaf and Danny to join?

 

They were both about to found a different startup, so I didn’t need to convince them to found a company – I just needed to convince them to join mine! Fortunately, they weren’t too far along with their idea. It was still fairly abstract, while mine was very concrete and compelling – and, because of my past relationships with the investors, I already had funding lined up. I visited Israel and, after a bunch of meals together, they decided to join. It wasn’t easy, but it wasn’t the hardest part of the journey. 

 

When you started Snyk, did you think about the importance of building a community from the offset, and is that what drove your decisions in terms of building and architecting the product?

 

Everything you build in a company or solution should really revolve around the eventual users’ pains and needs – especially if you’re building from the bottom up. Snyk was a developer-first security company. The whole thesis was to build a developer tooling company that tackled security. Everything about it was built through that lens.

 

The go-to-market strategy was to start free and open source and grow from there. The community approach is instrumental to the developer tooling landscape. Developers look to the open-source community to see what’s being used there; they ask their peers; they like to try before they buy – to get their hands dirty. Everything was designed to mimic what I believe to be best-of-breed developer tools. 

 

The other model we had was DevOps, and we wanted to bring security back into the fold of DevOps. It’s a community movement, rather than a technology or specific practice. So it was important to mobilise the notion of developers needing to take on security and to help them embrace it. This drove a lot of educational activities within this conceptual community, which led to business impact from the bottom up, while the freemium self-service model helped us get people on the platform and start tackling that mission. 

 

What tips would you give to entrepreneurs who want to build a community – particularly a developer community?

 

First, you have to think about the user. If you’re talking about a bottom-up play, it needs to focus much more on the user than on the buyer. You need to ask how these users find out about and consume technology, and orient your presence toward this. In the case of developer tools, discovery and usage are often very community-based. 

 

You also need to think about whether you’re trying to get these communities to embrace a new practice. Sometimes you’re shipping products that are doing something that’s already been done, they’re just doing it better. So you might just need greater awareness and reach. But if, like Snyk, you’re trying to change behaviour and persuade a community to embrace a new practice, you may want to think about thought leadership, and maybe even investing in certain communities. 

 

Finally, if you’re building a platform, and you want to pull people in to create plugins and additions – especially if it’s open source – you should also think about appealing to a community of builders. This is similar but not identical to the community of users.

 

One thing that’s been particularly impressive is the speed at which Snyk expanded internationally. Starting in three cities - Tel Aviv, London and Boston - at almost the same time helped, but can you walk us through how you thought about building a global company from day one? What have you learned from it?

 

The company started as a two-headed monster, evolving into three and four heads with Ottawa and Boston. We ensured each office – with its own talent pools – was part of one team. We intentionally divided the teams so they never existed in one office alone – each was present in at least two offices. This required more effort but it also forced us to write things down and communicate asynchronously.  

 

Bringing together people, perspectives, skills and opinions from different locations prevents an “us versus them” mentality

that can arise when every office specialises in a particular topic. There’s a lot of family and cultural value in having local presences but as part of a global company, and it’s an approach that’s helped as we’ve continued our international expansion. “One team” is one of Snyk’s core values

 

Commercially, it’s all about reach. The technology problem, the people problem, and the user pain the company solves are international. Anyone embracing DevOps that cares about security should use Snyk’s solutions to help them build security into their software development practices. The whole go-to-market motion is product-led and has naturally expanded globally so it’s been international from the beginning. We let the technology community spread it wherever it may go and then complemented this with an inside sales team, supporting anybody coming in and wanting to upgrade. This team then grew, becoming more time-zone friendly, evolving internationally, but always with a local presence. 

 

Instead of pursuing big economies, we’ve followed the users, and grown in the Nordics, the UK, and Spain. In the complicated APAC market, we’ve had to combine the community adoption concept with an intentional presence, as well as an understanding of how business is conducted regionally and how to reach local communities. As at the beginning, we’re helping users in the region embrace the product by fulfilling inbound demand, and reaching out to similar users to ensure they’re aware of Snyk. 

 

Snyk went from low single digit revenue to $100 million+ in ARR in a record time, which is amazing. What did you learn in terms of hyper-growth and the shift from being a founder leading a small team to hundreds of people?

 

One of my key learnings is to

 

think further ahead than you originally believe – especially when hiring.

When you’re hiring leaders, you need people who’ll stretch to the full scope of responsibilities you’ll give them. In hyper-growth, that scope will multiply many-fold within a year or two. You don’t want to be in a position where, after your company has doubled or tripled in size and scope of activities, the person you’ve hired is suddenly in the biggest job they’ve ever done. It’s tempting to take a leap of faith with an external hire and think they’ll be able to stretch to the size, but it’s risky. You should only do this with internal hires who you feel can take the role on.

 

Secondly, don’t underestimate infrastructure. Putting something in place - like an internal system, for example - to suit the needs of your company today is risky. In a year’s time, when you’ve grown, that system will likely be too small for you and need replacing again. I’ve appreciated thinking a few steps ahead and investing in something that felt a bit too big at the time but suited our needs a year or so later. The future is closer than you think when it comes to both people and infrastructure!

 

And, finally, define clear boundaries. Once you’re successful, and opportunities are plentiful, your biggest enemy is a lack of focus. You must balance taking on new opportunities and not spreading yourself too thinly. By agreeing on certain boundaries for six or 12 months, it becomes harder to deviate from them. We drew a line while deliberating whether to do certain things or partner with certain companies. It made decisions easier, and helped everyone in the organisation maintain focus. 

 

After being CEO for the first four years, you hand-picked Peter McKay to take over in that role in 2019. Can you talk about that decision? 

 

Like picking co-founders, picking a CEO to lead the company at the right time is a crucial decision. Peter and I have known each other for eighteen years. When I was at Watchfire building AppScan, Peter was the President and CEO, and when I started Blaze and Snyk, I asked Peter to be on our Board of Directors. As I built Snyk over the years, it became clear that the market opportunity was enormous and that my role as founder was to ensure the longevity of our developer security vision, including our technology evolution and product roadmap. And, as we reached GTM maturity, it also became increasingly obvious that we were ready for an experienced operator like Peter to partner with me. Given that Peter was already on the Board, it was truly a no-brainer and then ultimately a seamless transition.

 

Looking back at when you closed your Series A in 2018, what do you wish you’d known then that you know now?

 

Many things! My earlier point about hiring is one. I think I’d equip the business better in terms of data. Back then I could just about hold the business in my head and understand what was moving. I had enough exposure to deals, product features and such that I could make good decisions and the exec team could make good decisions based largely on intuition. But as the business grew, this became dangerous as I’d have less detail on what was really going on. So I’d have invested in more data around the business and product, and become a more data-driven organisation at that time - it’s less painful to do this earlier on.

 

Snyk’s been very proactive throughout its lifecycle, raising rounds ahead of time. What advice would you give when it comes to choosing an investor, and the timing of financing?

 

Most importantly, an investor must be someone you get along with. You’re going to spend a lot of time with them. Just as with co-founders, you need to be happy about this, and feel like you’re having productive conversations. Even if they’re great at what they do, they may be the wrong fit for you personally. 

 

I’m a fan of stage-appropriate and stage-focused companies. Different funds and partners excel at different phases. I’m sure there are amazing individuals and companies that go all the way from seed to super-growth, but there’s a mental state and organisational setup for firms more attuned to just a couple of rounds. Be mindful of the stage you’re in.

 

You also want investors to have knowledge and experience in areas you appreciate. It could be a market, like DevOps in our case, or it could be a stage. Ask yourself - what do they know that I can tap into and benefit from? You want to have investors that can help you a lot and add a lot of value in a little time.

 

That makes a lot of sense. What’s been the hardest part of building Snyk that you didn’t anticipate, and what’s been easier than you expected? 

 

The hardest thing has been saying no to exciting opportunities in the name of focus.

You see many things on the road ahead, but you have to stagger them. I can’t do everything. If I try, it’s gonna fail!

 

The easiest was finding funding when things were going well. I think the market’s set up for investors to actively find companies that are succeeding. Capable investors found us more easily when we were doing well. I don’t think it’s a coincidence. The best investors have their ears to the ground and will find you.

 

And, in closing, are there any valuable life hacks or habits you’ve developed over the years to cope with the demands of founding a startup?

 

Whether it’s relaxing or spending time with the family, define your non-work boundaries so you don’t need to decide on them every time.

 

For me, I leave the office at 6:30pm and go home to have dinner with my kids and might be back at my computer at 9pm once they’re in bed. I also try not to travel on weekends and do back-to-back trips. It’s an approach that’s helped me stay sane and feel like I’m not constantly working.‍

 

***************************

 

Read our Secrets to Scaling interviews with:

 

- Personio's Hanno Renner here

 

- Chainalysis' Michael Gronager here

 

- BlaBlaCar's Nicolas Brusson here

 

- Supercell's Ilkka Paananen here

 

- Miro's Andrey Khusid here‍

 

- Trade Republic’s Christian Hecker here 

“Growth and scaling are the hardest things to get right” - Chainalysis’ Michael Gronager

Earlier this year, Chainalysis announced its $100 million funding round, valuing the company at more than $2 billion and marking the fact that cryptocurrency is now mainstream. Since its Series C in November 2020, Chainalysis has increased ARR by more than 100% year-over-year, doubled its client base and now supports more than 100 digital assets across 10 native blockchains (around 90% of cryptocurrency economic activity). It’s been quite a journey getting here and there’s still a way to go as cryptocurrencies integrate with our global financial system.

I sat down (virtually) with Chainalysis co-founder and CEO Michael Gronager to discuss his learnings from almost seven years at the helm of a high-growth company. He shared his tips for building a global business, hiring, what he’d do differently and more…

The Chainalysis journey

‍

PB: Let’s go back to the start. What was your career prior to founding first Kraken and then Chainalysis? What attracted you to entrepreneurship?‍

Before Kraken, I was planning and running public research infrastructure projects across Europe. Essentially, I was just doing politics and talking to research councils to get funding. I got to a point where I thought the purpose of the education and research systems we were creating was for people to build companies and that those who could do, should. After a conversation with a colleague, I decided to build something myself. I started coding iPhone apps and got one off the ground for a US company. This gave me some financial freedom, so I quit my job and was soon bitten by the crypto bug. 

I started reading about Bitcoin when the price went crazy high - growing from $1 to $32! - and then crashed to $15 in 2011. I saw Bitcoin as a new paradigm in computing, creating digital scarcity where something digital couldn't be copied and you could only transfer its value or symbolic value. I looked for places to meet other people who thought Bitcoin was cool and found the first ever conference in New York. I met [Kraken co-founder] Jesse Powell here.‍

How did Kraken come about?‍

I’d been experimenting with distributed payments online and couldn't figure out whether to create a business around this or not when Jesse contacted me about a crypto exchange he was building. It sounded fun, so I went to San Francisco to join the team and Kraken launched in summer 2013. It was perfect timing - Bitcoin that year went from $10 to $1,000.‍

How did you get from there to Chainalysis?‍

Mt Gox, the biggest crypto exchange, went bankrupt in early 2014, losing about half a billion dollars following a hack. This caused a big downward spiral of everything crypto. It was associated with criminal activity, hacks, online drug sales, terrorism and more. No one wanted to talk about crypto, so running an exchange was tough. Talking to banks and regulators in Asia, Europe and the US, I kept hearing the same issues: they couldn't monitor transactions, no one understood the return of funds, and - most concerning - crime couldn’t be investigated. I thought about this, read the original Satoshi article and others on how it was possible to trace, execute and build a data layer crypto. I then decided to try and solve the obvious problem of understanding the flow of funds in the most transparent financial ecosystem ever created.

I left Kraken and created the Chainalysis prototype on my flight back to Europe. I had a lot of Bitcoin code and software so the proof of concept was basically 50 lines of code. I could build out clusters of transactions, enabling you to see different services and create the early map of crypto. It was then a case of finalising it, bringing Jonathan and Jan on board, selling it, and here we are!‍

Learnings for the next generation of entrepreneurs

‍

Many European founders wonder where to start their company - move to the US or stay in Europe. Why did you decide on New York and then build Chainalysis’ organisation between there and Copenhagen? ‍

In the best of all worlds, we’d have probably moved to San Francisco. There’s great talent, a lot of investment and programmes like Y Combinator. You can get capital and be up and running in the blink of an eye. But, when setting up, we wanted to maintain a European connection for developer resourcing and build some of the team out there. I also had family in Europe. Having a nine hour time difference between Copenhagen and San Francisco didn’t make sense. Proximity to Washington DC was going to be key for US government customers and the heart of finance was in New York so it made sense to set up shop there. There are two key reasons we didn’t just stay in Europe: there’s a sales momentum and energy in the US that we wanted to tap into to win the global market, and building trust with US government agencies would have been harder if we were seen as a European company. We had to be US-based.‍

How did you initially think about going global from a sales perspective? With the crypto ecosystem, you’ve got a big buyer in US government agencies, Chainalysis’ European roots, the UK’s GCHQ, and a lot of crypto activity in Asia. It's challenging for a young company to deal with three continents and time zones for sales. How did you do it?‍

We ran a lot of our sales calls over Skype, sitting in various places doing early or late calls every day with exchanges or law enforcement agencies worldwide. It worked pretty well. We were quite successful selling the product to both government agencies and exchanges purely online. But growing these accounts later typically required travel. Once the customer had bought the product, we had to get on a plane to drive adoption and upsells. I’d be jumping all over the world for these meetings. It was a lot of travel. One of the things I’ve enjoyed with the pandemic is not always sitting on a plane!‍

Now you’ve had five or six years of global expansion, is there anything you’d do differently?‍

I think that setting up and building a team in one office with a strong focus on product and design and so on would have been a slight advantage over hiring people via the internet all over the world, so I’d probably do that now.

I’d maybe even have moved to the West Coast at the beginning. When you’re trying to attract commercial talent at higher levels, it still has an advantage. It’s probably 10 times the talent pool of the East Coast and another 10 times that of Europe. This isn’t the case when hiring engineers - the quality across Europe is better than most of the US, in my opinion. But for leaders in sales and marketing, there’s a lot of high growth company history on the West Coast to draw talent from. ‍

Let’s dig into this. Hiring execs is one of the most important things for high growth companies. How do you view the composition of your team and proportion of people who’ve done the job before versus those growing into roles?‍

I think it was Eric Vishria who said he’d split it so 75% of the team have done the job before and 25% are growing into roles. I think that's right, but the key question is: “what does it mean to have done the job before?”. There are probably only a couple of COOs who’ve successfully built a company from $5m to $5bn revenue over 10 years and they likely don’t need or want to work anymore. I’m looking for people who’ve experienced high growth. There are tons of companies that have built hundreds of millions of revenue over 20 to 30 years, companies growing at 20-30% year-over-year. These companies grow at a pace most people can handle. They don't experience the same issues as high growth companies and it’s the high growth experience I’m interested in.

It’s important to me that they've been part of the ride overall and seen a company fall apart constantly and need fixing. You're basically driving a car too fast. But high speed racing cars are meant to fall apart. They regularly need new engines and tires and that’s what happens to a company when it grows at 80-100% year-over-year: you need to have the mindset that Band-Aids are your best friend and the company needs duct tape all over. Getting the company into this mode of constantly fixing and changing every component is the hard part. I'm looking for two thirds to three quarters of the team to have experienced that.‍

I like the racing car analogy - it brings me nicely to the role of company culture and values in keeping things together. What values have you created for Chainalysis?‍

Early on, we got a lot of cultural input from Techstars. We inherited their value “Give first”, a way of interacting with others so everyone wins. The other value to highlight is “radical gradualism”, which means aiming big but understanding there are many subtle, smaller steps that need to be applied along the way. This is very relevant to the early crypto days where everyone would say, “we’re taking over the world this year, governments are gone, everything’s done and this is happening now”. But this isn’t how change happens. Even the internet took 20 years and that’s fast for global change. Understanding all the steps and winning over stakeholders in the right order is the important part. Radical gradualism can be applied to problem-solving all over the company. Have the mindset of getting to the moon, but recognise there are many steps to building the rocket and getting it into orbit and beyond.

Chainalysis has developed a very mission-driven attitude from working closely with law enforcement. Many things we’re doing are seriously important - people's lives are at stake - and they’ve become a core part of our company culture. More important than value creation, it’s the bigger goal of creating a better world.‍

This is an important point. Chainalysis has been involved in some high profile cases. What accomplishments are you most proud of?‍

One that stands out for me is our involvement in the shutdown of the largest ever child pornography site in October 2019. There were more than 300 arrests across 38 countries and at least 23 minors were identified and rescued from abusers as a result of this investigation. I felt that if this was the only thing I ever accomplished it would be good enough for me.

Last year also saw the largest seizure of cryptocurrency - more than $1 billion - in the Department of Justice’s history. We’ve got a lot of “biggest, fastest, most important” cases on our resume and they're all cases to be proud of.‍

Looking back to when you started Chainalysis, what do you wish you’d known then that you can share with the next generation of founders?‍

I wish I’d properly understood the nature of fast growth and getting it right from the beginning. Growth and scaling are the hardest things to get right. We all get excited when we see growth for the first time. But it’s important to understand that getting to the point where you have a product, some customers and a million or two in revenue is just the start. Many companies get there, but never figure out how to scale beyond this. Maybe there’s no product-market fit, for example. Or maybe they do scale, but headaches start because they do it too quickly. It’s tempting to grow fast, but it’s hard to reach a stable growth curve. Growing by more than 100% is tough - it’s a muscle that needs to be built over time.‍

Building a business is always tough especially when growing as fast as Chainalysis. Are there any tips or life hacks you’d share with other entrepreneurs?‍

Developing routines helps in various ways. I try to exercise every morning, getting up and running so I know it’s done ahead of a day packed with meetings. I try to find joy in the small things. Ensure you have some of that during the day - whether it’s your morning run or cooking, for example. I like to cook as you can mentally get into another zone.

Try to also take one day off a week. I can’t take two days off, but I try to have Saturday as a reset day. Get your mind in another place and don’t think about work for several hours. It’s important for mental health as the other days will be 100% occupied with work.‍

What’s been the hardest thing about building Chainalysis that you didn’t anticipate?‍

Probably the fact you become another person on this journey. And you want to, but there's stuff you sacrifice. Not spending much time with my kids is tough. But when you're building something and you get into this mindset, it’s like you’ve swallowed a pill. Change just happens. Some of the life changes are tough, but you get to experience things that very few people do. I'm deeply grateful for that and hope I can share some of this with my kids at some point - this is a journey I can bring them on in various ways too.