The inability to protect sensitive data is a serious risk for many companies in today’s techno-centric business world. Deep-dive research has shown that so much of a company’s data can be found outside of their protected, structured systems. As data continues to grow at an exponential rate, the opportunity for breaches and cyber-attacks are created with it. After spending over 20 years leading and working from within some of the industry’s most innovative software companies, SailPoint‘s President and co-founder, Kevin Cunningham has been Austin’s own pioneer in the identity management market.
What does SailPoint do?
KEVIN CUNNINGHAM: We are basically in the market called identity management. We create software and technology-based solutions to help companies understand who has access to sensitive information. So for a financial institution, maybe account information. For a healthcare or hospital organization, it may be patient records. The reality is in most companies today, it’s a really difficult thing to keep track of. Our software goes in and mines all this information, around identities, pulls it all together, and gives you a complete view of who’s got access to what. It helps you understand whether it’s appropriate for their current job or not. Then we also provide controls around that to keep it clean over time. So, we have a discovery process, and then an ongoing governance process around who has access to what.
You’ve been doing this for how long?
KEVIN: We started SailPoint in 2005. But, I had a previous company that was in a very closely related space called Waveset, which started in 1999.
How did you get into this market?
KEVIN: Going back to 1999, I was working at Tivoli and decided I wanted to start my own business. I left without a clear idea of what I wanted to, intentionally, because I wanted to really put a lot of effort and focus into figuring out what a good opportunity would be. My three co-founders at Waveset and I got together on a daily basis to brainstorm ideas. We came up with a number of what we thought were really brave ideas- my favorite was a virtual Caiman Islands, which could be a tax free haven for commerce via the internet. We took them to a potential investor. He looked at them, and he said, “Not with my money, guys. I mean, if you want to be funded, you need to do something where you have some expertise and experience.” So we went back to the drawing board and started conducting a lot of primary market research. We started cold calling into a lot of big organizations and asked them a very broad set of questions: What’s not working for you today? What’s your biggest headache? After weeks doing that, we narrowed it down to a specific pain point. We heard companies say, “Boy, whenever I hire an employee it’s a very painful process for them, and for us to go through to get them access to everything they need to do their job.” Sometimes it takes weeks or more before someone is fully productive with everything they need to do their job. Likewise, when they leave, companies weren’t confident everything that needed to be turned off was getting turn off. So that was the genesis of our first company, Waveset.
So after Waveset was sold you still had the itch to start another venture?
KEVIN: In 2003, Sun Microsystems bought our company. After 18 months at Sun assisting with the transition I thought to myself, “Okay, I’m here in Austin, and I’ve had a good first run. I’ve got a set of investors who are willing to invest again. I’ve got a set of employees who are willing to come work with me again.” So, my two co-founders at SailPoint, Mark McClain, Jackie Gilbert and I, decided to strike out again in 2005. We basically did the same process over again, setting out to determine what are the biggest pain points now?
We quickly came to realize that there was still a lot of pain around this space that Waveset was originally founded to solve. At the time that Waveset was acquired, all of our other young, nimble competition were also acquired. All the innovative companies were sucked up into these big companies, and innovation basically came to a standstill. What remained constant was the evolution of customer requirements. In particular, during that period of time from 2003-2005 was a lot of legislation which mandated that companies do a better job of ensuring they knew who had access to sensitive information. The problem was there were no tools in the marketplace that existed that you could put in front of a non-technical person to go out and do that. Even our first project, Waveset, was really designed for system administrators to help them do their job faster. That’s when we identified a gap in the marketplace. It evolved to create a collaborative tool that lets IT and lines of business and audit and risk groups all work together to have this common understanding of who has access to what. That’s how we started Sailpoint.
Waveset. SailPoint. You like water.
KEVIN: I do. I’m a sailor. Naming a company is hard. We wanted the name to be non-descriptive, and also something we could tell a good story around and have fun with. Our language is rich with nautical terms. We’re helping companies navigate the security waters, or get them to their destination. Back in our Waveset days we had a big surfing theme and gave out surfboards for awards and things like that. For SailPoint, we have a lot of internal things like our Compass Award every quarter, and our Navigate User conference. Also, the domain was available, so we grabbed it.
When you got your partners together and decided to go into business together, what was your process for raising money?
KEVIN: I think for most investors, it’s more about the people. Investors know that you’re going to be met with all kinds of challenges, so they’re looking for the kind of people that can weather that kind of storm. They’re really betting on the people more than anything else. We were fortunate to maintain some of our longstanding contacts with AB Labs, a subsidiary of Austin Ventures, which financially backed Tivoli. They started following our research and when it came time to raise money, they were willing to bet on us despite our lack of a proven entrepreneurial track record. They knew us as “good guys.” We also had an investor through Austin Ventures and the Silverton Partners, Bill Wood, who was looking for a new project. He would come into our office once a week to sit down with us and see how things were going, and we shared our research and findings in the marketplace.
Was there a difference in the type of backing you were able to recruit between Waveset and SailPoint?
KEVIN: The second time around with SailPoint was a lot easier because we had a successful outcome with Waveset. We were approached by a West coast investor from a company called Lightspeed Venture Partners, who had been following our space and wanted to get involved in it. They basically saw us as a rising star. We were competing against some big companies: Oracle, IBM, BMC, CA, but they saw promise in the marketplace and wanted to get in. So they approached us and said, “Hey, we want to make you guys an offer that you’ll find very attractive.” And they did.
What were some of your major challenges?
KEVIN: The financial crisis in 2008 was a massive speed bump. We had to hunker down and weather that storm. Our investors came back telling us what a bad economic situation this was, much worse than anyone was thinking at the time, and we had to make cuts, fast. However, we noticed a couple things and decided to push back. First of all, we were still seeing a lot of market opportunity. Yes, it had slowed down, but we thought we were just at the curve of the hockey stick and cutting back our staff would be very detrimental to our success. And secondly, there’s an emotional aspect to a layoff that’s hard to recover from. Should we see that first layoff, everybody would be looking over their shoulder. It creates a nervous environment. So we held the line with our investors and took a pay cut instead. The whole company, top to bottom, took pay cuts to help with expenses. And in that year the market came surging back as companies concluded that our services were very important to them. In fact, we were caught a little flat footed because of the demand, but that’s a good problem to have.
If you could go back and give yourself a piece of advice when you first started, what would you tell yourself?
KEVIN: Trust yourself. When we were going through the depths of the financial crisis I think I held onto too much angst. Obviously, if you’ve got the gumption to go out and start something, give yourself the latitude to face those turbulent times, and get through them. Cut yourself some slack.
Do you have any advice for the young, tech-person with an idea, looking to begin their own entrepreneurial venture?
KEVIN: I think the best thing you can do as an entrepreneur with your idea is to validate it. Your roommate is not your target audience most likely. Our acid test for an idea was looking to see if something was urgent, pervasive, and are people willing to pay? You’ve got to find a problem that is urgent in someone’s mind, right? Pervasive, in other words there’s a lot of people who have this problem. And willing to pay; that last one is the hardest to test. It’s also important to surround yourself with good advisors, people who have been there, done that.
What does SailPoint do to stay engaged in the Austin community?
KEVIN: This is important to us for a number of reasons. People want to work for a company that is socially responsible and willing to give back to the community. So as an organization we have always tried to give back to the community through various events and activities. One of the most rewarding experiences for us was through our involvement with Habitat for Humanity. We were able to sponsor a home, brought our whole team out to the site, and got to meet with people from other groups within the company that you don’t normally get to rub shoulders with. It’s great for the community and great for the team bonding experience as well. We’re also active in contributing to our local Food Bank, and other things like that.
Have you had a mentor or role model along the way who has helped shape the way you formed your experience?
KEVIN: My dad has always been a mentor to me. I won the Entrepreneur of the Year award a couple of years ago and my dad came down for the ceremony. He was actually nominated for that award himself back in his day after going public with the company he founded in the 1960’s called Computer Entry Systems. Upon accepting the award I made a couple off-the-cuff remarks, and I said, “You know, a lot of people think my entrepreneurial career started when I started Waveset, but it started well before that. It started when I was about nine years old when my dad encouraged me to have an egg route. I grew up on a small farm, and he basically got me into the business. My first business was delivering eggs to neighbors.” So it goes way back. It’s in my blood as a result of that.
Do you have any plans for the future that you would like to share?
KEVIN: Certainly. I think if you look at our performance and size right now, we’re a pretty ideal candidate for a public offering. We’re well above 100 million dollars a year in revenue, and we are growing at about a 30% rate per year. And we’re doing that profitably, so there’s the trifecta of financial performance. We have a lot bankers talking to us about the prospects of going public, so we’re entertaining that. We don’t have any commitments or promises at this point in time, but that’s certainly a potential outcome. It’s also possible that somebody, a much larger company comes along and buys us-that’s a pretty common thing to happen in tech, right? For now, we just keep doing our job, building good products and making happy customers, and good things will come with it. That’s kind of our mantra.
What were some changes you had to embrace when becoming an entrepreneur?
KEVIN: You have to be willing to sacrifice a lot, especially in my line of work where we have customers all around the globe. I do a lot of traveling, which can also be tiring and hard to do after a while. You’re always on call. Sometimes you get a call at ten o’clock on a Friday night, and the last thing you want to do is have to deal with a crisis situation. But, it comes with the territory.
What do you do for fun?
KEVIN: As we touched on before, I like to sail. I also like to travel. There’s so much to see out there. I don’t do a lot of repeats. My wife is Australian, so we go back to Australia because her family is there. My ultimate goal would be to split my time in thirds. I want to spend one third of my time in Austin, one third of my time in Australia, and one third of my time in the rest of the world.
Written by Matt Kuball
To explore more about SailPoint’s innovative solution, head to their website at www.SailPoint.com.
