Putin is Making This Man $50 Million Per Year

Stu Sjouwerman

In Episode #716, Nathan interviews Stu Sjouwerman. He’s a serial entrepreneur and currently the founder and CEO of KnowBe4.com. He’s a big Shark Tank fan. He’s based in Tampa, Florida.

Famous Five:

  • Favorite Book? – Positioning
  • What CEO do you follow? – Elon Musk
  • Favorite online tool? — SurveyMonkey
  • How many hours of sleep do you get?—6
  • If you could let your 20-year old self, know one thing, what would it be? – “I wished that my 21 old self knew that Bill Gates was going to go into Windows server, in about 1995”

Time Stamped Show Notes:

  • 01:21 – Nathan introduces Stu to the show
  • 01:46 – KnowBe4 is a new school IT
    • 01:51 – KnowBe4 focuses on modern security and awareness training
  • 02:08 – KnowBe4 is a SaaS company
  • 02:46 – Average pay per user is $15/year
    • 03:01 – The charge is annual upfront which is easier and most people prefer that
  • 03:26 – KnowBe4 focuses on organizations with 50 users and up
  • 03:36 – Average seat size varies
    • 03:52 – Average seat size for SMBs is 200-300 and for enterprise 1500-3000 seats
  • 04:21 – Stu sold his anti-virus company in 2010
  • 04:35 – It was called Sunbelt and Stu’s 4th startup
  • 04:56 – “We are growing like crazy”
  • 05:01 – KnowBe4 did $7M in 2015, $24M in 2016 and is targeting $50M this year
  • 05:26 – KnowBe4 does inbound marketing and they send newsletters to their list of 1.2M people
    • 05:40 – The list was built over several years
  • 05:57 – KnowBe4 was bootstrapped for 5 years and Stu spent around a million building the company
  • 06:07 – In December 2015, they took $8M from VC
  • 06:47 – Total fund raised was $13M
  • 07:11 – It was easy for Stu to let go of 20% of the company
  • 07:25 – Stu’s told Kevin Mitnick that he would give him 50% of his company in exchange for Kevin’s 30-year experience in hacking
  • 08:34 – The cap table
  • 09:10 – Stu is confident that KnowBe4 will earn $50M this year
  • 09:20 – Churn is 15% annually
  • 09:33 – It is relatively easy to predict whether a SaaS model will be profitable
  • 09:43 – KnowBe4 serves 9500 companies
  • 09:55 – Average ARR
  • 10:22 – March revenue
  • 10:58 – Enterprise sales come in March
  • 11:10 – Team size is 290
  • 11:27 – CAC is around $2600
  • 11:39 – CAC to LTV ratio is 7
  • 12:02 – CAC payback is instant
  • 12:17 – Average selling price per year
  • 12:42 – Stu likes Vladimir Putin
  • 14:03 – Eagles programs are state-sponsored programs that are offensive cyberattacks
  • 14:49 – USA also has offensive cyber weapons, same with China and Russia
  • 14:58 – Hackers go after the weak link in IT security, which is the human
    • 15:15 – It comes in the form of an email
  • 15:33 – KnowBe4 sends frequent phishing attacks that are similar to legitimate ones
    • 15:43 – This will make the team aware and cause them to be on top of their toes in case they receive an attack
  • 16:02 – KnowBe4 has a phish alert button
  • 16:30 – KnowBe4 trains people with the real stuff
  • 16:41 – Stu used to play soccer and is very competitive
  • 16:49 – Stu has 2 reasons why he wants to go public:
    • 16:52 – First, because he has never gone public before
    • 16:57 – Second is to expand further and faster
  • 17:12 – KnowBe4’s biggest competitors are PhishMe and Wombat
  • 17:26 – Stu gets their competitors’ information from Owler
  • 17:45 – There’s a possibility of Stu acquiring one of their competitors once they go public
  • 18:11 – Stu got $10M from his previous exit and he’s NOT doing KnowBe4 for the money
  • 18:57 – The biggest problem Stu had with his previous company was social engineering
  • 19:08 – “Nobody is really taking care of the human IT security”
  • 20:30 – The Famous Five

3 Key Points:

  1. There’s a big gap in human IT security and more and more people aren’t even aware they’re being hacked.
  2. Going public can help a company expand further and faster, and perhaps even acquire the competition.
  3. There is no such thing as retirement.

Resources Mentioned:

  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives