What led you to found your company, what problem were you trying to solve?
I like to say that when we started Bay Dynamics, it was an excuse for Ryan and me to work together. We are very people centric, and we wanted to surround ourselves with like-minded, independently successful people who understand the value of a team coming together to create something larger. It was October of 2001, the wake of the dotcom crash, so a lot of talented people were available in San Francisco. We were able to bring some of the best talent together — data scientists, engineers — who in many cases are still with us today. We figured we’d start with great people and would later determine how to develop the company to leverage the talent we attracted to our team.
Our strength was in technology, so we rotated toward this expertise. We began doing consulting in analytics and business intelligence and we were soon pulled into cybersecurity.
Can you explain how and why your company has evolved since it started as a consulting company in 2001?
As we evolved as a consulting company we identified a gap in the market. In our work with analytics and algorithms we performed customizations into complex platforms and when we walked out the door, our knowledge left with us. We also recognized that those companies investing in cybersecurity automation were inundated with data that they couldn’t turn into informed business decisions. These two observations led us to start thinking about a product solution that would address both needs on an ongoing basis. In 2007, we launched our product, IT Analytics, which enabled organizations to autonomously integrate underlying data and to realize the investment they made in underlying security tools. That led to our OEM relationship with Symantec and ultimately to the next phase of transforming the company to a product company.
What are some of the specific challenges you’ve faced as the company has grown and how have you successfully addressed them?
One of our biggest challenges was going from a consulting to a product company. Prior to Bay Dynamics we had worked for a product company so the model wasn’t unfamiliar, but it was challenging to pivot away from something that was successful. We had a reputation for being a company that could solve hard problems and we were thriving as a business. It was a big risk transitioning to something unknown, but we felt a calling to become a product company. Like most transitions, there were difficulties along the way. It took several years to pivot and restructure. We were on the transformation journey from 2007-2012, but when we got there, it was worth it, and we emerged in a great positon as a company.
Bay Dynamics is not a start-up. Tell us about your decision to bring in an equity partner after the company was well established.
Back in 2014 we were growing fast. We had a breakthrough year with our product. We went to the RSA cybersecurity conference in San Francisco, and I remember walking the floor. Every 10 steps I saw signs that read “cyber security intelligence” or “cyber security analytics”. We were innovating at a time when people weren’t thinking of merging these tracks. I realized that this was an opportunity we had to capitalize on quickly. I went back to everyone in the company and said “We have never been a company that chased trends, but this trend is chasing us.” We knew we needed to accelerate our growth and had another phase of growth ahead of us, so we decided to bring in our first equity partner. A couple years later, we brought in Carrick Capital Partners to ensure we had the best resources and the best possible team to capitalize on the market opportunity.
What are the benefits of working with a group like Carrick Capital Partners?
It was clear to me when Carrick Capital reached out to us that they had a genuine interest and a deep and broad understanding of our category within cybersecurity. They had already done homework and diligence on the space even prior to that first phone call. That was different. It was not the typical random call. It was deliberate, and I was immediately engaged in the conversation. Carrick is an equity partner that does its homework and is committed to planning and putting together a strong strategy and executing behind it.
The other thing that impressed me about them was the fit of our two organizations. It was collaborative and complemented our people-centric culture. As I got to know more of the Carrick Capital team it became apparent that these were seasoned operators who would be able to help, guide, and advise us in a meaningful way. For someone who is trying to break new ground, they provide additional help and value. Part of the selection process was to understand what it is like to partner with Carrick. They are always helpful, but never overbearing. Every call starts with the question “Is there anything we can help you with?” I feel like I’m getting free consulting at the highest level with our private equity partners.
What’s your advice for other growing businesses considering private equity?
For me, it goes back to staying focused on qualifying the fit. Your priorities shouldn’t be exclusively driven by a capital raise. That’s not realistic. You are trying to grow your business, which inherently brings opportunities and challenges that you will face and overcome. Your equity people shouldn’t be a burden. Make sure you feel good about them. They should be an extension of you and your company. Be honest about what you need and find partners who are complementary to those needs. Consider the skills that they can bring, as well as their market reach.
What are you most excited about at Bay Dynamics and what’s next?
I am most excited about the feedback and results we are getting from the cybersecurity market regarding our Risk Fabric® analytics platform that measures and reduces the financial impact of cyber risk based on actual threats and vulnerabilities detected in the environment. The platform prescribes specific mitigation actions and enables clients to make informed decisions, based on financial impact, about which risks to prioritize. Although companies have made large investments in cybersecurity tools they still need guidance about how to determine where to focus their resources, time and budget, and where they can make the most impact defending their company.
When I look at cybersecurity it is our generation’s biggest challenge and our clients have to protect their assets from bad actors. It’s not simple. We are constantly innovating to support our clients in fighting the good fight.