Serial Cybersecurity Founders Return to the Game

“I didn’t really have a choice,” says Ben Bernstein, former CEO and co-founder of Twistlock (acquired by Palo Alto Networks in 2019) and CEO and co-founder of a new, still-stealth cybersecurity startup. “Building a start-up from scratch is a roller coaster ride, in more ways than one. Once you go down, you want to go back up. »

Our data on funding trends in the Israeli cybersecurity ecosystem in 2022 shows that a third of startups launched last year were founded by seasoned serial entrepreneurs with experience building and growing cybersecurity companies. cybersecurity.

Given the dramatic economic downturn in 2022, this data is surprising. These newcomers have already survived a turbulent, unforgiving and sometimes downright brutal entrepreneurial experience, some even succeeding despite the challenges, so why would they agree to go through that again? We spoke with three seasoned founders from our own portfolio to understand why they got back on the roller coaster and what their biggest learnings were.

Passion

We weren’t surprised that none of our founders mentioned the prestige of being a startup founder or the potential for future financial success. However, all three cited their passion for building something new as their main motivation.

“After Twistlock, I still wanted to prove to myself that I was capable of building something big and successful. There is so much more to do in cybersecurity and I knew I had to get in on the action,” Bernstein says.

Yoni ShohetCEO and co-founder of Valence Security, his second startup venture after founding cybersecurity startup SCADAfence (acquired by Honeywell this year), echoes that statement and says there’s “nothing like the enthusiasm, passion and challenges you encounter. when you create your own startup.

The team building aspect is another element that made Eran Barak, former CEO and co-founder of Hexadite (acquired by Microsoft in 2017), has found another cybersecurity startup still in stealth mode. “That’s what I love doing: creating things from scratch and scaling them, while bringing together talented people and working with them to build a strong, successful business,” he says.

Experience

Every entrepreneur wants their startup journey to end well, either with an impressive exit or as a respected leader in their category. Regardless of the outcome, starting a second startup allows these entrepreneurs to get a head start by using the proven strategies of their first startup and easily avoiding obstacles and hiccups along the way, the kind that newbies don’t. won’t see it coming.

“As the first founder at Hexadite, I underestimated the need for a marketing function from day one,” says Barak. “Unfortunately, I was unable to hire a marketing professional when we were on a tight budget and just starting out. This was a crucial lesson for us. This time, after learning how valuable marketing is for messaging, channel management, brand recognition, and lead generation, marketing is a top priority.

Hindsight offers newcomers the opportunity to focus their valuable time and resources and focus on the most important elements of building a successful business during these volatile early stages. Beginners are often psychologically ready for the startup journey, as they enter the new game with more maturity, confidence and focus, as well as the important ability to differentiate between what really makes things happen and deserves time and effort and what doesn’t.

Move base

Many Israeli startups are initially based in Tel Aviv, then expand to the United States as they expand. However, from their own experience, our serial entrepreneurs suggest another approach.

Bernstein moved to the United States immediately after founding Twistlock in Israel and sees immense value in this approach. “It was a crucial strategy that I intend to repeat this time. Being based in the United States has proven extremely helpful in meeting face-to-face with clients, advisors, and partners as needed.

For Barak, the network he developed in the United States during his time at Hexadite and Microsoft served him well when creating and growing his new company. As it is still based in the United States, its proximity to customers is a force multiplier. “My ability to work closely with customers in the US market from day one allows us to develop our new product using real customer data and apply it to real-world problems at scale, which otherwise would not have been possible. been possible without me. physically present in the United States from the start.

Advice for future founders

As early-stage cybersecurity investors, working with experienced entrepreneurs helps us improve our ability to guide newbies through the difficult first steps of building their business. We asked our founders to offer advice from their own experiences.

“Founders should focus on finding the biggest, most acute problem possible, instead of focusing on the solution itself,” says Shohet. “Customers need to be able to quickly understand why they are doing it, and why now. »

He also recommends keeping a cool head in the face of pressure in the cutthroat cybersecurity market: “Don’t be afraid of the competition and don’t let yourself be overwhelmed. You are either the first or fifth company in your industry, but if you choose your idea wisely, at some point you will find yourself facing strong competitors and so you will need to be ready to take them on.

Barak believes that the number one rule for building a strong business is building a strong team: “A good founder is a good recruiter. No matter how strong a technologist you are, you can’t build a successful business without great people around you. Don’t rush to hire: prioritize finding the right people, as early-stage turnover is bad for morale and stability.

Conclusion

Last year’s data on the increase in newcomers returning to the startup roller coaster despite the looming recession shows that building a cybersecurity startup during an economic crisis can have clear benefits.

Founders can think slowly, because the frenzied rush of 2021’s tech bonanza has long since dissipated and there’s less pressure to go to market before the company’s product is fully cooked. Founders can spend more time building the foundation of their business, working diligently behind the scenes to find design partners and launch their project when they’re ready.

Finally, the market continues to demand innovative cybersecurity solutions, as the urgency to solve the most acute security problems only increases. With these factors in mind, we look forward to seeing many more veteran players fill out the field.