Cybersecurity for small and medium-sized businesses (SMBs) isn’t sexy. It’s not where the big money is. It’s not what venture capitalists get excited about. And that’s precisely why Huntress decided to focus on it.

Kyle Hanslovan, CEO of Huntress, puts it bluntly in a recent episode of Category Visionaries: “There is a poverty line that exists between enterprise and mid-market SMB companies, and we’re for those folks that are the 99% that are usually ignored.”

This decision flew in the face of conventional wisdom. When Hanslovan pitched investors, he consistently heard the same refrain: “I like the approach. Let me show you how to take it to enterprise.” But Hanslovan and his team saw something others didn’t – a massive, underserved market ripe for disruption.

The Counterintuitive Go-to-Market Strategy

Huntress’s approach to winning the SMB market was unconventional from the start. Instead of targeting SMBs directly, they went after the managed service providers (MSPs) that serve them.

“We’ve got about 4000 of those. And they bring us to about 110,000 of those SMBs,” Hanslovan explains. This channel partner approach allowed Huntress to scale rapidly, reaching a vast number of SMBs without the need for an enormous sales team.

But getting those initial MSPs on board wasn’t easy. Hanslovan’s strategy? “I ended up pitching my first handful of customers and was like, I will work for free one day a week in your office to learn more about MSPs. And I did that for probably the first two and a half years just to learn.”

This hands-on approach, while time-consuming and not immediately profitable, provided Huntress with invaluable insights into their market. It allowed them to refine their product and messaging to perfectly fit the needs of MSPs and their SMB clients.

The Power of Conviction in the Face of Skepticism

For years, Huntress faced skepticism about their SMB-focused strategy. Hanslovan recalls, “From the Angels to the series A all the way, believe it or not, into series B was the first time I got conviction for SMB. So that is five years in, people did not believe in my go to market.”

This persistent doubt from investors could have derailed many startups. But Huntress had something crucial: data-backed conviction. “I had the people telling me the stories, people showing. I had the data that I was building from the bottom up on saying, look, this is how big the total addressable market is. That kept me going,” Hanslovan explains.

This conviction allowed Huntress to stay the course when others might have pivoted to chase the seemingly more lucrative enterprise market.

The Secret Weapon: Total Cost of Ownership

As the SMB cybersecurity market has heated up, with both enterprise players moving down-market and new entrants emerging, Huntress has maintained its edge through an often-overlooked metric: total cost of ownership (TCO).

Hanslovan breaks it down: “Even though my product isn’t the cheapest, if you combine the cost of acquisition plus the cost of the operations or humans to manage it, plus that opportunity that you could be doing other things and those three things into TCO or total cost ownership. I am the lowest total cost of ownership and we just disproportionately win our deals.”

This focus on TCO rather than just upfront cost has allowed Huntress to win deals even against larger, better-funded competitors.

Lessons for Other Founders

Huntress’s journey offers several key lessons for founders looking to disrupt established markets:

• Don’t be afraid of unsexy markets: The biggest opportunities often lie where others aren’t looking.
• Consider indirect go-to-market strategies: Sometimes, the best way to reach your end customer is through a channel partner.
• Be willing to do things that don’t scale: Hanslovan’s willingness to work for free for MSPs provided crucial early insights.
• Maintain conviction in the face of skepticism: If you have data backing up your strategy, don’t be swayed by naysayers.
• Look beyond price to total cost of ownership: Sometimes, being the cheapest isn’t as important as providing the best overall value.

The Road Ahead

Despite their success, Huntress isn’t resting on its laurels. As AI reshapes the cybersecurity landscape, they’re actively exploring how to leverage this technology to enhance their offerings.

Hanslovan sees AI as a tool for augmentation rather than replacement: “We found very few cases where AI truly replaces, but many cases where it augments.”

Looking to the future, Hanslovan’s ambitions are clear: “Five years into it, I’m probably looking at, all right, I see a billion dollars in ARR coming. How do I get to 2 billion?”

But for Hanslovan, these financial goals are just a means to an end. The real goal? “You’re protecting 300 or 400,000 of us SMBs. How do you protect the 34 million that are in the US alone, let alone the hundreds of millions across the globe?”

By staying true to their mission of serving the underserved, Huntress has not only built a successful business but has also reshaped the cybersecurity landscape for SMBs. Their journey serves as a powerful reminder that sometimes, the best way to win is to play a different game entirely.