“We don’t have any IT. We outsource it.”
These seven words, repeated by small business after small business, could have spelled doom for Huntress, a cybersecurity startup targeting the SMB market. Instead, they became the catalyst for a revolutionary go-to-market strategy that would propel the company to protect over 100,000 SMBs and raise $160 million in funding.
In a recent episode of Category Visionaries, Kyle Hanslovan, CEO and co-founder of Huntress, shared the pivotal moment that transformed their approach to the SMB cybersecurity market.
The Early Struggles
When Huntress first launched, their strategy seemed straightforward: sell directly to small and medium-sized businesses (SMBs) who needed cybersecurity protection. But reality quickly set in.
Kyle recalls, “As embarrassing as it sounds, my first, like, five or six calls were to these small businesses that were like, Kyle, I really like your story, and I, you know, it’s cool that you are a hacker and all, but we don’t have any IT. We outsource it.”
This refrain, repeated over and over, could have sent Huntress back to the drawing board. Instead, it led to a crucial insight.
The Channel Partner Epiphany
After several frustrating calls, Kyle had a realization. If SMBs were outsourcing their IT, who were they outsourcing it to? The answer: Managed Service Providers (MSPs).
“Probably the fifth or 6th call, I finally called these people who actually do care about cybersecurity, who do have the budget, and that’s how I reach the SMBs. I go to market through the IT outsourcers who often call themselves a managed service provider,” Kyle explains.
This epiphany marked a turning point for Huntress. Instead of trying to educate and sell to thousands of individual SMBs, they could partner with MSPs who already had established relationships with these businesses.
Diving Deep into the MSP World
Recognizing the potential of this channel partner approach, Kyle took an unconventional next step. He didn’t just pitch to MSPs—he offered to work for them.
“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,” Kyle shares.
This hands-on approach provided invaluable insights into the MSP world. Kyle learned their pain points, their clients’ needs, and how Huntress could position itself as an indispensable partner.
Scaling Through Partnerships
The channel partner strategy proved to be a game-changer for Huntress. Kyle reveals the impressive numbers: “We’ve got about 4000 of those. And they bring us to about 110,000 of those SMBs.”
This approach allowed Huntress to scale rapidly without the need for a massive direct sales force. Each new MSP partnership opened the door to dozens, if not hundreds, of new SMB clients.
Overcoming Skepticism
Despite the success of this approach, Huntress faced skepticism from investors who were more familiar with traditional enterprise-focused cybersecurity companies.
Kyle 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.”
But Huntress remained committed to their channel partner strategy, backed by data showing the vast potential of the SMB market.
The Total Cost of Ownership Advantage
As the strategy matured, Huntress found another advantage to their channel partner approach: a lower total cost of ownership (TCO) for their clients.
Kyle explains, “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.”
By leveraging MSPs’ existing relationships and infrastructure, Huntress could offer more value at a lower overall cost, further cementing their position in the market.
Lessons for Founders
Huntress’s journey offers valuable lessons for founders considering a channel partner strategy:
- Listen to your market: The repeated “no’s” from SMBs led Huntress to a crucial insight about their market’s structure.
- Be willing to learn: Kyle’s willingness to work for free to understand MSPs demonstrates the value of deep market knowledge.
- Think in ecosystems: Instead of viewing SMBs in isolation, Huntress recognized the ecosystem of providers serving them.
- Leverage existing relationships: By partnering with MSPs, Huntress tapped into established trust between MSPs and SMBs.
- Consider total cost of ownership: The channel partner approach allowed Huntress to offer better overall value, not just a lower price.
The Road Ahead
As Huntress looks to the future, their channel partner strategy remains central to their growth plans. Kyle’s ambition is clear: “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?”
With their innovative approach to reaching SMBs through channel partners, Huntress is well-positioned to continue their rapid growth and reshape the cybersecurity landscape for small and medium-sized businesses worldwide.