The following interview is a conversation we had with David Etue, CEO of Nisos, on our podcast Category Visionaries. You can view the full episode here: $33 Million Raised to Build the Future of Managed Intelligence

David Etue
Excited to be here, thanks. 

Brett
To kick things off, can we just start with a quick summary of who you are and a bit more about your background? 

David Etue
Absolutely. So again, I’m David Echu. I’m the CEO of Nissos, the managed intelligence, this company. On a personal note, my wife and I have two boys and we make a great team as a family. I love to Barbecue, though time with your smoker and startup CEO are not necessarily the most compatible things. I’m also a fellow at the National Security Institute, where I get to work on national security policy issues. On the professional side, I’ve had the opportunity to lead a number of great teams and businesses in cybersecurity. Prior to Nisos, I led Bluevoyance managed security services business. I also led Rapid Seven’s managed services business and built the OEM and service provider business at Safebad and then Gibalto’s admin data protection business. As were acquired in. And earlier in my career, I was a technical practitioner that actually worked information security. 

David Etue
So I’ve had the opportunity to sit at most seats on the leadership table. From marketing to product to sales to operations. I actually gives me a lot of perspective and empathy as a CEO. 

Brett
Do you have one food item that you’re famous for cooking on the grill? 

David Etue
Yeah, if you ask my family, it would be ribs. That if you ask guests at parties, I really enjoy burnt ends. But I think one of the most interesting things I’ve found is doing hot dog burnt ends that if you do at the right temperature, the hot dogs actually puff up and absorb the burnt end kind of barbecue sauce. And they are something pretty splendid for something as basic as a hot dog.

Brett
You’ll have to share the recipe for us so then we can add it to the show notes here. Another question we like to ask, and the goal here is really just to better understand what makes you tick? What Founder do you admire the most and what do you admire about them? 

David Etue
This is a hard question, but I think I chose George Kurtz, the CEO and Founder of Mean. He’s founded some great companies, Crowdstrike. I think many people know Foundstone was one of his early companies. And I don’t mind him just because he’s built great companies. I think when you look at Foundstone as an example, it wasn’t just a great company, but it really transformed the careers of the employees. And I think when you look back in, we now call the cybersecurity industry a small number of early companies. Foundstone at stake, Internet security Systems, who I got to do a lot of work with as a customer, created many of the people that are the founders and leaders of cybersecurity today. And so when I look at George, I think if you look at sports, there’s this analogy. 

David Etue
There’s a coaching tree, which shows you take a head coach and you look at the careers that their assistant coaches have had after working for them as head coaches. And I think George’s coaching tree is probably the best that is out there in know, while he’s created billions of dollars of value for his companies, he’s created and transformed careers. And so I’ve learned from watching him that hiring great people and creating a culture and environment where they can succeed and do great things for the company and their careers really creates transformation opportunity for everyone. I think that will always admire what he and others, some of those companies have created.

Brett
What about books and the way we like to frame this? It comes from an author named Ryan Holiday. He calls them Quickbooks. So a quickbook is a book that rocks you to your core, really influences how you think about the world and how you approach life. Do any Quickbooks come to mind? 

David Etue
Yeah, I’m going to give you two, because the one that is probably the most meaningful book for me is one I actually wouldn’t recommend that people read, but there’s a story behind it, so I’ll save that one for the second one. But I think the book that I’d actually recommend reading is crossing the chasm. It’s sort of hard to believe for me that the book is coming up on 30 years old. But when you talk about entrepreneurships and startups and product launches, the short summary of the book is that the approaches from product organization, things across the company that get you going, and when your earliest customers aren’t the ones that get you to scale in the broader market. And I find myself rereading it every few years at a number of different stages of companies. 

David Etue
So I think that’s one if you haven’t picked up, I would highly recommend also tee up a lesson book. So the context is I’m leading computer security globally for General Electric, and we want a red teaming exercise where you simulate the adversary and attack the systems, the network. And we ran one of these and we compromised some critical systems, which often happens in some of these exercises, and went into a meeting with a bunch of very senior executives and I made some statements about how much money we could have stolen with access to those systems. And someone from the finance team cut me off and said, lesson learned, that they should look into improving the security of their systems to learn from our simulation. 

David Etue
They said we wouldn’t have lost a penny because any money that had been transferred, they either could have blocked the transfer or could have gotten reversed. And I left the meeting with my sort of tail between my legs and I asked someone for advice and they handed me a book. And the book is called after the treaty is made, processing securities transactions. And it’s a guide to pretty much how every financial transaction, the US, is reconciled. It’s probably one of the most boring books I’ve ever read, but it’s a book on them, a free gift, because first of all, tactically, it enabled me to figure out how we could have actually transferred money that they couldn’t have stopped or recovered. But that was the important point. The lessons it taught me know understand the business, not just technology. 

David Etue
Don’t make claims I wasn’t ready to substantiate and to be prepared. And so I keep both of these books on the top of my bookshelf right here behind me, because they’re both really important lessons. 

Brett
Normally, when a guest shares a book, I add it to Amazon cart immediately after for the second one. I think it’s the first time. I’m not going to do that, but I can definitely see the relevance there on the first one, crossing the chasm. I’m a huge fan of that book, and I remember years ago when someone told me to read it. So I bought it on Amazon and I got it and I picked it up. I’m like, what are you talking about? This book looks like it’s from, like, the 80s. Why am I going to read this book about technology? And I read it and was just mind blown how relevant it still is. And I think you touched on that, too. It’s three decades old, yet somehow they’ve just nailed technology adoption, which I find just fascinating.

Brett
Let’s switch gears now and let’s dive a little bit deeper into the company. So at a high level, what problem do you solve? 

David Etue
So at Nisos, we’re the managed intelligence company. And what does that mean? For what problems we solve is we provide intelligence assessments, which are a snapshot or report of an organization’s individual risk or threats monitoring, which is basically tailored monitoring across surface deep dark web and beyond for specific risks related to the organization, and investigations, which are deep dive investigations into threats to uncover who is behind them, how they’re being perpetrated, and work with security teams to mitigate or shut down the threat. So our clients are typically cybersecurity, corporate security, or trust and safety teams, who we enable to better respond to cyber attacks, disinformation than they’ve used to digital platforms.

Brett
And talk to me about the founding story behind the company. 

David Etue
So, I think, pretty exciting history to the company. So the founders were two operators in the US intelligence community, and they saw that nation state actors were not just targeting governments, but targeting private sector organizations and really mission focused, said, hey, we’re going to do something about that. And I think what’s important is that they founded Nisos on that mission, but importantly, then also hired amazing talent and from day one had the north Star of ensuring that our clients are successful in managing risks and remediating incidents. And so a few years in, they realized that they were doing a lot of work around intelligence problem sets and that it was having a big impact for our clients. 

David Etue
And they stepped back and said, hey, I think we have, instead of being a consulting company, as they were founded, to really look at how we could invest in the trade craft, our intelligence trade craft and importantly, technology enablement to transform how intelligence was delivered. So that spawned the creation of managed intelligence and which has enabled intelligence teams from our customers from early in the maturity to the most mature, to be able to consume fierce intelligence from esos.

Brett
And then you joined, it looks like, in June 2020. What was it about what the company was doing that made you say, yes, that’s it. That’s the type of company that I want to be part of. That’s the type of company that I want to lead.

David Etue
So a couple of different things. So, first, from a market opportunity perspective, that I think there’s a transformational kind of market opportunity for what we do. That if you think about most mature tech markets, that when something hits a billion dollars in software or SaaS revenue, there tends to be at least a 15% sophisticated services business connected to it and in cybersecurity, that number actually tends to be even higher. That for every dollar that goes into texture response, Penny is counting, $25 to $0.35 goes into managed text response. And we look at the intelligence market, there’s a $6 billion market. And for every dollar spent, less than a penny is going into managed services. And it has all the people process technology problems. 

David Etue
And so having been very early building one of the rapid seven’s managed texture response business, seeing the impact that could have on customers, being able to look at how we could transform intelligence just seemed a phenomenal market opportunity. And then when it came to the company itself, the things I mentioned in the mission North Star of the company, the view that we’re not successful if our clients aren’t successful, and the talent in the organization, those things were, I think those are critical components to a recipe of success. And so between the market opportunity and then meeting the team and understanding the capabilities and the passion for what they delivered, that signed me up. 

Brett
When you joined, did it feel like there was already product market fit or did it still take some time for you to really reach that and start to feel confident in the product? 

David Etue
So here’s the thing is, I think from a use case and problem perspective, we had product market fit in a number of areas. From a pricing and packaging. I think we’re pretty early in our journey, and so we had been fortunate to work with some incredibly sophisticated customers early in our lifecycle. And I think having come from a consulting company background, were still doing a lot of things that were time, materials, hourly rate type work. And that work, from my perspective, isn’t good for anyone because the company wants to maximize the hourly rate, the consumer wants to minimize it. But it doesn’t really drive any goals of efficiency is that if you talk about value based pricing, what you want to be able to do is set a price that your customer feels good, that is relevant for solving their problem. 

David Etue
But then you control how you deliver that in a way that allows you to maximize the returns on your business. And hourly pricing, I think is far away from doing that. So I think we’ve been on a great transformation over the past three and a half years to move to subscription pricing to more clear, understandable upfront pricing. I think what we’ve learned with that too is not only does it create the right incentives, it actually accelerates business. Because if someone calls you and said, hey, can you solve this problem? And you’re like, yes, maybe, let me go figure out how much that costs. Let me ask you. Ten more questions. Let’s back and forth. Whereas you’re like, yes, we can solve that problem. Then here’s our offering and here’s what it cost. You’re able to be more responsive to your customers. 

David Etue
And importantly, I’m seeing a startup, you’re able to shorten sales cycles, which are important to drive the success that we need. 

Brett
And what’s the competitive landscape look like today? 

David Etue
So our competitive landscape today is interesting is that part of pioneering a new market is dealing with what I consider non traditional competition. So we’re the first scalable managed service for threat intelligence. There’s other service providers that do it in a bespoke way. What that means is the primary competition we deal with is someone buying a seat to an intelligence SaaS portal or a data feed and then trying to turn that into intelligence themselves. If were on video, you would see the air quotes intelligence. Because I think what’s fascinating about this $6 billion cyber threat intelligence market is that it actually doesn’t sell intelligence. It sells data or information. So data is the collection of raw facts, information is data that’s logically arranged, and intelligence is information that’s curated to enable a timely, actionable and relevant decision. 

David Etue
And so what we compete against is people buying data, information that they then have to curate themselves to create intelligence. Some of the consulting firms have offerings that are similar. We’ve seen some great copycats that a number of our competitors that provide those SaaS portals or data feeds have put up managed intelligence pages on their websites that they typically support professional services. They haven’t achieved the scale and quality that we have. So I think that’s probably a quick view of the competitor landscape. 

Brett
Is managed intelligence then? Is that the market category, or is the market category threat intelligence? Like, how do you think about the market category that you fall within? 

David Etue
I think I would say we’re creating a subcategory that gives you think about examples like in the cybersecurity space, we have good parallels to detection response market. So you have the endpoint detection response, or XDR extended texture response market, and then you have a badge detection response market. And some people consider those to be one aggregate market with subcategories, other consider them two different markets. But I think that analogy fits very well that we’re pioneering scalable delivery of finished intelligence. So whether I tend to think of it as a subcategory of the $6 billion fed intelligence market, but we can debate it either way. But I think the key difference for us is what our market is. Delivering finished intelligence for our clients that is immediately useful, that has brought custom analysis to the risks that they’re dealing with. 

David Etue
So instead of getting data that they have to bring to life themselves, we provide the people, process and technology that delivers finished intelligence that they can action. 

Brett
And can you share any numbers about the growth and adoption that the platform is seeing today? 

David Etue
Yeah, so I think the metrics we focus on are beyond the normal things that I think everyone would is subscription revenue growth, client retention, so specifically net dollar retention, and then new client wins. And I think the place that comfortable sharing more numbers is we’ve taken the business from the tradition, went through what was nearly zero to 20% subscription revenue business to north of 90% in subscription revenue, which has just been great for both, obviously the particularly of our business, but importantly our clients understanding and predictability of how they engage with us. I think the other metric that we really care about is net negative churn. So NDR retention that the threat intelligence space has historically had a churn problem. And it’s not because people don’t have great data. 

David Etue
I was a consumer of this stuff years ago that there’s a lot of great data out there. But even if you’ve built the best data feed for something, if your customer can’t bring it to life, that creates a value challenge and a renewable challenge for you. And so I think we’ve having north of 100% net dollar retention. We were north of 108% last year. So being able to really illustrate that we retain our clients and we grow with them is really critical and I think a great illustration of the value provide for our clients. 

Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we’ve built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io slash podcast. Now back today’s episode. As I’m sure you experience every day, there’s a lot of noise in cybersecurity. I’ve been to blackhat a few times and RSA a few times, and whenever I walk the halls there, I just think, wow, everyone’s kind of saying the same thing in a slightly different way. 

Brett
And there’s just hundreds and thousands of vendors that exist today. So what are you doing to really rise above all that noise and you obtain that type of growth that you just shared. 

David Etue
Yeah, I think this is a great question because I think it’s one of the interesting chats. I’ve made a comment that it would be easier to build the managed intelligence market if the threat intelligence market was 1 billion, not 6 billion, because I think nearly all of what’s provided in the threat intelligence space is data or information. So it’s not that actionable intelligence that I think the bar for user is what I’m getting immediately useful. But the market is not providing that. But the challenge is that there’s almost $6 billion that is educating the prospects that what they’re selling is adequate. So you talk about the noise in the market. 

David Etue
Not only is there a lot of vendors, that there’s a market that we believe is selling what’s short of what the customer needs, and they’re doing that at a lot of scale with a lot of marketing dollars. So rising above that noise is challenging and important. So we have three connected strategies that we think about of how we rise above that. So educating about finished intelligence, highlighting the analysts and then our research. So one of these issues we’ve learned is that prospects that come from the intelligence community or law enforcement are likely to actually know what finished intelligence is and have experience in that in their careers. But that’s a small percentage of the buyer population, particularly in cybersecurity. 

David Etue
So with finnish intelligence, we have to help them understand that actual intelligence is based on their original specific needs that’s immediately useful versus just having good data that they have to bring their lives themselves. And we show that in real life examples. And I’ll talk to in the next two. We’re also going to be doing some creative and fun things with this and some marketing campaigns coming out shortly. The next we talk about is the value of the analyst that too often in the security industry we rave solely about technology and technology matters and the technology platform at Nisos matters in enabling our analysts. But if you step back, the real heroes that are out there are the security team members that are battling threats and managing risk every day. And I think a lot of messaging, those folks get lost in the noise. 

David Etue
It’s a speeds and feeds conversation, not about the impact that offerings have on people. And so our products are combinations of people, process and technology. But in our case, it’s our people who are a superpower and it’s our people who enable our clients to be heroes. And so that’s what differentiates us from the competition and if you think of furniture makers, you could give me a bunch of woodworking tools. And if I tried to make a piece of furniture, it would probably be functional, but it wouldn’t be great. We have folks who can bring the trade, craft and expertise and experience to life to produce fish intelligence. So highlighting that, and importantly, we’re not the heroes. Our clients are the heroes. How we make them successful in mitigating or addressing their organization’s risk is key. 

David Etue
Then the last part is, how do you make this real? So we publish a lot of research, I think, particularly for a company our size. So we cover topics from disinformation, impacting elections to ransomware, to fraud. And some of this impact is really useful in driving media coverage. And we’ve been really fortunate to be covered in some great publications like Time magazine, Reuters, a number of areas that shows our expertise, but it also gives them something tangible to see that the difference between, hey, wait. From there I’d get a feed of raw data and here is an example of what a fish intelligence report that’s relevant to my industry. We’ve done somewhat of fraud. That fraud barrier was go, wow, I could bring this to life in my organization today. 

Brett
As I mentioned there in the intro, you’ve raised 33 million to date. What have you learned about fundraising throughout this journey? 

David Etue
Yeah, I’ve been fortunate. I’ve been a GM of a number of businesses. This is my first CEO role. But in a number of executive and GM roles, I’ve had the opportunity to be involved in critical parts of fundraising process. And so I think the lesson that I would hit home is have the right investors, not just the right amount of capital. There’s a lot of advice out there on what the right amount of capital is, but I found way less on how you evaluate the right partner. So what are some attributes of what does the right investor look like? And again, if you have someone who answers all of these topics the exact same way, like figure that out. You don’t have to have perfect alignment, but I think directionality is important. So what is the vision for the business? 

David Etue
Is this a platform or a feature? How big is the total and servicehold addressable market? So what are you building toward? There’s a lot of cybersecurity solutions example that end up as a feature of a larger platform pretty early in their cycle. If that’s your intent, great. If it’s not, that could be a pretty disappointing outcome for the broader vision that you have next. What is kind of related? What is the time horizon of the business, you’re typically raising capital for an 18 to 24 month window. So what are you going to accomplish during that time, and how does that connect to that vision that we talked about just before this next what is risk tolerance? So what is the balance of forward investment in the business with current performance that we’ve seen with the economic changes over the past twelve months? 

David Etue
That tolerance for burn has changed a lot in some investors eyes. And so how much are you investing in forward investments to unlock the opportunity you have versus what is seen as responsible and appropriate? And then along with that, what happens when things don’t go as planned? Because they won’t. Sometimes they don’t go as planned better. Sometimes they don’t go as planned worse. But very rarely do things operate to the actual plan. And then I think the last one that’s really important is what is the role of the board? I was chatting with a leader of a company last week and he was telling me that his board members expect a weekly sales forecast sync. And this is a company that was performing fine. It wasn’t like they’re running out of money. You’re missing your numbers. We’re having problems, which that’s pretty granular. 

David Etue
On the opposite side, I’ve seen companies where the board was so removed from the business, I’m not sure how they could do their role. So there’s a lot in between and what makes sense for the company and the members of the board, because that’s a group you need to work well and work well together and have the right expectations. So I think those are advice. I’d say, as you dive into the process, how do you think about who your right partner is? 

Brett
And based on everything you’ve learned so far, if you were starting this company again today from scratch, what would be the number one piece of advice that. 

David Etue
You’D give to yourself? Focus. Hands down. Focus. I think Nisos journey has been really interesting because it’s early days to start as a consulting firm. And the benefit of that was that all the work we did had a sophisticated client paying us to solve their problem. And were fortunate to win a number of those. You talk about elements of product market fit. If someone paying you to do something and renewing or continuing you doing that, I think that’s great evidence. While all the work we do after I joined, we made some difficult decisions, that there were some offerings that we have that didn’t fit in our vision, intelligence, vision. And so we stopped doing those and that was turning off revenue as an early stage startup is a fascinating endeavor to go through, but it was also definitely the right decision. 

David Etue
But I think looking back, we still ended up supporting, even within managed intelligence, a number of different buying centers and use cases early in our journey than had we found it with that in mind that I think we would have said, hey, we’re going to focus on trust and safety problems for tech platforms, or we’re going to focus on protective intelligence problems and insider threat for corporate security teams. That given the opportunity to pick one thing early on and do it, would have been great. But it was also nice to have the benefit of knowing everything we did someone already paid us for is great market validation. 

Brett
And we’re getting into the final couple of questions here. Last one or last of the two. What excites you most about the work you get to do every day? 

David Etue
The mission and the team. So at ESOs, we have written down our purpose is to protect organizations and people from adversaries seeking to harm them, that we get to help protect people, and there’s a mission that comes of that is infectious. So I think that’s piece of it. So we’re not only pioneering a new space and building a great company, we get to do a lot of good while we’re doing it. The part that is interesting is, had you asked me ten years ago, I would have actually laughed at you if I said these things, but it’s 100% true. Is that the thing I love about entrepreneurship is actually the team and the impact you could have on people’s careers? 

David Etue
I think ten years ago you said, hey, David, look, in the future you’ll be running a managed services firm, and I probably would have laughed at you and said, oh my God, people. And the variable cost of software is zero. And why would we do that? And I think I’ve learned that one is that when you bring people process and technology, you can solve problems in ways that people, clients couldn’t solve on their own. But on the team side, that seeing the growth in the team, both the team and as individuals, is really heartwarming. And we can create opportunities for people that would take them years or careers to have in a large organization, that we get the opportunity to create opportunity and invest on bed and people and help them grow. And that gets me out of bed in the morning.

David Etue
That is one of the most fulfilling things about my job. 

Brett
Final question, let’s zoom out three to five years into the future. What’s the big picture vision for what you’re building here?

David Etue
So we’re really excited to go prove that we can scale, we’re in eight figures of revenue, so we’re well past the couple of folks in a garage stage. But we’ve got a long way to go to be that 100 million plus company in ARR that we know we can be. And so we have a lot of great plans on both how we scale in the market and also how we scale our service delivery to make that happen. Looking that far ahead today, we’re primarily us focused in our go to market initiatives. We have some international customers, but those have come through referrals or partners typically. So I think we see significant international growth opportunities. We’ll likely start with the five ice countries, US, Canada, UK, Australia, New Zealand, where it’s english speaking, many cultural similarities, Europe from there and then continuing. 

David Etue
So we see that one we’re working on right now, which I think will be a big, that’s happening live in 2023, but will continue to be a big part of our business is partnerships, that historically we’ve been primarily a direct sales, kind of direct enterprise sales company. And what we found is that there are a number of people that provide and data information that we talked about them as competition. But I think when you really step back and look at it, what they ultimately want, beyond someone paying to use their platform data feed, is for that to have a massive impact on their clients success. And so we’re aligned there. And I think what we’re seeing is we recently launched a threat intelligence and service partnership with Cybersecale. 

David Etue
When we partner up and they provide access to their platform and we provide the managed services to connect it, that we can really make transformational impact on our mutual clients. And so I think partnerships is a piece where we see a lot of opportunity to grow the company, and then we see a ton of opportunity to expand additional finished intelligence use cases, some of those organically, and I think some of those can be via acquisition. So as we talk about the investment partners, as we look ahead, I think that assuring a partner who can help us look at how we turn this into really a platform services company, that we can go address these opportunities together, is really exciting. And one of my challenges to go. 

Brett
Continue to make happen amazing. I love the vision, I love everything that you’re building and I really have enjoyed this conversation. If there’s any founders or leaders that are listening in and they just want to follow along with your journey as you build and execute, where should they go?

David Etue
So for me personally, I think follow me on LinkedIn for the company, we do a lot on LinkedIn and I guess X, formerly Twitter. But you can follow us on the socials and we also for find the company, follow our blog and our research that we do a lot of. We share a lot of get shared in social media too. But if you’re really passionate, want to dive into any of these kind of problem sets, I think the research that we publish is some of my favorite stuff and really impactful, amazing.

Brett
David, thank you so much for taking the time. Really appreciate it. 

David Etue
Pleasure. Thanks for having me. 

Brett
All right, keep in touch. This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we’ll catch you on the next.