The Founder Formula

Rakesh Loonkar - President & Co-founder of Transmit Security

• Trace3 • Episode 34

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You need these two things to start a company: a really big idea and a plan for how to get there. Our guest today has an absolutely mammoth idea…Passwordless authentication.

In this episode, we interview Rakesh Loonkar, President & Co-Founder at Transmit Security and four-time founder, about how his latest company achieved the largest series A in the history of cybersecurity with a big idea and a plan.

Listen to this and all of The Founder Formula episodes through your favorite podcast platform or Trace3.com.

Rakesh Loonkar:

If you're going to go start a company, have a really big idea and have a plan on how to get there. And that, in turn, will help define you as an entrepreneur.

Todd Gallina:

Founder Formula brings you in behind the curtains and inside the minds of today's brave executives at the most future-leaning startups. Each interview will feature a transformative leader who's behind the wheel at a fast-paced and innovative tech firm. They'll give you an insider's look at how companies are envisioned, created, and scaled. We hope you're ready. Let's get into the show. Hey everybody, welcome to another episode of the show. We are super excited to have you listening in. My name is Todd Galena and with me is the Chief Marketing Officer here at Trace3, Sandy Salty. Hey Todd. I'm so happy you are back again for another episode.

Sandy Salty:

There's so much fun. Thanks for having me.

Todd Gallina:

Oh, you're welcome. So you and I were talking before we turned the microphone on and we have a new feature.

Sandy Salty:

Yes.

Todd Gallina:

For the podcast that we're launching for this episode.

Sandy Salty:

Super fun.

Todd Gallina:

Yep. Yep. And it's called the lightning round.

Sandy Salty:

Or at least we think it's fun.

Todd Gallina:

It's called the lightning round. And this is where we have a lot of similarly themed questions that we ask these founders to answer. Of course, we get into a multitude of topics when we're speaking with them. But what we wanted to do is add some guaranteed kind of silly levity to the show. So we have some very random lightning round questions.

Sandy Salty:

Yeah.

Todd Gallina:

Okay. So I'm going to ask... You won. We're going to test it out. And you don't know which one I'm going to ask. Now, there's a list. Everybody who's listening in, there's a list of about 25 of these. Sandy, here's my question for you. Would you rather watch a movie on your phone or would you rather go to an old school drive-in?

Sandy Salty:

Oh, gosh, that is so easy.

Todd Gallina:

Oh.

Sandy Salty:

Without question. A drive-in. I mean, that's basically asking me, would you rather squint for two hours trying to see a movie on a small device or get a full big screen experience in the comfort of your own car while munching on popcorn? You know what? Wait a minute.

Todd Gallina:

It's not that easy to answer. It's pretty easy. Hey, there's this really exciting movie that you've never heard of. You have to watch it. And you're like, oh my gosh, like, I really don't want to let this person down. I'm going to watch this movie. But dang, that's like two hours of my life. And then someone comes to you and goes, okay, I'm going to give you an offer. You can watch that movie on your phone, like right now. while you're sitting on your couch or you can get in your car and where we live, you can drive to like the city of orange and you can have them load this movie up. And now it's like a four and a half hour experience.

Sandy Salty:

So that like two minute preamble did not make the question any more hard. I still pick the drive-in. Okay. Well, now it's your turn. Okay. Okay. So I want to ask you two questions. The first is, How many cars is too long for you to pass on a drive-thru?

Todd Gallina:

Like you're talking about like a fast food drive-thru?

Sandy Salty:

Yeah. You're getting kind of hungry. You want to pick up some lunch, approach a drive-thru. How many cars before you're like, forget this?

Todd Gallina:

I can't. I hate long lines. And I would have to say if there are four cars in front of me, I would park. In fact, you know, now that you mention it, there's a Chick-fil-A by our house. And I will tell you, there will be like, 16, 17, 18 cars, like pouring out onto like the main street. And I, and I say to myself, like, buddy, like you can get out of your car and go park and walk in. I don't understand anyone who could possibly wait that long in a drive-thru line.

Sandy Salty:

Yeah. That seems very reasonable. Like to park your car and actually go move your body and order your food.

Todd Gallina:

Yeah. But you're willing to sit in a car for long hours to watch a movie. It

Sandy Salty:

depends. Oh, well played. Good point. Good point. How many cars for you? I mean, it would be three, three or four. Okay, good. You know what? I would preface that question with which restaurant is it? Because maybe for In-N-Out, I'd wait five to six cars. Like Filet, maybe three to four.

Todd Gallina:

Yeah, yeah, yeah. In-N-Out tends to turn and burn it pretty quick. They only have like five items.

Sandy Salty:

Yeah.

Todd Gallina:

Okay, I'd move it to six for In-N-Out.

Sandy Salty:

Yeah, plus for California. So it's like In-N-Out all the way.

Todd Gallina:

Yeah.

Sandy Salty:

My second question for you is large gathering or small gathering? Large party or small gathering, better said.

Todd Gallina:

Okay, so this is sad. I have a bit of a long answer for that one. So party sizes are weird. So if you have a party that's like 10 and less, it's awesome, right? And then if you have a party that's like, 40 and more it's awesome yeah it's when because you know a small group you can get like a group conversation going super fun right but if it gets more than like 10 people then you then you kind of have multiple small conversations going on and you kind of like what are they talking about oh wait a minute then at a big big party you can what you can like pollinate like you can walk around talk to somebody and and then go to see somebody else you see a lot of people in in one in one event. So, but if I had to pick between the two, I would probably go small.

Sandy Salty:

Yeah.

Todd Gallina:

What about you?

Sandy Salty:

Well, no, let's not jump over to me yet. The other thing about a big party for you specifically is it allows you to disappear without anybody noticing, which is a big Todd Galena move.

Todd Gallina:

The ghosting move? Yeah, the ghosting move. Yeah, but big parties, sometimes you don't feel obligated to say goodbye. I mean, maybe I'm a bad person, but like 60 people? No, it's true. You don't want to go in and interrupt the host and be like, I'm leaving. Yeah. Have you ever made that move? Have you ever left without saying goodbye?

Sandy Salty:

Oh,

Todd Gallina:

yeah. Okay, okay.

Sandy Salty:

I prefer that move. I do it all the time. No, I agree with you. I think small gathering all the way, for sure.

Todd Gallina:

These are good. Okay. All right. So you asked me to, so I have to ask you to now. Okay. Oh, this is a good one.

Sandy Salty:

We're not even going to get to the show. We're just going to go back and forth with these

Todd Gallina:

lightning

Sandy Salty:

questions.

Todd Gallina:

Once again, people are just tuning us out. I'm going to listen to another podcast. Okay. What's your most commonly used emoji?

Sandy Salty:

Ooh, good one. Okay. Easy. I love, have a lot of nieces and one nephew and I go, I get a lot of cute pictures. So it's the emoji with the hard eyes. Oh

Todd Gallina:

yes. That's a perfect one. That's such a sweet one. You know, it's like, I wonder if there are people who have like angry, the angry one, you know, or the vulgar one. We'll have to find out. I don't know if we should ask that for this coming interview, but we'll see how it goes. I'd

Sandy Salty:

like to meet those people. I think they'd be fun to talk to.

Todd Gallina:

Okay. What do you say we get to our guests? Let's roll. All right. Okay, as promised, our guest is a serial entrepreneur and four-time founder in the cybersecurity industry. He is also a private investor who has provided seed round funding for multiple cybersecurity startups, including Palo Alto Networks, Zscaler, and Armis. The third company he co-founded, Trusteer, was acquired by IBM for $1 billion. His latest company is Transmit Security, where he serves as co-founder and president. They are a cybersecurity company that specializes in customer-facing, passwordless authentication. Please help me welcome to the show, Rakesh Lunkar. Hey, thank you so much for having me. I

Rakesh Loonkar:

appreciate it.

Sandy Salty:

Thanks so much for being here, Rakesh. Well, let's dive right in. So, Rakesh, Todd and I are in marketing, and marketers love soundbites and headlines. And Transmit made some headlines recently. Can you talk a little bit about that?

Rakesh Loonkar:

Yeah, absolutely. We raised the largest Series A in the history of cybersecurity, raising $543 million for our first outside round.

Sandy Salty:

That's just incredible. It's incredible.

Rakesh Loonkar:

Yeah, congratulations.

Sandy Salty:

I'd like to give our audience a little bit of context on why that is so monumental. So I'm going to share some stats.

Todd Gallina:

Please do.

Sandy Salty:

So the average seed round equates to about $2.2 million in funding. And I'm talking, you know, not industry specific. To add, only 10% of companies who manage to raise a seed round are successful in raising their Series A, which I was surprised by. Just to say that going from seed to Series A is pretty monumental in its own right. The average Series A round in the U.S. is about $15.6 million in funding. And the average B and C rounds are 33 million and 59 million, respectively. So, again, just to put it in context, Transmit raises 543 million in their Series A, orders of magnitude higher than the average, of course, which puts them in unicorn status. Rakesh, what's the story behind the 543 million you have to share?

Rakesh Loonkar:

Sure. First, I assure you, the venture capital industry and the private equity industry is not totally crazy. So that's the first thing people probably think in the back of their mind, and you have to unwind that. The actual story is far more sane. And I think there's actually an incredible business achievement behind the numbers that my business partner, Mickey Budai, and I have been able to achieve, of course, with the amazing Transmit team. So to know that, you have to understand a little bit about the history of the company. So the company was started and incorporated in 2014. We really launched product to the market in the middle of 2016. And with just loaning the company about $9 million, which we ended up paying ourselves back over time, the company ended up becoming a $100 million revenue company. We'll do $100 million in annual recurring revenues this year. Our net retention, which means it's a representative of how much customers like you and spend more, is really excellent. It's 121%. we were able to generate more than $90 million of cash. By the time we got funded, we had about $75 million of cash on our balance sheet. So behind that is this incredible business story that just nobody heard of. And the reason nobody heard of is because there are a lot of buyers, especially the big buyers, the savvy buyers, who essentially curate their entire IT portfolio based on who got funded, with how much money, And that's how, you know, TechCrunch picks who they write about. That's how the Wall Street Journal does and, you know, pick your periodical. And without that validation, it's very hard to get customer attention. And so that's exactly what we found is that we were just not in the echo chamber. People didn't hear about us. And it was very hard to get into that echo chamber despite this, what I think is an even more monumental business achievement of basically starting a $100 million company that's growing at 60% a year, accelerating growth without any venture money. And then I would say the second is that we're a $100 million company, we're growing to $500 million, and then the next... Milestone is a billion. And what ends up happening is that the executive teams start to look very, very different. And you have to bring in executives and really good executives want to make sure that their equity is worth something. And part of that is having a private equity firm or a venture firm set the value of the equity so that they know that when they leave their job in a certain place, that they have an option to make as much or 10 times more. And so that's the reason we did it. And it was actually quite a few fast process. We had one venture firm that was trying to get into the deal for seven years. And they just said, give us three numbers and we'll give you a valuation back. And we're lucky that our numbers were great. And they came back with a really great valuation. And we went then to Insight Partners. And Insight was just really helpful, introducing us to customers and And just also like kind of wonderful to work with, which was unusual in our experience. Although we've had worked with many wonderful venture firms and venture partners, they really just took it to another level. And they gave us a term sheet in one day and we raised the rest of the money within a couple of weeks. And if we wanted to, we could have even raised a billion and a half dollars there. because of the health and the underlying health of the business. And of course, the large market we're going after.

Todd Gallina:

You kind of explained the process a little bit there, and you mentioned Insight leading it, but you had far more investors in there. It looks like you have a total of nine. Do they go out and find the other eight? Do you make it available to some other investors who have shown interest early?

Rakesh Loonkar:

Yeah, that's exactly what we did. So we had a bunch of investors. Insight was the lead. They set the value and they were very supportive. And we'd build a relationship with General Atlantic, with a number of other firms. We have two cyber specific firms there, one called CyberStarts, another called SinVentures. which are really plugged into the security community. And then we had another great venture firm called Artisanal and not a firm people have heard about a lot outside of the Silicon Valley, but they specialize in executive recruitment and they're, The founder of that firm, Andy Price, is literally the most connected person in the Silicon Valley when it comes to finding executives. And so we were really honored to have him join the round because we needed to go build an executive team that understands how to run a $500 million, billion dollar, $2 billion revenue company.

Todd Gallina:

That's crazy. Because when I compare it to... The third company you started, Trustier, which was acquired by IBM. My understanding is you guys started with only $10 million. So can you give us an idea of what it's like to have an A round that's half a billion dollars and maybe some of the pressure that's on you and your co-founders and your founding team as compared to starting a company with $10 million? Yeah.

Rakesh Loonkar:

Well, it's a good question. I actually think the pressure is the same. In this particular case, in the context of Transmit, we still have full control of the company. We're known by the investment community. We're trusted by the investment community. They know we're not nuts or we're not going to take the money and have a huge party in Mykonos. At least we're not going to take their money and do that. And so... You know, I think that's the first, but I think there's nothing like the pressure of being a first-time entrepreneur because being a first-time entrepreneur, it's very hard to understand what the signal is from the noise and what to ignore and what not to. And I find everyone goes through it. It's a rite of passage. Everyone feels so obligated that they tend to work the 12 hours and the 15 hours a day. And I think experience has taught both Mickey and myself that that leads to a really bad place. And if you don't know how to manage your time and you're not focusing your time to a reasonable level, I'm not saying we don't work hard. We work very, very hard, but we work smart too. And so that's the difference between you could raise any amount of money and be experienced and it isn't necessarily an emotional drain. And you can raise any amount of money as a first-time entrepreneur and and even a second time entrepreneur and have tremendous pressure on you just because the sheer will to succeed. And also there are a lot of entrepreneurs and I went through this myself. You think, wow, this is like my time and I'm not going to waste it. And that leads to the huge pressures of being a first time entrepreneur. So I would say that raising this much money is not as stressful as doing it for the first time.

Sandy Salty:

Well, Rakesh, we're going to come back to the funding and pitching topic. But before we continue down that path, I want to ask you to tell us a little bit about Transmit Security and what passwordless authentication means.

Rakesh Loonkar:

Oh, thanks. Well, first, we dislike passwords. They're the root cause of most security issues in the enterprise. And especially in customer facing environments and customer facing environments, they're the root cause of about 80% of the attack vectors, including every flavor of account takeover. And they're also the root cause of really bad customer experience first, because. Sometimes people don't remember their username and password. Sometimes you remember the wrong username and password. They have to recover their account. They have to do all these things. And they're application owners who really operate at scale. And I'm talking about not only the ones who have 100,000 users, they're application owners who have a billion users. And they experience these problems pretty significantly. And then the second is that Because people don't trust username and password, they need all these other controls. They need bot control. They need captchas. Everything you experience as a consumer trying to get into an app. And then there are a bunch of technologies in the backend that you don't even see. And then finally, they have to do an MFA. Why do you do MFA? It's because people don't trust username and password. So I think as an industry... There's this consensus that username and password isn't good and we should patch it. But there is a consensus, or at least it's building, that you can get rid of username and password. And that's what's changed in the industry. We have full platform support now for biometrics across almost all mobile devices around the world. And then there's biometric support for PCs or critical mass of PCs and, of course, tablets. And then... Finally, for those devices and users that don't have biometric support, they're really solid alternative ways that are very easy to use. And so that leads to this kind of the essence of the beginning of a really big company. And I think the beginning of a really big company has always started in a very, very simple idea, which is we're going to get rid of username and password, passwords especially. And what we mean by that is you can delete all the passwords from the customer experience and they're not secretly cached anywhere. And you can actually delete passwords from the password database. And that in itself... not only solves a lot of security issues, but application owners and specifically customer-facing application owners can use it to dramatically improve the customer experience, which of course helps with conversion. And that's important for banks, retailers, governments. You name the application. It could be healthcare. It could be patient records. It doesn't matter. Any place that people use to log in. So... There's this huge opportunity. There are millions and millions of applications out there. And we believe every single one of them is going to go passwordless over the next 3, 4, 5 years, even 10 years, starting today and last year. So that's an enormous opportunity. And we think that... The incumbents, including the ones you read about every day, are just not going to be able to do it. They'll be there, but we see this very, very clear opportunity to create what should be an

Todd Gallina:

absolutely huge company. It sounds amazing, but I am kind of sad that... CAPTCHA is going to disappear. You know, it's one of those, it's one of those stressful puzzle games that I enjoy so much. Like when you, when you log in, like, Hey, can you, which one of these six images do you see a bus? And I'm like, I think I see a bus in all of them, you know, or nine images.

Sandy Salty:

Right. And we're both certainly going to miss that. Recording our passwords in our notes within our mobile devices. I can't wait until we live in a passwordless world, personally.

Todd Gallina:

Yeah, what a great rally cry for a company.

Rakesh Loonkar:

That's great. I was literally talking to somebody, and I was, you know, for the geeks in the audience, if you think about all the Star Wars movies, you know, the entire Empire series, was destroyed by the Rebellion because of one password. It was Stardust. So if any Star Wars fans are in there, you know that the Empire was crushed by a password.

Todd Gallina:

Wait a minute. I'm a Star Wars geek, and I didn't know that. Is that the password where they found out that one hole was accessible on the Death Star?

Rakesh Loonkar:

Yeah, that's right. Yeah, it's in Rogue One. Oh, my gosh. I'm learning so much. You

Sandy Salty:

just blew Todd's mind. Oh,

Todd Gallina:

my gosh. That's funny. I told my kids that. They rolled their eyes. I bugged my eyes.

Sandy Salty:

Well, let's switch gears for a little bit, shall we?

Todd Gallina:

Yeah.

Sandy Salty:

You are not just a founder and entrepreneur, but also an investor, right? And a lot of companies you've invested in over the years have been either acquired or IPO'd. What's the criteria for an exit from your perspective? And the second part to that question is because you've also been the man pitching the concept. When you're pitching to a VC, do you pitch the way out too?

Rakesh Loonkar:

Yeah, it's interesting. They're really just two different questions. Just to give the audience an idea of the companies that my business partner, Mickey Bedai, and I have invested in, just give the list. Well, Mickey started Imperva. We both started Trusteer together. And of course, both started Transmit together. But I was one of the early seed investors in Palo Alto Networks. We both invested in Zscaler. We were both investors in Armis. I was an early investor, seed investor in Sumo Logic. We invested in Preempt, which was acquired by CrowdStrike, Fireglass by Symantec, Aerato by Microsoft, Risk Recon by MasterCard, HyperWise and Lacoon, both by Checkpoint and a number of others. All, by the way, all the work was done by the amazing entrepreneurs who started those companies. So, you know, just kind of, you know, I think the first is We make almost every single investment decision in probably 60 seconds or less. It's a combination of first knowing and typically the entrepreneurs... Knowing the entrepreneurs by reputation, knowing them personally, and or having them referred to us. And what we're always interested in is a new area. So you can think of it as... You can think of security as this big matrix, and there tends to be new areas that kind of make themselves apparent over time. And when that happens, there are lots of interesting companies that start to solve those problems. And so, for example, we always had malware detection and device control on PCs. Mobile devices emerged. They reached critical mass. And then at some point, it became clear that you needed or as an industry, we would need anti-malware on mobile devices. And that was originally the observation. I think a very simple observation, but an observation nonetheless around Lacoon, which was acquired by Checkpoint. And the observation around Palo Alto was, again, very simple, world-class entrepreneur observation. in near Zook and that the nature of applications was changing. And, you know, very simply that stateful inspection had to become application aware. And if it was application aware, then an enterprise can implement a lot more security controls. And those are just two examples, but there are many, many others. So I think that it starts with the team, you know, really simple root cause or simple observation that anybody can explain in one or two sentences. And then of course, you know, the ability to invest, which is always, you know, we're always invited guests from the various entrepreneurs. I think there was a second part of your question that I didn't answer. Well,

Sandy Salty:

no, you, it's a beautiful answer. I think the second part was when you're pitching to a VC, we can only imagine what that what that's like and what it feels like. But do you include the exit plan in your pitch?

Rakesh Loonkar:

Yeah. So I would break first, what do VCs want to hear in general? And I think some of this is cliche and some of it's not. But what are they really looking for? And what taps in to their instinct that you're not saying? And they're really two or three things. The first is... Who are you and who's the founding team? And by the way, is the founding team constructed correctly? So I've seen many times people come with five founders and there really should be two founders. And the VCs don't say it, but they're like, hey, who are these other three clowns here getting a lot of equity? Right. And who are on the website, but they don't really deserve founder equity. And maybe you can hire them as employees, or maybe they shouldn't be here. And people don't say that in the meeting, but they think that for sure. Because at some point, the VCs or the good VCs really want the valuable, unique founders to make money. And I think the second is, is it a big market? Yeah. that's typically cliche again because everything's a big market but you have to look at the sub market and have like a real strategy on how you enter from a sub market and then fundamentally change the big market and you know the good vcs will really pressure the challenge the entrepreneurs to find and really think through how are they going to go and establish a beachhead in a market and then attack the bigger market and then fundamentally disrupt it. And if the entrepreneurs have really good answers around that, they have a much better chance of getting funded regardless of who the VC is because most enterprises fail. And if you're gonna go and do a startup, you might as well try to do something big because if you apply the probability of success and multiply it by the potential outcome, you'll see that the outcomes are always much, much bigger and better targeting a really big company. And that's kind of fundamentally the core advice behind to anyone is if you're going to go start a company, have a really big idea and have a plan on how to get there. And that in turn will help define you as an entrepreneur and also define the quality of your ability to be an entrepreneur by how big you think?

Todd Gallina:

That was, no one's ever laid it out like that before. I can't tell you how fascinating that is. My mouth is agape in the sense that we've had founders come on that are part of one of 10 founders, believe it or not. And so when you're saying like, hey, five are there, who are the two that really matter? Is there a core skill set where you look at those two, where you're like, hey, I love the fact that we have an idea person here, a creative person, an engineering person, but we also need a financially savvy person, a really good scaling business person. Are there certain things you look for in those two or it just doesn't matter? You know a good founder when you see them.

Rakesh Loonkar:

No, it does matter. And I would say that most skills in the market can be bought, right? the generic ones. There are very few skills that are so unique. And those are the skills you want in the founding team. And it really centers on understanding of technology, market, and product. And if you had to pick, it would be technology and product. Because if you have a great technologist, they don't know how to productize it. And so I always tell everyone, I have this wonderful relationship with Mickey. budai you know my business partner and the other co-founder of transmit and trustier and you know but he's the product guy and he i tell everyone he's he's worth more than me and he is because he's the product person and for me i bring you know slightly different things but i think the engineering skill set and and it's not just a regular engineer it's somebody who is an uber engineer who can think of everything differently so if i think back to my first business partner near zook he is by far and i think anybody in security would say this by far the most special engineer in the market you know for the last 20 years he's really and you know he can parse something and come up with a unique solution to just about anything. And then I think Mickey is just one of the best product people in the security space. And so for me, I've been lucky to partner with both of them successfully for various reasons. And then the finance skill sets. I mean, you can hire... a Harvard MBA. You don't need to give them founder equity. And you can hire somebody from Princeton. You can hire somebody from Yale. They make wonderful employees, but they don't necessarily have to be part of the founding team.

Sandy Salty:

I'm disappointed to hear you didn't mention marketing. I will actually say, not to toot our own horn, but... I find that really successful founders oftentimes are the best marketers

Todd Gallina:

in their own right. So true. And it's great that you mentioned Nir. Sandy and I have both been lucky enough to meet him. And he's a rock star in our industry, as you know, Rakesh. And talking about entrepreneurs, let's talk quickly about you and your start. So why did you become an entrepreneur? When did that kind of sense start to kick in for you?

Rakesh Loonkar:

I think it's an interesting story in the sense of maybe just recently, I've come to understand it. But the first is that I was a kid. I always wanted to start a company. Since I was 8 years old, and I have all these small stories about trying to start businesses and saving money. And the second is that I had this wonderful, wonderful... financial education from my father. My father was kind of this uber mathematician. He earned a PhD in chemical engineering and he had a corporate job, but he was this wonderful mathematician. He really taught me from a young age how money worked. And I kind of internalized all of this. He helped me get a stock account. I bought my first Apple stock when I was 13 years old. And he kind of let me make my own decisions. How long did you hold it? How long did you hold it? No, I sold it after a couple of years. I messed up on that one. But you really made up

Todd Gallina:

for it. So don't worry about it.

Rakesh Loonkar:

I don't know if, you know, you know, holding Apple for for that long, it might be equivalent. But, you know, I never really realized it. And I have a friend here who's a venture capitalist in Boston. I think he has one of the highest EQs of anyone I've ever met. And his name is David Fialco. And he started a firm called General Catalyst. And he asked me the exact same question. He's like, Hey, why are you an entrepreneur? And I was like, David, I actually really don't know. And thinking about it, and he looks at me, and he goes, I know exactly why you're an entrepreneur. and i'm like okay you know somebody uh somebody's gonna give me this bs answer and he said it's very common but you need to control your own environment and you need to kind of be in control and you need to be able to create an environment around you so you can succeed and i looked at him and i'm like okay and i like started to think about it i had these like kind of chills that kind of came over me and i'm like oh my God, I think he's right. And, you know, if you think back, I, like I worked at HP and I was a horrible, horrible, horrible employee. I mean, you know, people were telling me to do this. I wanted to do that, you know, that. And like, you know, I saw other things and I just viewed the world differently. And, you know, I think it goes back to the way I was raised. And, you know, I had this, you know, I love both my parents and, you know, I had a wonderful father and, you know, I love my mother. But my mother growing up was not mentally healthy. She was mentally ill. She was bipolar. She had depression. And by the way, I noticed a lot of entrepreneurs have the same characteristics with their parents. Nobody wants to talk about it. I don't mind. And my childhood, even though I had these parents I still have wonderful relationships with, it was never certain. And because of these mental mood swings of my mother, and I think it pushed me as a child... to want to be able to really, really control my own environment. And that lasted me even to adulthood. And so I think there are some, you know, really obvious reasons. And then I think there's some reasons that I really just became aware of, you know, even though I'm, you know, I just turned 50 even today. So I'm still learning, but I think back to what my friend told me and I realized that he was right. I like to and need to control my own environment for me to be successful. And the only way for me to do that was to become an entrepreneur.

Sandy Salty:

Thank you for sharing that.

Todd Gallina:

Yeah. I mean, just a fascinating, revealing story in your background. That's thank you for sharing.

Sandy Salty:

Yeah. When we think about sort of controlling one's environment in the context of business, you know, you often think about competitors and competition in general and facets of, of your business that are harder to control. Yeah. New companies coming to market, et cetera. And, you know, for a long time, you know, when you asked the founder about how they kind of stay ahead of competition, the sexy, almost cliched answer was always, you know, we don't focus on competition. We focus on the client or the customer, but in a, in a field where, or industry like security, there are new companies launching literally every day. So in the context of sort of an inundated industry, is that still the right answer from your perspective? Would that be your answer of we don't really think about the competition, we think about the customer and prospect?

Rakesh Loonkar:

I think it's still the right answer. But I think there's a second part of that answer too. And I think it's the right answer because as a leader, as an entrepreneur, we're asked that question 50 times a day. And if we keep on focusing on competition, then everyone will focus on competition as opposed to what the customer really needs. And that this kind of underlying need and trend... that really customers, they always have problems. And if you're focused on the customer problem, even in the light of competition and capable competition, you can really win. And so I think that answer is a great primary answer. And I think it's true. But that said, one has to really pay attention to the threats. And of course, you have to understand, what the customers own, which by definition is competition, and whom else can get there first and what assets do they bring to the point of, okay, what do you say in a pitch that accentuates your positives and depositions the competition in very, very simple ways and very broad ways. And so, personally, I watch what the competition does. I care about what they do. There are lots of entrepreneurs who dismiss their competition. I don't do that. I think it's very arrogant to do that. I think people who are arrogant today get crushed. And I respect every single one of them for what they do, even though I think we can beat them, even the big ones. And so... I think it's a combination of both, but you can't win a race by running backwards. That's for sure. You have to run forward and run forward towards the customer as fast as possible. And I think culturally, that's right. And attitude-wise, that's right. Well said.

Todd Gallina:

Yeah. Speaking about the customer, we have a tradition on this podcast, and it's to ask our guests to share a gratifying customer experience. I'm sure you had many. Can you have one that focuses on Transmit?

Rakesh Loonkar:

Yeah. Well, absolutely. So we have a number of customers going passwordless with Transmit. I can't mention the customers' names just because I'm not sure they would allow me to. But going passwordless is one of these things that could be transformational. And you end up really impacting people's lives. So we had this one application owner in France. It's a very, very large financial institution in France. And they just went passwordless with Transmit for an application that serves 20,000 blind users. Why? Because people had a hard time, even with all the accessibility tools and the mobile device and the PC to enter username and password. And they... really got overwhelming positive responses, which was so cool. It just made me feel good about what we do. And the second is one of our very large customers is a health insurance plan. And they found the same with really old users. So You know, the demographics tend to skew to the older side and you have lots of people of dementia, you know, and have a really hard time with this, again, very basic username and password experience. And they found that they're the happiest user group, although everyone was super happy. The happiest user group was the older and oldest demographic that was able to basically log in with this really simple user experience, which was similar to unlocking your phone, which they do 100 times a day to look at Facebook pictures of their grandkids. And so I think they're both really great examples of how you can be in business, you can be in cyber, but you really can have an impact on thousands, tens of thousands, millions, and even hundreds of millions of lives. And, you know, doing that every day. So I felt great about it, really. And so, you know, that's that's one out of many, many stories or two stories.

Todd Gallina:

How can you not be proud of helping the elderly and the visually impaired? I mean, that's amazing. Pretty

Sandy Salty:

profound. Yeah. So we talked a little bit about the right founding team and leadership team. And certainly, people shape culture. We haven't had a chance to tap into the significance of culture. We're obviously living in a remote world these days with the COVID reality. Any sort of tricks and tips on how to bolster culture and keep it intact during a time like this, Rakesh?

Rakesh Loonkar:

It's a really good question. I think that you have to look at it based on the constituency. and then treat each constituency differently. So what we're doing for new employees is we're doing a lot more handholding. We're building opportunities for them to build relationships within the company, even though we probably would not have done that a year ago. It's a bit less efficient, but critical to their success and their ability to lower barriers of social conduct and contact and asking what may be an embarrassing question for them so they can ask their peer. And so I think we're most careful about brand new employees. For the existing employees, we're trying to create safe environments for people to meet physically. We're on an ongoing but not everyday basis because just not everyone is comfortable with coming to the office yet. And that's still something that we're trying to respect in the various phases of the pandemic. And so we have a number of different things. And I think that the last thing is, I think we're not the best at this, but we're really trying to be much better, is just ongoing communication to try to tether people to the information flow, because information flow outside of the office in this remote environment doesn't flow as easily. And so people, they assume things when they don't know things. and sometimes assume the worst. And you have to really counteract that with a lot of information flow, a lot of communication to the point where we're over-communicating and even being repetitive. And so I would say before we would say, never try to be repetitive, but now we're repetitive purposely.

Todd Gallina:

Yeah, chief reminding officer is a term that we use here at Trace3. That's great. Okay, so listen. We're about ready to wrap up, but we have something new that we've added to the podcast and we're calling it the lightning round. So we're going to ask you three random questions that you don't know what's coming. And we'd love to hear your answer. Sandy, would you like to start the lightning round?

Sandy Salty:

Sure. I'll kick it off with an easy one. I'm a total foodie. If you had to pick one snack or food to eat for the rest of your life, what is it and why?

Rakesh Loonkar:

Oh, I would say that's a good question. I would say wasabi almonds. They're healthy. Good answer.

Sandy Salty:

They are pretty addictive. Yeah,

Todd Gallina:

yeah. Okay, nice. Good answer. Okay, so if you had to walk around the office wearing one of these two items for one week, would you choose Crocs or a fanny pack? I would pick a fanny pack.

Rakesh Loonkar:

At least I can keep my almonds in the fanny pack. I'd

Todd Gallina:

pick both. time. Oh, you know what? That's because you can get away with anything.

Rakesh Loonkar:

I saw somebody wearing Crocs the other day this weekend and I'm like, no, you can't be serious. Yeah, that's funny.

Sandy Salty:

If you had to compete in an Olympic sport, which one would it be?

Todd Gallina:

It would have to be right now. Like if you got the phone call like right now and they're like, you have to participate in the Olympics, but you have to pick a sport. Go now. What would it be?

Rakesh Loonkar:

Oh my God. I don't know. It would, it would have to be, it doesn't have to be an Olympic sport. It has to be part of the Olympics. It does. Oh, downhill skiing. Done.

Sandy Salty:

Nice.

Rakesh Loonkar:

That's

Sandy Salty:

me. I think if Rakesh could compete in, let's put it this way. If building companies was an Olympic sport, he'd win gold. Let's just leave it at that.

Rakesh Loonkar:

I wish. So I think even in that world, you know, you'd lose to, you know, Bezos, Gates or, you know, Elon Musk. Never heard about

Sandy Salty:

him.

Todd Gallina:

Okay. Hey, this has been awesome. Is there anything you'd like to share with the audience that we might have missed during this conversation, Rakesh?

Rakesh Loonkar:

No, just I think that's it. I think the last thing is, you know, just in building companies and I see this kind of consistently is the core of any great culture is integrity. And, you know, it's the, you know, the ability for everyone to trust the system as you build it. And, you know, that's that's first and foremost. So, you know, I think everyone knows it, but I think that's, you know, Every single experience, you know, taught me that I was new at any way. And it was kind of part of my core and part of Mickey's core. So that's the. I love that.

Sandy Salty:

Thanks for the wisdom and for your time. We're in total awe.

Rakesh Loonkar:

That's that's so kind. So I have to go back to work and hopefully every day we have to prove ourselves.

Todd Gallina:

That's right. Well, thank you so much, Rakesh. We'll chat with you soon.

Rakesh Loonkar:

Okay. Thank you so much. I appreciate it.

Outro:

Trace3 is hyper-focused on helping IT leaders deliver business outcomes by providing a wide variety of data center solutions and consulting services. If you're looking for emerging technology to solve tried and true business problems, Trace3 is here to help. We believe all possibilities live in technology. You can learn more at trace3.com slash podcast. That's trace the number three dot com slash podcast. you've

Todd Gallina:

been listening to the founder formula the podcast for all things startup from silicon valley to innovators across the country if you want to know what it takes to lead tomorrow's tech companies subscribe to the show wherever you get your podcasts until next time