[00:00:00] Hey, it's Andrew. And just quickly before we start this episode, I want to tell you about one of my favorite podcasts is the Bare Knuckles and Brass Tax Podcast. Not only does it have a great name, it also has a really good format that's interesting. The two hosts are both named George. That's not what's interesting about it. It's that George K is on the vendor side and George A is a CISO on the customer side. And they have real conversations, sometimes with guests, about the world of vendor customer

[00:00:29] interactions. They're not afraid to call out bad behavior on both sides and talk about the weird and wonderful nature of this world of ours in cybersecurity. Recent favors of mine are the one about building trust called taking a flamethrower to FOD and buzzword mumbo jumbo, and also the one with someone who's a field CISO and advisor to startups called how security buyers think and go to market strategies for young companies. I'm not getting paid for this promo. I just really enjoy the show that two George's

[00:00:59] is put on check it out. It's the Bare Knuckles and Brass Tax Podcast. Now on with this episode. Cyber Donut finished off 2024 really strong. So in this episode, what we're going to do is review what happened in Q4, what numbers of the end up with? Why did they finish so strong? And then we're going to talk about 2025. Is Cyber Donut set up for success in 2025? What has to happen on the sales side to get improvement and added

[00:01:29] capacity? So they have a chance to get to that 10 million dollars in ARR. Let's listen in and find out. So if you've been following along with the success or lack of success of Cyber Donut, you will know you can go to Cyber Donut dot com and see where we are with numbers. And that's C Y B R Donut D O N U T dot com. So cyber without

[00:02:04] an E is the URL right there. So if you're there, you'll see all the numbers I'm about to talk about. It goes all the way through from quarter by quarter ARR, growth numbers, new ARR, renewal rates, total customers, ASPs, pipeline, qualified pipe, conversion rates, headcount, the whole lot. And you can see how Cyber Donut is progressing as we keep trying to get advice from the outside from our advisors, but also as we make changes in how our go to market functions.

[00:02:33] So let's look quickly at 2024. We actually finished off the year with $2.8 million in ARR, which was huge, right? That was a big step up. When you imagine in Q4 2023, the number we ended up with 150K. So growth from 150K up to 2.87 million is what we have on the numbers on the website.

[00:02:58] So a huge increase, obviously. I don't know what percentage it is, but it's huge. There's small numbers we started with, right? So it's natural that we're going to hopefully progress pretty quickly once we got some momentum going.

[00:03:10] But to give you an idea, in Q1 of last year, we did half a million in ARR. Q2, it crept up to just under 900K. In Q3, we broke a million. We got to 1.2. And if you remember, we were struggling along a little bit, right? We're trying to find our feet. We're looking at changes in leadership. We're wondering if we need to rebrand the company. We're looking at advice on demand gen side. We had some input on hiring.

[00:03:34] And the way things ended up in Q4 is in Q4 alone, we actually booked 1.5 million in ARR. So we've ended up the year with 2.87. So that's a big step up, right? Good progress from the team and some good highlights.

[00:03:53] What also happened as well was that we started to get the first renewals coming through from the previous year. And again, we only won three customers in 2023, in Q4-23. But according to the numbers, all three renewed and our net renewal rate was 126%. So we were renewing at a higher amount than we did before. So they're adding more seats. Are we able to get some price increases because there was nothing baked in in the renewal, given they were the first few customers?

[00:04:21] So that was all good. And we added 15 new customers in Q4. Actually, we added 28 new customers in Q4, up from 15 in Q3. So we doubled the number of customers. And then the ASP of the net new business was 113k. So the first time ever, we broke the 100k in ASP. So these are all good signs that we're starting to turn the corner with Cyberdonut.

[00:04:50] And we did this with reasonably conservative headcount numbers. We added just two new heads in Q4. We had a marketing leader came in because we felt like, you know, if we really got to get the demand gen going and the branding and the positioning of the company, things like that. So we brought in a marketing leader. And the other addition was on the customer success side because we're adding in all those customers, right? So we've got two CSRs right now handling. How many customers do we have in total? I can't remember how we got in total, but it's over 50 now, I think.

[00:05:20] So, you know, there's a lot of customers for them to handle and make sure they're getting success going forward. So, you know, when we, those are the headlines, the numbers, when we look back, it was a struggle, right? We were struggling all the way through. Q4 was a bit of a breakout quarter and December was a blowout. You know, we had the obviously end of year rush that, you know, most companies obviously get. But we're, you know, a little bit cautious going into next year to say, okay, so that was a combination of a lot of hard work. Are we still in a position to do well in 2025?

[00:05:48] The marketing investments that we made in Q2 and Q3 on Pipeline Gen started to pay off in Q4. You know, we took the advice of the marketing experts that we had come in to advise us, Joseph Baringhouse and Rob Sobers as well. We were looking at what they were saying about, you know, events to run, the tactics to run, the programs to run, things like that. The real leader didn't make too much impact, frankly, because they came in in Q4. So it's going to take a quarter for them to really bet it and start making changes and positioning and all the rest of it.

[00:06:17] But, you know, the pipeline grew. So if you look at new qualified pipeline added, $4.5 million in new pipeline added was in Q4. That's a great, you know, hard result from a lot of that work that happened. On the sales side, the sales team matured. You know, for the first quarter, really, we had the full team fully ramped, firing on, you know, decent amount of cylinders, if not all of them.

[00:06:40] We felt like that the ones we have, we have five AEs now and two SDRs are really starting to make a difference, building their territories and getting out there, you know, playing in traffic, as someone used to call it back in my day. And one of the successes that they had was they were using a lot of AI tools to be scrappy, right? You've probably seen a bunch of them talked about online, but they were getting some capacity. They were thinking about how to be different. They're using these tools to try and target better.

[00:07:09] And also when they're actually talking to companies and outreach to get much more effective than before. One of the, well, a couple of things that, a couple of metrics that were good with conversion rates. So, you know, the first meeting to opportunity. So the first meeting to basically a qualified opportunity went up from Q3 to Q4. The opportunity to POV went up from Q3 to Q4 and the POV to close one went up from Q3 to Q4.

[00:07:36] So we had Alexei Rubinstein come in and some advice in Q4. He's the VP of sales engineering, customer success at Morphosec, and he gave some advice about what we could do to tighten up our process so that our close one or POV to close one ratio improved. So those were all good. So, you know, the leadership are coming at a little bit, what's the word? Not satisfaction, but relief, I guess, that we did so well. But, you know, because we've been through this before, we know not to get too carried away.

[00:08:06] Everything could, you know, we don't want to go from hero to zero in a quarter. And, you know, new year, new numbers, new demands, new growth requirements, so the rest are coming in. So that's where we finished up. What does 2025 mean? Well, we have to go from an ARR right now of 2.87 up to 10 million. So it's over a 3x improvement in ARR. There's a number of things that have to happen for us to get there. But let's focus, first of all, on the sales side.

[00:08:35] So the overall message that we have is that we need to, for the team, is that we need to keep increasing our ASP. So right now in Q4, it was 113k for the net new ARR. And our goal is to get that up to 150k by the middle of the year. So it's going to take a bit of sales execution improvements to get there.

[00:08:57] We're going to need to focus on selling value, maximizing every opportunity that we have so that we're positioning ourselves as a value-based play as opposed to a feature or commodity-based play. You know, we still got some big competitors in the marketplace to compete against, so there might be some pricing pressure. But we believe we have a product that demands a premium price. We just need to get very good at making sure that our customers, our prospects, believe that too.

[00:09:25] So driving up the ASP is going to be part of it, but we've got a little bit of detail in the conversion rates. So when we look, for us, you know, when you look at getting the ASP up and we look at getting that first meeting to qualified opportunity rate up as well, you know, we want to do it with some good rigor around it, making sure it's well-qualified and good opportunities that get created and not just, you know, any old crap that gets through. So what are we doing? A few things we realized. One is the team is still not great at our positioning.

[00:09:54] You know, it's simply just saying, what do we do? Answering the questions, the question from prospects, where exactly does Cyber Donut fit into this? If you go back and listen to the calls recorded in our conversation intelligence tool, everyone's all over the place, right? They've got their own way of doing it. It's not completely different, right? It's not off the board, but everyone's got their own way of doing it. It's different words. Some are more buzzwordy than others. We've got SEs trying to do it as well. We've got two SEs in the group, and they've got their own way of doing it.

[00:10:23] And, you know, when I go in and listen to these calls, I get confused about what it exactly is that we do because there's so many different variations in there. So we feel like there's a need to really look at that and say, well, what is the really strong standard way to do that? To answer the question, what does Cyber Donut do? And when we get to that point in the first meeting, Lieutenant of it, Discovery, we turn around to us is that we got a really crisp way to start, very powerful way to start. So someone doesn't get confused.

[00:10:52] They actually sit there and go, oh, I get it. Now I've got some, you know, intelligent questions to follow up with you on how you do that. So we want to standardize on that, and we want to make sure we're tailoring it as well for the personas that we go target. There are three main personas that we go after. We need to have a slightly different version of that for each one. So that's one thing we want to do is get the right positioning there for the sales team. Now, obviously, that's different than the words we use in our website.

[00:11:20] You know, human-to-human interaction is not the slogans that you put on a website. And we got to make sure that when we do this is that we don't standardize on buzzword-y type stuff, right? We start talking about, you know, synergies and optimizing and all this type of stuff. We're not describing what we do very effectively. So one project we're going to start to kick off in Q1 is getting good at that.

[00:11:39] Now, in terms of growing the ASP and looking at those conversion rates, one of the things that we are not doing very well right now is getting down into the impacts of problems. So when you listen to the conversation intelligence calls, and this is the same for a lot of companies in cybersecurity, a lot of sales teams, is we're very good at asking the surface-level questions. What's going on? What do you have? How's it going? How do you do this? How do you do that? Is that going well for you? You know, things like that, right?

[00:12:07] What we're not good at doing is getting below that into impact. You know, when we uncover some sort of problem, understanding, well, what's the big deal? Figuring out the so what. So what, we find a problem. You know, these prospects we talked to are not short of things to fix. So, you know, we need to make sure it's a problem we're solving. So what are we doing on that? We're going to do some training. There's a company called Unstoppable.do out there. And they have some training around how to do this, how to do it better than before.

[00:12:37] And it's all about, you know, crossing that chasm from a lot of situation questions into situation plus impact questions. And what they do is they come in, they give examples about how to do it. They train the team on the different types of different boxes of questions you can ask. And they workshop it so the team actually create their own versions of these questions. You know, we don't want to just force questions on the team and say, this is what you have to ask. What we have to do is get them the frameworks from Unstoppable and let them create their own versions of these questions.

[00:13:07] And that way they have a sense of ownership and we can coach them on and refine them. So they're more, you know, high quality questions rather than the weaker ones that they might go with on their own. Then we practice it. We practice a lot. And so they get comfortable. And then we track through on the conversation, the calls recorded in our conversation tool to see how they're being asked. And if they're asking, we coach the team on a weekly basis to make sure they're maximizing those opportunities. You know, there's nothing worse. And you may have had this yourself. There's nothing worse than all these hard-earned first meetings.

[00:13:36] And you had this annoying feeling in your gut that we're not doing well enough. And you listen to the calls and go, oh gosh, we missed opportunities there to go deeper. We missed opportunities here to do things a little bit differently. So we definitely want to maximize those opportunities at the first meeting with getting down into impact. The second thing we do is we're in a bit of a credit market segment, like many segments are in cybersecurity. And what we're doing a lot of is differentiating on features.

[00:14:03] So when we get asked the question, oh, you guys sound like, or how are you different to, and they, you know, drop in the name of a competitor, we tend to get very feature very quickly. You know, it's what we do this better, and we have 100 of these, and they only have 50 of those. And, you know, we're told all the time that our reporting is better and our usability is better or our workflow is better or things like that, right? And this is good, but it doesn't really, it's not maximizing the chance that we get to really answer that question powerfully.

[00:14:30] So what we want to do is move to a situation where we differentiate on value and not just on features. So if you look at the competitors that we have, we've got a couple of direct competitors, like truly, you know, we're head to head with them. And we've got a whole bunch of adjacent, you know, where they do some of what we do in different ways, or it might be a feature or a module inside a bigger suite for a bigger company. So the training we're going to do is, first of all, is the reactive. So how are you different to, they fill in the name of a competitor.

[00:15:00] And the structure that we're going to use for Unstoppable is one where we train the team to say, well, look, you know, yeah, we're in the same segment as company X. And we're similar to them in that, and we might have something that we can say, such as, you know, they're also trying to solve this problem in a slightly different way than the traditional players. We're similar in that, you know, we've got this type of functionality and they've got the same sort of thing. But then quickly, what we want to do is move to why we're different.

[00:15:27] But rather than go straight to features, what we want to do is be able to differentiate on philosophical things or approaches as opposed to just features. So in the unsolvable world of doing this, what they train us on is the idea that you can say, we just don't believe that in 2025, you should be hampered by not having something, right? We don't believe, or you should have, or you shouldn't have, all these philosophical phrases that we can drop in there.

[00:15:57] You shouldn't have to compromise on how you do this in 2025 by using a technology that was built 15 years ago. You know, this is 2025 where we've got a whole bunch of new technologies and new approaches. We've got AI coming in and we need to use these new things from the ground up to be able to give you the type of tool that's going to have a huge impact for you. And you're just not going to get there if you're using something from, you know, 2012, right? So that philosophical difference, the approach difference is how we want to start off.

[00:16:26] And then the second part of that is, for example. So for example, this is where you get into features. We've built this a certain way. And the reason we've done that is because it has this sort of impact on how you do things, right? We don't want to bash the competitors, but we want to say it's different. But we've built this a certain way because you know that the old way is flawed and we've done it this way. And the impact for you is it's going to save you, you know, X amount of time. It's going to improve this or change that, right? And then you can wrap up at the end of that statement if you do two or three examples with some sort of impact.

[00:16:55] And what we've seen is from customers who've gone with our approach is they get this big payout, this big outcome at the end of the day, right? So the approach that a software has is, you know, agree that the other companies in the same segment, agree and talk about how we're similar very briefly. We both have this type of functionality, but we're fundamentally different. And then you slot into philosophical argument, the approach argument, and then you go into the features or the examples at that point right there, right?

[00:17:25] And finish off with some outcomes. So that's a very powerful way to do that. And kind of similar with the questioning, we want to go deeper. We want to train the team on the approach, right? So we give them the assets, the sales tools that say, you know, for each of the competitors, this is how to do this. We want to train them on the wording, the structure, things like that. We want to role play with them, practice with them so they're good at doing the drill that says, okay, John, how are you different to this company?

[00:17:53] And he's got a set way of doing it and then do the coaching after that as well. So we're going to pick up a program in Q1 to do that. The other side of differentiation is where you know where you're strong and you want to direct the conversation in that first meeting, in that second meeting, into that area that we're strong in versus our competitors. Right. And, you know, there's different ways to do it. Some less elegant, frankly, than others. You know, when you have to say either, you know, we do this very well.

[00:18:23] What are you doing for this? You know, that's not very powerful. If we're saying, if we're doing the what abouts, right? What about this? And what about that? And what about this? And, you know, and you're almost like trying to catch them or don't you want to have this faster? Don't you want to have this a different way? I hear that a lot on calls at different companies. It's not very, if you're trying to really convince someone and have some prospect and have they come on your site, it's not a very powerful way to do that.

[00:18:48] So the way that we do it in the unstoppable way is that we introduce the issue that we solve, right? So if your feature, I don't know, let's just make some, you know, weird example up, right? If you inspect 10 elements, I don't know, 10 elements of a piece of malware and other competitors only do five, right? Rather than saying, you know, what level of depth of inspection do you need to have or don't you need to have deeper?

[00:19:16] What you think about is the issues. The issue might be what other security leaders that we talked to are thinking about is with all this AI driven malware coming out now, the surface level inspection of malware is just not enough these days, right? You know, most companies, what they'll do is look at five different levels and give you something. But with the way that things are going right now, it's proven to be not just quite enough to do great detection and removal of infections. How are you guys thinking about that, right?

[00:19:45] So you introduce the issue and then ask them how they're approaching it or how they're thinking about it, something like that. And then you get an answer and then you say, okay, is that working well for you right now? Or how well is that working well? How much of a problem is that for you right now since you don't have that deeper capability right now? And then you want to get an idea of impact, right? So you'll say, okay, so you realize you're missing out on a bunch. What's the big deal though?

[00:20:10] So, you know, what's the impact that's having not being able to, you know, handle these outbreaks and handle the malware effectively? So you've kind of gone through a little, you know, the way that Unstoppable trains it is on a pyramid. So you go from issue down to problem down to impact to make sure that there's a conversation. But the impact of not having that capability. And the final thing is that you want to say at the end is, okay, this sounds like from what you're saying, something you need to have.

[00:20:37] Should we add it onto the list of things that we demo and show to you in the POV? All right. And they'll usually say yes, because you just talked about it and they kind of realized that they want it. And by you doing it this way, what you're essentially doing is adding it into the list of requirements for all vendors looking at, not just Cyber Donut. But and then the final, final thing you'll do is, okay, I'm going to add that to the list of things to show you what should I call it or how should I phrase that in the list? I want to make sure I use your terminology. Right.

[00:21:06] So you want to get their words on that on that structure. So in the Unstoppable world, what they call it is introducing the unfair advantage, where it's really the ends up being the prospects realizing that there's an issue out there that they should be thinking about. They haven't tackled it. It has an impact and they want to see how they can they can fix it. So those are the three areas that we're going to be working with Unstoppable on in Q1 to really sharpen up those first meetings that we're doing.

[00:21:32] The goal is to get that first meeting to opportunity conversion rate from 36% right now up to over 45%. That's what we want to get to. So it's a big jump, but we feel like there's room there to improve that. And what's good about Unstoppable is when they come in, they've got tried and proven frameworks to do this. They've got experienced cybersecurity salespeople that know how to do this and they'll come in and work with us and train and coach us. And they use a lot of the latest tools.

[00:22:00] So, for example, in the role play, they're bringing in AI role play tools, which are really good now. And they're just finalizing their partnership with one company right now. So they can come in and really provide us with some drills and some scale to get really good at those things. So these are the things we're looking to do to try and get that ASP greater than 150 by focusing on value and also to get the conversion rate from 36% to over 45%.

[00:22:25] In terms of capacity of the team, not quite yet, but slated for Q2 is to bring in some new hires. So we're going to look to Unstoppable as well to build a new hire program so that they can try and bring down our ramp time. You know, we got all the sales team in 2024 ramped up, but it was nowhere near quick enough. I think we were saying roughly it was taking about eight months, seven months for the team to really get productive. And that's just not good enough. So what we're doing is working with them on a way to bring it down under four months.

[00:22:55] All right. So that's going to have a big, big deal. So as a quick summary on the Cyberdonut side, you know, Cyberdonut has a chance, right? We've got a chance to get to that $10 million. It's going to require a lot of hard work. We need to get more pipeline. We need to get the sales execution better. And it's going to be tough, but we're going. We've got some momentum and there's some room and some things to work on, which is great. So that was the Cyberdonut summary, right? Now I'm going to go back into Andrew. So I talked about Unstoppable there.

[00:23:23] Somewhat weirdly in the third person, obviously that's my business. I go into cybersecurity sales teams. I help them improve on these types of things. We put in programs, you know, where I described right there for Cyberdonut is the kind of thing I work on with companies, right? They're looking to do value selling, not just feature selling. You know, feature benefit selling is like table stakes these days. And many companies are looking to say, how can we help our sales team become better value, business value sellers truly and drive up our ASP?

[00:23:52] And then what can we do to improve those first meetings to opportunity conversion rates? Because, you know, we want to make sure that we get those hard fought first meetings that they're doing really well and converting high quality ones at a greater number. So this is what I do. I go in and help teams. So it's a little bit weird that I talked about it in the third person there. And obviously, you know, Cyberdonut is a made-up company. Unstoppable.do is not made up, though. You can go to Unstoppable.do and you'll see these programs I talked about on there.

[00:24:19] So that's what we're doing for Cyberdonut, supposedly in Q1 in the mythical world that Cyberdonut lives in. And it's going to be fun to go off and do that. So coming up next is we've got a couple of, we've got CROs coming on soon. I've got someone coming on who talks about how to do really good practice sessions as well. And I've got someone on the marketing side coming on soon as well. So we've got some good guests lined up coming up here in the next few weeks. So look out for those. But thanks for joining. I'll catch you next time.

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