Case Studies
Realizing Your Dream
CASE STUDY
Dr. Vincent Berk knows technology. He has a PhD in machine learning applied to internet security, monitoring, and forensics. But when he started Flowtraq in 2006 it wasn’t so much the technology that excited him as the opportunity for innovation within the business model on how that technology was delivered.
FlowTraq is a network security software focussed on catching Advanced Persistent Threats. It helps cyber security operators identify and investigate data leaks, compromises, spammers, botnets, worms, and DDoS attacks in high-volume networks. For years, this type of service was available via an expensive appliance limiting the benefits to only Fortune 500 companies.
SITUATION
“To me this service is just software – software that could be run in a virtual appliance or downloadable software,” Vince said. “My vision was to sell it in smaller chunks to people who haven’t had access to that type of technology in the past. The value was applicable to smaller businesses, schools, universities, etc. and I wanted to bring that capability to a segment of the market that had been traditionally underserved.”Vince and his co-founder funded the venture and got to work. Over time the company narrowed its focus and began to gobble up market share. Vince’s thesis proved accurate. Flowtraq was selling to 25 person companies but also to PayPal and Boeing.
The company was growing strong, renewals were good, the business was proven, cash flow was positive and generated revenue was being put back into the company.
As you can imagine, Vince became very popular.
“A lot of Series A investors were interested,” Vince said. “And in security you’re constantly in M&A talks. The list of people who put LOIs in front of me was long.”
“As an entrepreneur in these moments, a lot of people want to talk with you and give you advice,” Vince said. “Kyle and I just hit it off immediately. There was a lot of overlap between our personalities.”
Vince and Kyle discussed Flowtraq’s options. While the Series A investment opportunities were good, the margins were very high. After a lot of discussion and analysis, the acquisition route looked the best but Vince wasn’t necessarily driving toward an exit. In fact, Kyle helped him recruit new sales and marketing hires.
But it was Kyle’s introduction to Riverbed that ultimately changed the destiny of Flowtraq. The massive network performance monitoring and application performance management company was looking to tell a security story. They thought Flowtraq was a great fit. Vince took the initial call, but while intrigued, it came as one of many. In fact he was in active discussions with two other companies interested in an acquisition. Kyle suggested he let the situation play out and see what happens. In the end, Riverbed made an excellent offer and had a clear vision for integrating Flowtraq. Vince had played the perfect hand.
CHALLENGE
Sometimes so many options can be a curse. Vince was struggling on what was the best route forward for Flowtraq. He told this problem to his long-time industry friend Tom Daly, c0-founder of Dyn and SVP, Infrastructure at Fastly. Tom recommended Vince talk with Kyle York, former Chief Revenue Officer at Dyn and now CEO of York IE.– Dr. Vincent Berk
“Kyle’s value was in the experience he had with the process, having just gone through an acquisition by Oracle and having acquired many companies while at Dyn,” Vince said. “When you get into an exit having someone with you who has been there before is really important. Kyle was one of the key people in that process. In many ways, he acted as a banker. He made the introduction and acted as an independent third party, which is helpful to unstick a deadlock.”