Executing on Ideas with Dr. Neil Costigan

Alberto Yepéz [AY]

I am Alberto Yepéz and I’m your host today. I’m delighted to have Dr. Neil Costigan with us who is going to share his journey as a serial entrepreneur with more than 25 years of experience in this industry. He is a cryptographer by training, an entrepreneur, and a Renaissance man who has led a number of great startups that have realized great returns to investors, customers, and the team. Neil, welcome to the Forgecast.

Neil Costigan [NC]

Thanks, Alberto. Delighted to be here. I hope, given what you just described, that I can add something to the illustrious panels that you have had before.

AY

Why don’t we get started with your story? Everybody wants to have context: who is Neil Costigan? What was your career? How did your journey start? Then we will get into some of the specifics for success and some of the lessons that you learned across the board.

NC

I’m Irish, I grew up in Ireland in the 70s and 80s, which was quite a different place than it is now. I studied computer science, which was a little bit rare at that time in the late 80s and graduated in ‘92. I first started working in an interesting startup- skunkworks- a spin-out of the Irish national telecom. We were making network management systems, and I was a software developer. There was a great team of around 20 in a space of about two years. Somebody there made some great technology decisions. They had us working on C, on SQL databases, and on TCP/IP. We were doing it on X Window/Motif. It was a great, cresting wave of technology that we were thrown into the mix of as new engineers. Those were my formative years: a couple of years programming C for Graphics. That’s why I say my trade is software development. If it all goes wrong, I’ll always go back and be a C programmer. That’s the instinct of trade and discipline I would have.

I moved from Ireland to Sweden back in the mid-90s and I got a job in an interesting startup- our consultancy firm, really, in Stockholm. We were doing siloed crypto stuff. We were in security around the health system, and it struck me that there was a generic way of doing this. The big problem back then, if you remember, in the mid-90s was that crypto was export controlled. We didn’t have our hands on the high-end crypto that the American companies were making. I had a light bulb moment where I realized I could put it back in. We spun out a startup, myself and a few of my colleagues. I was CTO. In the space of about two and a half years, we made a secure internet banking facility. We put in the security to the browsers, with digital signing, secure web services- very much what would be looked at as an adaptive authentication kind of suite. I was writing code and was CTO. In the space of those two and a half years, we flipped it out to California.

I moved out to San Francisco; we worked in Mountain View. We had some interesting projects, particularly with Visa, that led to a successful exit to Gemalto (Gemplus at the time) the smart card manufacturers. That was all security- PKI, SSL. We did pre-SSL and then when SSL came along, we were doing that kind of stuff: all the PKI, X.509, and the various iterations of 1.0, 1.2, and 1.3 of SSL.

I moved to France and ran R&D for banking and security for Gemplus at the time. They were smartcard manufacturers with 8,000 employees there, and it was quite a jump. I was in my late 20s and early 30s at the time and spent a couple of years in south of France. After that time, I went back to university. I thought I was going to an MBA but ended up doing a master’s in security, and that led to a PhD track. “Dr.” Neil was by accident. I was hanging around with some very smart people and I hung around long enough that I too got the doctorate. That’s the story of the PhD. I think the more interesting one, and the one you probably have me here to talk about, was the journey after that.

During my time doing my PhD, I was in Sweden. I was at a university as a guest researcher. I was introduced through mutual friends to Olov and Peder, the founders of BehavioSec, who had just set up the company. Peder had the idea- he went to the innovation office, all of us working there. Quickly, the two of them put together a skeleton of a business plan and a patent application. I came on as an advisory board member and pretty quickly joined the team. That was kind of the founding of BehavioSec. The journey for the next 10 or 12 years was kind of vague as we really got that thing going. Every time I see an old presentation or some old photographs, I say “We were doing it then,” you know, it goes back that far. We led the company through a number of rounds, took the company out to the U.S., and had a successful exit.

AY

I remember that we met through an introduction from In-Q-Tel. In-Q-Tel had given us a call and they said “We’re looking for behavioral biometrics, we canvassed the whole world and found a company out in the north of Sweden, in Luleå, that is doing amazing work. What is more impressive is they have gotten DARPA awards.” DARPA tends to be very regional and always wants to support American universities. Since DARPA gave you awards and In-Q-Tel was giving us a call, we knew we had to meet you guys. Maybe you can replay that episode when we got together.

NC

The DARPA story is interesting. They put out a call back in 2012. They had this very big DARPA moonshot idea: we believe the human will be part of the future of security. Nice and vague. Olov said “I think we can get this” and I said “I don’t think we can” because of the reasons you pointed out. There’s a huge amount of work and paperwork, which is understandable. We put together a proposal saying we believed the behavioral part was the future and outlined the things that need to be done that DARPA can help us with. We won a contract with it. I remember being very surprised and then getting to it. It was an amazing place to work. It was an amazing theater to help us fund the R&D, the prototyping, and everything else. We got a certain level of product-market fit. Part of the product-market fit with something as innovative and disruptive as the behavioral is the quality of the implementation and the scores, and the consistency in that. DARPA really led us there. With In-Q-Tel, we ended up doing three programs back-to-back. One of my most rewarding times as an engineer was being principal investigator at DARPA. We were out in Arlington quarterly. We worked with some great peers on projects. Then there were actors who watched DARPA’s advanced research and said “Where is this going?” We got the opportunity to speak to some very big American companies who wanted to take the work further. Also, the defense industry themselves took interest, and that’s where I think the recommendation came to meet you.

I don’t know if you remember this Alberto, but the story of meeting you is quite an interesting one. My daughter was quite young at the time, I think 12, and was a gamer. She asked if she could go to the Minecraft convention and I assumed it was here in Sweden because Mojang, the company that created Minecraft, is Swedish. I just thought this was just a weekend trip to the local convention hall. But it ended up being a very different thing, it was in Anaheim at Disney. I went, oh, I got to do this. It actually turned into an amazing [trip], I really enjoyed it actually- I’m a bit of a nerd in my own right. Three days at a gaming conference was fun.

I took a long, slow road trip up the 1 from LA to San Francisco to show her California. We did it over about five days. Part of it, of course, was that I had to do some work. While I was in the Bay Area, I took the opportunity to do some networking and pitching. I presented the deck, the slides, the DARPA story, and some of our European customers to show it off. I had to drag her around. Some of these VCs, the ones at the high end of Sand Hill Road would take a look and go, “Who is this guy with his daughter?” and be a bit surprised. But when I met you, you did the opposite. You went straight to her, avoided me, and had a really nice, warm chat with Clara. She decided to tell you that I do this over and over again, I say nothing but the same things, and my PowerPoints weren’t really good at all. I thought “Well, that’s the end of this meeting.” Subsequently, I met you long after we did the deal together and I asked you “What was the actual thing that led to the second look?” You said to me, “Anybody who brings his daughter along to a meeting- I got to meet him twice.” Maybe she was the trump card.

In the second meeting, I pitched. When we got down to haggle the overall terms of the investment, I met you on the side of a security conference in Monterey. We met at the back of the gardens in this hotel. I think we made a handshake deal. I was thinking “Okay, is it good or bad? I don’t know.” But as I’m walking with you back up to the event, what was a five-minute walk took us about 20 minutes because every single person stopped to have a chat with you and shake hands and catch up and everything. I remember just looking and going, “I think I’ve made a good decision here. This guy knows everybody. This is going to work.” There are some very prestigious names that I got introduced to just through your network that day and afterwards.

AY

I appreciate the compliment. This is what Forgepoint is all about: building trusted, long-standing relationships. As investors, I wouldn’t say that we don’t know anything, but we have a network that can really help our entrepreneurs build lasting companies.

NC

I’ve been around for five years and certainly the network is an amazing asset along with the team feeling of Forgepoint. Don’t dismiss that you don’t know anything. The operations, the fact that most of you are operators and come with the stories and experience of the problems that we have is way different than a lot of the larger more finance-oriented venture capital input. Their contribution is valid and the money is a big part of the investment, of course, but the value-add on top of the money- the network, the team and the competence of the team you have around you- is a big part of that.

AY

As a serial entrepreneur, Neil, you appreciate that nothing goes in a straight line. There are a lot of bumps along the road. You have a loyal team next to you that delivers on execution, but at the same time there are some critical milestones that you need to achieve in order to get attention for your next round or a potential exit. Can you describe some of the journey with BehavioSec until the exit?

NC

BehavioSec was a university spin-out, so for a lot of the team- particularly in engineering, development, and data science- it was their first time working. The enthusiasm and energy and new skill sets are amazing. They really are. That’s one of the reasons I love doing startup stuff. I love the early days when you’re all in it together. Everyone has to multi-hash. You’ve got to find people who are capable of the amount of time and energy and commitment it takes. But secondly, they have to understand that roller coaster- two steps forward, one step back- to really appreciate the successes and to learn from the steps back, and there are many. So, the team is there. Quite a few of the BehavioSec team, in addition to Peder and Olov who were enthusiastic people coming out of the university with these ideas, were from some of my old teams, some of my previous exits- Ingo and Wolfgang and Callum all joined. We put the band back together: “Hey guys, I think I got something. Drop everything, I’ll see you.” In the case of Ingo, you’ve got to remember, drop everything was taken from the south Pacific. That was quite a big ask for me to get them to come back.

On go-to-market, I haven’t read very many of the business books describing our industry. I’ve got a shelf full of them, but the one that really resonated to me was Crossing the Chasm. It was kind of like, this guy gets what I see. It described and documented what a lot of us, particularly those who were around in Silicon Valley in the late 90s, were executing. You’ve got to focus, cross that chasm, get over the early adopters, and work with them in a certain way at the early stages. But when you get product-market fit, be very disciplined to focus and repeat the hell out of it. That’s it. People don’t get that in addition to the idea, the prototype, and the demo, it’s execution, scale, references, proof points, integration points, and the version two of the product that happens after the chasm that really explodes. It’s very tempting to take the product into many different verticals. It’s very tempting to try and scale too many geographies, too many verticals, too many partners. The discipline of identifying the 80% of success that’s really important and repeatable, and really doubling down into that and maximizing it, is a real key. The text says that many people fail at that chasm spot. To learn the lessons, the patterns, the experience that you and your peers have, and people like yourself bring as advisors- a lot of it is about making the decision, being very disciplined and sticking to it. Build a multi-discipline team, all the roles are equally important. You don’t need a whole bunch of prima donnas. You really need to have people who are prepared to multi-hat, do the time, and work together. They’ve got to work together. You have to like the people you’re with, you’re going to spend an awful lot of time with them. Any cracks in personalities, any cracks in commitment, any cracks in skill sets, any gaps in skill sets- you’ve really got to fill them and fill them early.

AY

I think you’re very insightful in those comments. I remember you needed to cross the pond. We were very impressed because you had some of the largest financial institutions as customers in Europe, a small startup with very little go-to-market yet great engineering and support. But you said, “If I’m going to be successful, I need to bring and build a go-to-market team in North America.” What we easily forget is the fact that this was in the middle of COVID. I remember that one of the conditions was, “Neil, you’ve got to move, you cannot be going back and forth,” but the world shut down on us. At the same time, you were very set on very strong DNA, a belonging team and culture, inserted with go-to-market skills, but in a culturally different way. Sometimes the U.S. or Silicon Valley tends to say, “Hey, let’s get going. Let’s do this or that” but you have that convergence and team building. I remember you made a lot of personal sacrifices going back and forth because you couldn’t move effectively in the middle of COVID.

NC

Well, there was pre-COVID and then COVID. Together we did about four and a half years of work, I think, from first investment to the exit. Two and a half out of that was pre-COVID and it was building out the team. From the Swedish base, as you said, we had traction from directly selling to some of the digitally sophisticated banks in Europe, Sweden, Norway, Denmark, Holland, Belgium, Germany, and Switzerland. Very similar banks in their journeys with regard to digital transformation and technology, like ours, were viewed as part of that journey. Europe FinTech, particularly banking, is a little bit further along than North America, and so we were bringing lessons out as well. But you’re right, the cultural fit- bringing in people who just didn’t break- it wasn’t the shift. We ended up about 50 /50, about half the team were in North America and half the team in Europe. Half the team was in engineering or R&D and the other half were in the commercial side of things which was sales, partners, professional services, customer success, and product management. As an external person to Sweden, it’s clear there is an ability to make really high end, high quality security products in Sweden and the Nordics- there are many of them. But they can be very over-engineered. They can look like an Ericsson phone. They can look like a Volvo. The best engineering under the hood and the best technology inside. But if you remember, companies like Ericsson bring Sony in to make the commercial front end consumable. I think the same happened with us and happens with Swedish companies- we produced products that amazing marketing, product management, and product marketing feed on.

We made superb engineering and had the team in North America “put lipstick on” and really make the product, I think, a lot more easily consumable for secondary customers that aren’t early adopters (who are happy putting the nuts and bolts together themselves). We were giving them an assembled product rather than parts. That, I think, is part of the journey and part of the value that Silicon Valley brings. I don’t think that either Silicon Valley or Europe understands that those disciplines are quite different. Product-ifying is something that was done very well in North America.

AY

I remember that one of the very first hires was somebody to help us run product management. Sometimes we get reactions from other entrepreneurs: “What do you mean? Project management? I already have one of those, even two of those.” But when you start appreciating the product management discipline of bringing the requirements, the need for commercialization and eventually product marketing and marketing, it’s very interesting and necessary to succeed. The other thing that I would complement you on is that when you came to North America, instead of saying “Let’s grow at all costs” you were very scrappy, saying “We’re going to go run some reference accounts that are going to validate our technology, and then we’re going to scale.” I remember you landed one of the largest banks in the U.S. that was driving huge digital transformation as a customer reference. I said, “Wow, that’s a huge validation of the value you provided.” To your point, you needed solutions architect, product management, and project management professionals to make it successful. You landed one of the largest marketplaces in the world as a customer. We also landed one of those ride sharing companies that wanted to know how to control fraud. We were amazed and then the moment we said, “Okay, it is time to scale” we got an inbound to buy the company. Maybe you can complete that chapter.

NC

In hindsight, we weren’t as daunted by the scale of some of the customers in the U.S. as we should have been. We were used to dealing with, say, a bank in Sweden with one or two million users, a bank in Switzerland with five million. When you get to somebody where it’s a hundred million, then you think that’s just a bigger version of what you did before. But in the smaller ones, you’re dealing with the fraud officer, security officer, the sign off, data protection, the person who scales it- they all go for beers on a Friday night and get to know each other. But when you start dealing with a hundred million customer bank in North America, that fraud officer could be in Dallas, the security guy could be in Boston, and the operations people could be in Boise, Idaho. That’s different countries practically. We possibly should have been a bit more overwhelmed than we were, but [the customer] logo, the scale, and the fact that we were delivering… I remember asking a partner why they partnered with us, because that was inbound, and he said “We were doing some strategy with one of the analyst firms and the analyst said ‘The next thing you guys should do is behavioral biometrics. If you’re going to do it, you can build it or license it. Don’t build it- it’s really, really hard to do. If you’re going to license it, you have to go to BehavioSec because in practice, they’re the only ones executing.’” I remember just going, “Give me that quote, put it on the website, that’s it, that’s the best thing ever.” It was a little bit of that. I don’t think we appreciated how well the technology was executing.

The word of mouth too- if you think back to our European customers there were hives of them, a number of customers in Benelux, a number of customers in the Nordics, a number of customers in the German speaking areas. They sold it to each other. One bank told us that the other bank called them up and said, “Hey, this technology is pretty cool, you need to have a go at it.” The best reference was the previous customer telling the next one. I think that happened in North America as well. That customer logo, who everybody knows was quite tough to be a supplier to, did some things in-house and put suppliers through the mill. I think the fact that we were getting renewals and stepping up the business gave an indicator that the technology was valid because people were understandably skeptical to a disruptive new idea. On the back of that, we got an inbound. My job as a CEO is to take all these things very seriously. I remember going and bringing it to the board and we all collectively went “This is interesting, it’s a number, but it’s not a good enough number, it’s not there.” We were structuring to do new financing. We had the full support of all the existing investors. Everyone was very excited, understandably. [The] best practice is to go out there and find a number to value the company. This was one, there’s other ways of doing it. We weren’t in a position that we had to exit, thankfully. I think the body language you have afterwards is if you don’t need to do it, it’s an awful lot better position to be in. I think the board itself and the other investors kind of said “With that number, we got to go and see what else is there.” That’s the smart move, to go and check it out. Together we decided to get an advisor to help us on that journey while not distracting the business. You could very easily lose your direction. A very small senior team can get consumed with that process. I think the best thing we did was to take in really good advice and help.

AY

To emphasize the point, how many patents do you have? Because you say, “oh, we had great technology and all that,” but don’t just brush it off to the side.

NC

When you’re running a startup, you’re running a tight ship and you have to make decisions about where you spend your money, resources, and where you hire. The whole thing is a balance. There’s a natural triangle to the shape of a company. If you have too many engineers, it looks odd. But one of the things that people wonder is where you are spending the money. What are the skill sets? What’s there? Of course, everybody in the commercial team quite rightfully is concerned about the customer who’s signing next Friday and doesn’t understand why the whole company is not rallied behind them and just that meeting and just that demo and just that delivery. Of course, you have to treat them with the level of seriousness that they deserve. However, you’ve got to keep on going. You’ve got to look over the horizon. You’ve got to have a roadmap for the product. You’ve got to invest in things that are coming around the corner. You participate in standards. You evangelize. You build your product marketing and your company strategy. How do you present yourself in front of the industry, getting your position? That’s all peacocking and making yourself big. They’re all part of the game that you’ll have to do in parallel to this week’s customer.

One of the things I think you’re raising there is patents. Sometimes you’re sitting there going, “How can we, with such a small team, have the overhead of those external lawyers? What are we getting out of this? Where is the ROI on that money spent?” It turns out as you get investment, it’s a big part of it. It’s that validation, that freedom to operate. We had two different financing rounds that focused on different aspects of the business. One investor was very, very specific about freedom to operate- competitors’ patents and whether we fit in the industry. I have to give credit to Ingo, who writes these things like a machine and works with the external IP lawyers for Optima. We had quite a successful machine where we were filing in an orderly fashion. Every quarter we’d be getting something out there, not making a big deal about it. It’s not something that’s needed in your marketing or your customer-facing material for a few reasons I could expand on. It’s the language of doing in business. When you’re getting investment, you need freedom to operate. You need that stack. It’s not just whether you have a patent. It’s that cadence of constantly inventing, of reassuring the product and building it. After finance rounds, in the exit and the negotiations of the value of the company, the patents play a huge part. There’s a couple of the advisors who actually looked at patents in the portfolio, particularly if they were Silicon focused. With multiples of the patents, that’s where they come up with their numbers. There was certainly ROI and the time spent there. We’ve got some great stuff. There is a case of shoulder to the wall, get this thing out, get that customer happy, whatever. But there are also those moments when you’re kind of internally high fiving things like DARPA and also the patents and some of the ideas. It’s to make a big thing of the team for such innovation, such breakthroughs and such success. We would high five and have our Friday beers or cake, come in around a customer, a hire, a birthday a financing round- and patents were a big part of that as well.

AY

You were building that mode that would show that it not only wasn’t easy, but people that wanted to come in the market needed to exceed or reference your patents. Very interesting.

NC

There was nothing really in our history of litigation or contention around the patents. One of the reasons we didn’t have any problems was because we had a solid foundation.

AY

Exactly. Through the banking process, you got six different offers or so that I remember. Then you selected the place where you’re working today. Talk about the general process and more importantly, the transition before and after and how as an entrepreneur, you have loyalty to your team, to your customers.

NC

If we roll it back a bit, one has to remember we keep an eye on the prize. If we look at our industry, particularly our vertical, the security vector, there aren’t too many huge companies that stand alone. There’s a lot of consolidation, a lot of mergers and acquisitions, a lot of rollups. That’s kind of inevitable. In the journey, you’ve got to have an eye on that in addition to fundraising. Somebody once told me, “If you’re in a startup, when you say you’re not raising funding, you’re just lying.” It’s a constant part of the journey. In addition to financing, there is the element of dealing with potential acquirers. You’re dealing with bankers and brokers. You’re dealing with your partners to be very selective, to understand the ecosystem where you fit and the value you bring. A lot of the reason you’re onboarding partners is a future investment. Quite a lot of startups will never get any revenue through the channel. However, knowing where you fit, having big partners open doors, the reputation they bring with you… ultimately, there’s a potential acquisition. Usually when you sign off their partnership, particularly if with the right company on the other side who know this too, we all informally know this. You do not just sign a partnership. You introduce yourself to the corporate development team. You update them every six months both on how you’re doing but also potentially where this is going. We invited some of our partners to be strategic investors. You’ll be very selective about that too, because it can also close some doors. There’s a constant eye on the prize with regard to where or if there’s going to be an exit.

In that regard, when we got the inbound offer, we did a process to select a banker and advisor. We did that together with the board and the investors. We did 10, shortlisted four, and selected one, based on a number of things. I think it was the feeling that they understood the business, that we could do business with them, and that their advice was gold. That turned out to be true. When we went into a process, they shortlisted a number of people we should speak to. It turned out they were pretty good. Between ourselves, our partners, them, and some other names that came up, they got a lot of interest. It was a busy time. It was in the middle of COVID. We didn’t get to meet anybody. There were pitches. Me, Josh as CFO, and Ingo as head of engineering, were head of that. Behind us, when it got serious, we would have CROs in and had our partners in at various ends depending on who the customer or potential acquirer was. It was very intense. I’ll never forget those few months in COVID. It was midnight calls for us from Europe. We never met anybody. We ended up with a number of offers, but selected one based on a number of criteria and it is where the team is now. I think part of it is that we finally got to sit with the team for four hours in a workshop in Berlin. We were with certain individuals in that company because the overall team couldn’t travel. There were still travel restrictions across the Atlantic. A bunch of us sat in a room in Berlin and the overlap in technology, the vision of where we were going, complimentary architecture designs, and the team itself, kind of sparked. You’d expect an awful lot more concerns and issues to come out of it. When we went into that final lockdown and we had that ability to pick and choose, I think we chose well because that’s where we are now. It’s been over a year and a half. The majority of the team are still with us, even through COVID and some of the macroeconomic climate where that’s not necessarily going to be the case for all decisions.

It’s been interesting. My previous exit was also in a time of economic uncertainty and it didn’t go very well for a couple of reasons. One, I think the previous company wasn’t that mature in acquisitions, whereas Relics or Lexus Nexus Risk Solutions are and came with a playbook of lessons they’ve learned from this process and laid it out. To be fair, there was very little to negotiate or to clarify or understand. It was nearly self-evident that this was the right way to do it. That’s kind of how it works. Here we are a year and a half in, and my understanding is the majority of everybody thinks it has been great. For the team it’s kind of fulfilling the roadmap and journey we thought we were going to take with the technology. The fact that we’re doing it with a partner now rather than on our own is a little to the point. I saw some slides I had from around 2012, and the trajectory, the industries, the technology leaps we’d have, where we’d sit and what I call now the connected cloud for this technology- you’ve got to remember, there wasn’t even internet mobile banking running around at the time- we followed that journey. We were very stubborn and we didn’t pivot and we’re still on that trajectory. That’s where we are going now and delivering as part of the LexisNexis Risk Solutions family.

AY

As a former and fellow serial entrepreneur, I agree with you. There are successful acquisitions from a financial standpoint, but there are also successful acquisitions when technology becomes pervasive. Not only that, but the team in Luleå is also double the size and adding value.

NC

It will be if we get all the hires that we just put out the ads for. We’re on a big hiring splurge at the moment, which is great to complement and grow out the team. I kept speaking about those Friday nights when we were delivering to a customer. Now, we’re kind of monthly delivering to a product organization. Instead of 10 different customers, 10 different deadlines, 10 different configurations, and very tight customer deadlines, there’s a more thoughtful roadmap and larger platform we’re delivering. It’s actually one customer- it’s the platform that the company runs and operates. Now it’s subtly different, but very, very different in practice to the development and engineering team. It’s an awful lot more chance to breed the ideas and an awful lot more chance to get it right. The QA is there. There are different layers of this technology for fraud prevention and we fit one, but our peers are a part of the company. Now, instead of being part of a 20 person R&D group or part of 250 person R&D group, it’s just for this product, which is part of a business unit that has revenue over three and a half billion and the larger organization is running about 10 billion. There are 36,000 employees around the world and the market cap on the London Stock Exchange is above 50 billion. This is very different than the university spinouts that we were in not that long ago.

AY

A lot of credit to how you got their attention, the scarcity value, the reference customers and so on. You built enough of a mode where they felt compelled to put a premium offer to make you part of the team. I want to move on to a little bit about your next chapter. What are you doing now? What is next? What excites you about the market?

NC

What I’m doing is quite similar to what I was doing to be honest. I mentioned before that I was part of an acquisition that didn’t go as well as we had expected. I think this time I learned that lesson and a big part of my own drive is to work with everybody to make sure that they’re happy with their position and their role, and feel that they contribute and that their voices are listened to. This time, I had a lovely short job description, it was “Make the acquisition a success.” There’s a whole bunch of dimensions to that. Obviously, there’s business and our customers, but there’s also the HR and the personnel side of things. There’s a technology roadmap side of things, where we fit in, the culture of the company moving, legal, HR, lots and lots of dimensions. It’s still a multi-headed kind of role, which suits me I guess, but it is sticking my nose into anything that looks like if I contribute it gets more efficient than we move things on. That’s the role.

In parallel, and I’m very shy about this one, I seem to see the next thing. I just keep doing that. I’ve been out as an individual contributor into the larger technology group under the CTO, where we’re looking at future technologies and technologies that are going to affect Lexis not in three months’ time or six months’ time, but in two years’ time, four years’ time, 10 years’ time. I’m very excited and I’ve just been at the post quantum security conference that was held in Amsterdam for the last two days, it was very active, very interesting. It’s something that’s been around for a while- where is cryptography going as a building block for security and security products. There is a big shift that’s going to happen in the near future, and we’re preparing for it now. That will impact the industry overall, it’ll impact our customers and our ability to deliver and supply those customers. I’m back to a bit of my theoretical cryptographer training at the moment. It’s very rewarding, actually. It’s amazing what’s happened over the years.

AY

There’s a lot of hype around AI. What are your two cents on that? I think it’s here, it’s been here, and it’s a matter of how we’re going to use it.

NC 

If you remember, BehavioSec was an AI company. It was kind of custom- not these large language models- but variants or internal versions of them. It’s very much in our minds and very much an active part of our current work and activities. Already, we’re finding the tools to be taking some of the mundane parts of delivery away. Some of the really exciting innovation I’ve seen in the product is in using it as another tool. It’s yet another tool. In delivery, there are some mundane parts and checkboxes there, if you get them wrong you’ve got security problems. Using them as tools to make sure we don’t have security problems. Also, in the performance side of things, proper configuration multiplies these things so much quicker. Again, we have new tools just based on advances in AI that are taking all of the hard work out, so great stuff even for what we have today. Where it’s going, it’s just incredible.

You and I have been through many technological jumps like that and I think there’s a pattern. One of the things I love about Gardner is the hype cycle. It’s a tool that we can lean on over and over again. There’s a certain point in that journey that AI is on and if we remember that path and journey, like in Crossing the Chasm, I think we can learn from this technology and see where it’s going as well. One difference I see now is the speed of it. Where we had time to understand that hype cycle and time to see where this technology and innovation is disrupting, just like the other ones, this is happening so quickly. Can we keep our head around it? That’s my worry.

AY

You also value the role of the board. We’re very honored and excited that you’re a member of our advisory board to help entrepreneurs in our portfolio. Do you have any comments about boards in general?

NC

Yeah, actually in preparation for talking here I was watching some of the other interviews you’ve done just to see how you were going to grill me. The one with Ed [Amoroso] struck me. Ed made a comment about boards and the board’s understanding of where they fit in the ecosystem. I think he was speaking to some guidance that was coming from the authorities of the Fed about further responsibilities for the board in regard to risk. One thing that frustrated me, and in hindsight I now know a lot more about it, is that I think leadership teams also need to understand and possibly have some education early on about what the board is. Time and time again, we’d have some of the senior team going, “What’s the board going to tell us to do?” And I’d say “They’re not going to tell us to do anything. We’re the subject matter experts. We’re the ones executing.” For example, I’d hear “Is the board giving us our operating plan?” and I would say “No, we’re going to debate and discuss and build an operating plan that we believe in, and we’ll present it to the board for their experience and governance and compromise.” It’ll be approved or not approved, or suggestions will be made. The operating plan doesn’t come down from the board. The board is not the management team. We are. I would have some senior members of the team in a panic about the board. I would say “You’re in charge of your feature and function. This is an advisory group, a governance group, an auditor group, a fiduciary- but it’s not the executive team.” The overlap might be there in a small startup in the early days, where there is a multi-hatted and kind of thing. But when you get to a certain stage and scale, things become a bit more rigid. I think founder and exec team education just takes a training session or a chat to set out the guidelines early. But that’s something I see missing. I think people think that boards are some kind of magic with some magic wand and things change and decisions happen. It’s generally commentary on proposals to be approved. That’s a very different dynamic than I think people understand.

AY

As venture capitalists, we always try to evaluate startups we might back based on criteria like market dynamics, market size, the team, go-to-market. But as a serial entrepreneur, you also have criteria you use to evaluate whether it is going to work. Any advice to fellow entrepreneurs that listen to the Forgecast? Share your own experience on how that works.

NC

Nobody knows it’s going to work. There’s a lot of gut feeling, and gut feelings are based on experience. Gut feeling is based on the patterns that have worked before and if it lines up with them. But from the angle that I’ve come from a few times, with a light bulb moment where you’ve got to go from genuinely nothing (particularly if it’s academic or in a university advanced research environment), a lot of people believe it’s the idea. Actually, it’s the execution on the idea. The 95% is not the idea, the 95% is the execution. You’ve got to see if the people around the idea can execute. Execution means knowing how to delegate, knowing how to balance the 80/20 rule about what to focus on. It means getting on together. It means having personalities that can multi-hat. It‘s not just a brilliant idea. It’s somebody who’s willing to go 24/7/365. It’s somebody who knows how to work with their partners and peers. Somebody who knows they don’t know everything. Somebody who knows that it’s a team effort, that you need all those skills. Just because you have the idea doesn’t mean that the person who gets the sale wins. The person who gets the sale needs to know that it was the team who made the product. The people who made the product need to know that their wages had been paid by the commercial team and the investment. You see what I mean? It starts becoming a thing. Success happens through spotting the talent that becomes a team. In soccer terms, Zlatan [Ibrahimović] can change the game but he can’t play the other 11 by himself. You need a goalkeeper and a right-winger and a defense. So, it’s not the manager. It’s not the star striker. It’s the full team and squad and coaching staff and everything. I think it’s about seeing an idea and the people around it that know it’s going to be that journey.

I remember saying this to Olov, and Josh loves it as well, I said it over and over again: “If you don’t enjoy the journey, you shouldn’t be doing this.” You’ve got to have people who love the journey and not necessarily the outcome. It’s all about the journey on the way- the war stories, the camaraderie, David against Goliath, the high fives. We have so many tough ones too, it wasn’t all roses, but you have to enjoy the journey. So, it’s about spotting a team and a bunch of people that are going to do that. One of those things that I love is people who are prepared to listen, be criticized, take criticism, work on it, and get it. When I’m coaching, around events or innovation, or pitching and talking to someone, if you can quickly ascertain that a person is someone you want to meet the next time because they’re a nice person or they get it and they’re going to grow, that’s a big part of it.

AY

Wow, there’s a lot to unpack there. I know that you’ve got a very, very close team. There are unspoken heroes like the CFO, the person that is there next to you guiding where you can invest and incorporating the human factor- that’s an unsung hero as well.

NC

There’s a certain stage when you need a full-time CFO. I remember that we had very little money and we were investing in the first hire in North America. They’ve got to be right. You don’t get a second chance. If somebody has buggered that thing up in a year or two, the company’s in shambles, there’s no corporate governance, you never get an investment. Staging the company, rightsizing the company at the right time is very, very important. No doubt all of those roles fit into the overall solution.

AY

Well, thank you very much for imparting your knowledge, your wisdom, your experiences. I think everybody’s going to benefit from your experience. I really appreciate and value the relationship that we have with you and the team. Hopefully there will be more to come, joint successes.

NC

I think there’s a pattern to this. I’ve always looked at other founders and journey people in this ecosystem to lean on. People are very, very generous with their time and advice way above and beyond the call of duty. It’s quite often it’s those late hours and pints where you get that moment. So, in some way, if I can do the same, it’s great.

AY

Thank you again, Neil. We look forward to seeing you in New York. Thank you. Cheers.