Why Early-Age Startups Should Switch to Cloud Storage Business 2 Community
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In a typical security team, engineers write one-off scripts to track a particular problem on a cloud vendor such as an unauthorized user on your GitHub account, and while engineers are capable of writing such scripts, it’s not exactly an efficient or scalable way to deal with the range of security problems these pros need to track.
Vectrix, a member of the Y Combinator Summer 2020 cohort started by three security veterans, wants to fix that problem. It has created a security marketplace where fellow security pros write modules to automate these kinds of fixes, and other security pros can take advantage without reinventing the script writing wheel every time.
Alex Dunbrack, company co-founder and COO, says that he and fellow co-founders, CTO Matthew Lewis and CEO Corey Mahan saw this problem first-hand in their previous jobs at PlanGrid, Vimeo and Uber. So like so many YC company founders, they decided to build a solution.
“It’s a marketplace of automated security tools that monitor tech and have response capabilities for any security issues that a company may have within their cloud vendors,” Dunbrack explained. He says this could be on GitHub, AWS, G Suite, potentially any cloud service.
The idea is to have security professionals build these modules, then give them a “royalty” and bragging rights for coming up with a viable solution. Dunbrack says it’s not unlike the HackerOne model, which provides a financial incentive and community recognition to find vulnerabilities in code.
Users don’t actually download anything. They simply select a module, enter their cloud service credentials and provide an output like Slack or Jira for any alerts the module generates.
The startup vets the modules and the developers before allowing them in the marketplace. While this is a manual process at the moment, he says they are working on bringing more automation to it. For now, each person that wants to contribute modules, they do an interview, a reference check, employment background check and similar types of investigation.
Once they pass this, and the security pro writes the module, it has to pass further scrutiny. “We basically scope exactly what they’re going to build and the kinds of alerts that will come out of it. And then from there, we have an extremely templated logic scheme on the code side where they’re just writing the logic to go do the scan,” he said.
Module writers can’t see any user information on the service, and Vectrix makes sure there are no issues like outbound requests for data. Presently they have 10 modules with plans to add several more soon. While they are working on the pricing model, today customers pay a flat fee for access to the entire marketplace, rather than paying per module.
The company is currently just the three co-founders, but they hope to expand, and when they do they have already given a lot of thought about how to build a diverse and inclusive company. He says, for starters, they are not swayed by the Silicon Valley network effect.
“A lot of people will say ‘we simply want the best people,’ but our interpretation of the best people is really a collective of differing thoughts and experiences that really make someone’s perspective unique. That comes from diversity in the way that we see it, so in a lot of senses bringing the best people on is bringing the widest range of thinking processes, and that comes with diversity and being inclusive, and kind of taking all of those factors into account,” he said.
As for the YC experience, Dunbrack says he was mostly looking forward to learning from the network of companies that came before him, and he says that even virtually the company has succeeded in giving him that experience.
So far, the company has bootstrapped and used the money from Y Combinator, but it intends to do a fundraising round soon. “We’re cognizant of what we’re bringing to the industry and the value there. So bringing on strategic partners is really how we’re going to be approaching this,” he said.
“Marketing Cloud” has become an increasingly popular concept in the world of marketing technology — used by the likes of Salesforce, Adobe, Oracle and others to describe their digital toolsets for organizations to identify and connect with customers. Now, a startup that is building its own take on the idea aimed specifically at e-commerce companies is announcing some funding after seeing a surge of business in the last few months.
Yotpo, which provides a suite of tool to help direct-to-comsumer and other e-commerce players build better relationships with customers, is today announcing that it has raised $ 75 million in funding, money it will use to continue growing its suite of products, as well as to acquire more customers and build out more integration partnerships.
The Series E included a number of Yotpo’s existing investors, namely Bessemer Venture Partners, Access industries (the owner of Warner Music Group, among a number of other holdings) and Vertex Ventures (a subsidiary of Temasek), new investor Hanaco (which focuses on Israeli startups — Yotpo is co-headquartered in Tel Aviv and New York), and other unnamed investors.
It brings the total raised by the startup to $ 176 million, and while it’s not disclosing valuation, its CEO Tomer Tagrin — who co-founded the company with COO Omri Cohen — describes it as “nearly a unicorn.”
“I like to call what we’re building a flamingo, which is also a rare and beautiful animal but also a real thing, and we are a proper business,” he said in an interview, adding that Yotpo is on target for ARR next year to be $ 100 million.
The company had its start as an app in Shopify’s App Store, providing tools to Shopify customers to help with customer engagement by way of user-generated content, and while it has outgrown that single relationship — it now has some 500 additional strategic partners, including Salesforce, Adobe, BigCommerce and others — Yotpo’s CEO still likes to describe his company in Shopify-ish terms.
“Just as Shopify manages your business, we manage your customers end to end,” Tagrin said. He said that while it’s great to see the bigger trend of consolidation around marketing clouds, it’s not a one-size-fits-all problem. He believes Yotpo’s e-commerce-specific approach to that stands apart from the pack because it addresses issues unique to D2C and other e-commerce companies.
Yotpo’s services today include SMS and visual marketing, loyalty and referral services, and reviews and ratings, which are used by a range of e-commerce companies, spanning from newer direct-to-consumer brands like Third Love and Away, to more established names like Patagonia and 1800flowers. Some of these have been built in-house, and some by way of acquisition — most recently, SMSBump, in January. The plan is to use some of the funding also to continue that acquisition strategy.
“Since our first investment more than three years ago, Tomer and Omri have executed flawlessly, expanding the product suite, serving a wider range of customers, and continually hiring strong talent across the organization,” says Adam Fisher, a Partner at BVP, in a statement. “Yotpo is singularly focused on helping direct-to-consumer eCommerce brands solve the dual challenge of engaging consumers and increasing revenue, and with their multi-product strategy and innovative edge, they are uniquely positioned to dominate the eCommerce industry for years to come.”
Yotpo is built as a freemium platform, with some 9,000 customers paying for services, and a further 280,000 customers on its free usage tier. Customer count grew by 250% in the last year, Tagrin said.
The COVID-19 pandemic has had a well-documented impact on internet use, and specifically e-commerce, as people turned to digital channels in record numbers to procure things while complying with shelter-in-place orders, or trying to increase social distancing to slow down the spread of the coronavirus.
E-commerce has been on the rise for years, but the acceleration of that trend has been drastic since February, with revenue and spend both regularly exceeding baseline figures over the last several months, according to research from digital marketing agency Common Thread Collective.
That, in turn, had a big impact on companies that help enable those e-commerce enterprises operate in more direct and personable ways. Yotpo was a direct beneficiary: it said it had a surge of sign-ups of new customers, many taking paid services, working out to a 170% year-on-year ARR and lower customer churn.
The bigger picture, of course, is not completely rosy, with thousands of layoffs across the whole tech service, and a huge number of brick-and-mortar business closures. Those economic indicators could ultimately also have a knock-on effect not just in more business moving online, but also a slowdown in spending overall.
That will inevitably have an impact on startups like Yotpo, too, which is definitely on a rise now but will continue to think longer term about the impact and how it can continue to diversify its products to meet a wider set of customer use cases.
For example, today, the company addresses customer care needs by way of integrations with companies like Zendesk, but longer term it might consider how it can bring in services like this to continue to build out the touchpoints between D2C brands and their customers, and specifically running those through a bigger picture of the customer as profiled on Yotpo’s platform.
This is a big part of our product in our meetings and debates,” Tagrin said about product expansions.
“I do think any celebration of growth and funding comes to me with something else: we need to be internalising more what is going on,” he said. “The world is not back to normal and we shouldn’t act like it is.”
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