ONE-HOUR WITH PIERRE BETOUIN, CO-FOUNDER & CEO OF SQREEN
by French Tech SF
“OUR CHOICE TO SETTLE IN SAN FRANCISCO WAS QUITE NATURAL AND WE KNEW THAT IF WE SUCCEEDED IN CONVINCING THE AVANT-GARDE DEVELOPERS OVER THERE, THE REST OF MARKET WOULD FOLLOW".
It all started in 2015 in Paris, after 10 years at Apple managing the "Red Team '', that Pierre decided with his colleague Jean-Baptiste Aviat to create Sqreen.
Sqreen is a SaaS security platform that allows companies to detect, block and respond to application level attacks. But Sqreen is also an incredible entrepreneurial success story that we really wanted to share with you.
FTSF: In 2019, you decided to take a step forward and establish a new office in the US. What made you decide? Why did you choose San Francisco?
PB: We founded the company in Paris in 2015 with the idea of creating a solution that would democratize application security for security teams but also Dev and Ops teams. For the first two years, we focused our efforts only on the product, without the sales or go to market. This approach allowed us not to bias the go-to-market and the geography. We quickly noticed that there were Industrial and geographic patterns and particularly in the US, on the West Coast. It was not surprising, given our product and the market. So our choice to settle in San Francisco was quite natural and we knew that if we succeeded in convincing the avant-garde developers over there, the rest of the market would follow.
FTSF: Your acceleration was quite amazing. You multiplied your revenues by 5 in one year. What did you find here?
PB: After these two years where we worked a lot on a beta version of the product, we had a mature product that people liked. We were ready. Now we had to accelerate, and it was going to happen in the United States. But the question was: How do you get velocity in the US? It is very hard. Some companies take two years to set up, and I did not want to wait.
At the end of 2017, we integrated the Y Combinator (YC) program. For us, it was the obvious ticket to succeed in igniting the market, but it was also a pretty daring bet. We had already raised close to $3M, we had about 15 employees, a hundred customers and we had to sell 7% of our company to get into the YC program. These are the standard and non-negotiable conditions at YC. For us, it was a “go big or go home” approach.
So we invested a lot in YC. We prepared ourselves four months before the batch; we flipped the company, we took two apartments in San Francisco to welcome half a dozen of our team members. We worked non-stop around the clock with Paris teams. We were on fire! This work combined with the YC program momentum generated allowed us to continue to interact with mature clients and evolve our solutions into a more open product that protects in real-time but also provides information and the means to identify and mitigate future vulnerabilities. After a couple of big names in Silicon Valley, we became identifiable pretty quickly, and that was it.
At the end of our Batch, we closed our $14 million Series A funding round. Greylock Partners led the round with our existing investors Y Combinator, Alven, and Point. In four days to scale up to increase revenue while maintaining the initial philosophy.
FTSF: What advice would you give to those who want to move here?
PB: First, I would say not come too early and too late. You have to be ready. Moving to the US means managing two companies, and that is a big deal. It is twice the complexity on all fronts.
Then you have to come on-site and come with a good team of early employees who have a cross-functional vision of the product to be able to adjust it very quickly but who also have a complete overview of the company, of its culture to avoid having two different companies. In the case of Sqreen, we created a framework for setting up a business, a sort of simple pyramid: very good and motivated people, immersed in a strong culture, who look in the same direction. Once you get that you can create incredible products and if you put them in the hands of the right people, then you just have to push it on the market with the Sales. You have to take time to set up all these sequences. The revenue is the consequence of all of that.
Finally, I would advise entrepreneurs to go through the Y Combinator program. Even those who were not selected. You can do a "No YC program" by following their method:
- An extreme commitment. There is no social excuse possible. We know why we are here, so let's do it.
- Create a friendly community with a mentor around you to advise and support you.
- Define your metrics on which you cannot lie and on which you commit to progress. We all know that the first flaw of entrepreneurs is intellectual honesty.
FTSF: The Covid crisis has hit the world hard. Can you summarize this last year of the crisis?
BT: From a business perspective, Covid didn't have a significant impact on us. There was a slowdown, but it was more execution-related - due to second order impacts of the pandemics on people. During this period, I think I had at least one HR-related issue per day. And being a French-American company, it did not help. There was a stronger sense of homesickness than in American companies. And like everyone else, I would say a general feeling of fatigue. But that's how it is. You bite the bullet and move on.
FTSF: Your merger with Datadog was announced last February, what created the spark for this merger?
BT: We were in the process of our Series B fundraising round when informal contacts with Datadog started.
During the time, we noticed a market convergence with two blocks, which emerged and consolidated. One block, with Datadog and other competitors, extended to security. Another one, that was very traditional security. It is pretty positive to see big players like Datadog starting to do what you do. It legitimizes what you are doing, but we knew that, in the not short-term, we had to be part of one of these two blocks. After two years, when you raise your Series C, you have to show the way to be a public company. And at that point, if you do not show the way, you risk pulling out the oars and finding yourself in the graveyard of startups that never consolidated.
In addition, Datadog's thesis was exactly ours: a platform for developers and Ops to build reliable and fast solutions. We were the same for Devs and Secs. It was so adjacent, and it was at every level. We were a perfect fit. We saw a path to build the « perfect security platform for engineering teams » andand it was a great operation.
FTSF: Can you tell us a bit about this experience? How did it go? What were the different steps?
BT: Olivier Pomel Datadog's CEO contacted me. We already knew each other, and I was already very impressed by his knowledge of the market and what they were doing. In every discussion, we understood each other, on every point of detail. That is very rare. We started to imagine what our companies could do together with this common philosophy of democratizing subjects that are full of expertise but omnipresent today. We were also aware that we would do it much faster and more surely together than alone. Datadog is a great company, with great leadership and great teams. Datadog is also a company that builds a lot and builds well, with a crazy growth, more than 50% year over year. And in the end, it just made so much sense.
So we exchanged and worked a lot. We communicated the intention, the decision framework with the board, the teams, and the VCs. It was an open and transparent discussion, and once everyone was aligned, we went ahead. We had two months of work on diligence, etc. We signed in February and closed in April because we had regulatory issues. That is how everything went, and we are very happy today.
FTSF: What will this merger change for your two companies and your clients?
BT: For Datadog, it is an opportunity to enter the security market. We will bring our experience in the AppSec domain and in providing transparent and user-friendly products. Finally, it is also the possibility to extend their current observability that they have with security offers. So it is almost plug-and-play.
For Sqreen customers who were already Sqreen and Datadog clients, it is a more unified offer. And for the others, they will be able to have much more observability than they had before.
Now they can have robust application security without the disjointed visibility, high implementation costs, or steep learning curve of traditional application security products.
It brings more to everyone.
FTSF: You talk about this merger as a new chapter for Sqreen. Can you project us in this new chapter? How are you organized?
BT: When you do an operation like this, you close one chapter to open another. Even if people are a bit disoriented at first. Normally, it takes a little time to understand the new paradigm, the ecosystem, etc. But frankly, we couldn't find a better company than this one.
FTSF: You are part of the French Tech environment, and you are a great successful example: what do you think about the French Tech movement and its initiatives?
BT: First of all, I would say that French Tech is a great community with a fantastic "pay it forward" approach. Here we all know each other. We share in all transparency. It is not so common in the startup ecosystem, and it is very true in the French community.
It is also a French Touch: a French "rebel culture": we thrive on building new things, and we are not afraid to invest infinite energy to do it.
Finally, French Tech is a fantastic trend with more and more talented entrepreneurs and companies that are now competing with tier-1 companies. We have great people in France, and we are exporting more and more. We learn how to build multi-billion-endurable companies - it's a journey to get there. I am convinced that we will soon also see very large premium exits in France and companies going public as the market becomes more mature.