Cyber Threat Detection Startup Stamus Networks Commands the Last Spot for October Pitch Week
Talking with Stamus Networks CEO Ken Gramley is like talking with an old friend. He’s been a successful tech entrepreneur in Indiana for last seven years, during which time he served as CEO of Emerging Threats (acquired by Proofpoint) and as an entrepreneur-in-residence for Elevate Ventures. It’s exciting to have Ken present his new venture to VisionTech Angels’ five chapters across Indiana and Ohio during our last Pitch Week of 2019, October 21-24. Enjoy our discussion.
BP: Tell me a little about how and why Stamus Networks was founded. What unmet need did you identify within the IT security space?
KG: The company was founded by Eric Leblond and Peter Manev, two experts in network security who saw the lack of innovation in large security vendors’ products and believed that combining network traffic analysis with threat detection would provide security practitioners with a previously unachieved clarity in viewing the security state of their networks. The company is headquartered in Westfield, Ind., with an office in Paris. I joined Stamus as CEO in December 2018, after spending the last 15 years in IT security. This includes my time as CEO of Emerging Threats, during which time I oversaw the company’s 20x increase in sales and revenue and ultimate acquisition by Proofpoint.
BP: How is your product different from other IT security offerings?
KG: We’ve combined a Network Traffic Analyzer that analyzes protocol and flow data on a network and married it with an Intrusion Detection System that provides deep packet inspection of network traffic. The combination of these two approaches provides a level of correlated security data never previously achieved in a single solution. We then added a Threat Hunting interface that gives security practitioners the ability to quickly and efficiently search through their data to examine, validate, and resolve the security incidents that they face on a daily basis.
This graphic helps explain what we do at a high level. Each of the circles is a different Gartner quadrant, making us the only company that crosses intrusion detection, threat hunting and network traffic analysis into a single cost-effective solution.
BP: Who is the ideal customer for Stamus?
KG: We are very appealing to mid-size enterprises ($100 million to $1 billion) that have relatively immature security teams and are looking to improve their security posture. A company’s increasing compliance issues often drive demand. As an example, iHerb, an online natural products retailer, contacted us because they are required to be Tier 1 PCI (payment card industry) compliant, and they believe our solution is the fastest path that they have found to achieve network compliance issues required by PCI.
BP: What market traction do you have to date?
KG: We have 16 companies using our solution, including customers in technology, banking, defense, retail, and government. Seven of those have come back to expand their usage of our tools with additional purchases, which is tremendous validation.
BP: What are the barriers to adoption?
KG: Like any startup, barriers are really opportunities. One early issue was finding the right product-to-market alignment. In the last year, we solved this barrier by restructuring our product to better fit features to specific customer use cases. This has allowed us to sell different feature sets at different price points, helping us overcome pricing issues for customers that only wanted entry level functionality. Our next challenge to conquer has to do with customer knowledge, or lack thereof, about Stamus as a company. We are relatively unknown; however there is a segment of the market that knows us as providing an open source solution, a perception we need to overcome. Creating awareness and brand clarity will include updating all of our messaging and branding to better address the differences between our paid and open source products and the added value that our paid solutions provide.
BP: How much money are you raising and what will the funds be used for?
KG: We’re raising $1.5 million, which will primarily be used for sales and marketing. We have not yet done any outbound marketing, and we need to revamp our branding and messaging to take what we’ve learned from our customers and improve our storytelling. We’ve hired our first U.S. sales person and plan to hire a sales person for Europe, where the majority of our current customers are. We also will be hiring our first sales engineer. These additions will free up an enormous amount of the founders’ time so they can focus more on product strategy, features and development, and less on customer demos.
BP: Why should VisionTech Angels invest in Stamus Networks?
KG: Network security is a universal problem and the solutions on the market today are stagnant despite the billions being spent on network security by enterprise-sized companies. Stamus represents a unique investment opportunity for VisionTech Angels for several reasons. First, we’re one of the only companies actually innovating in the network traffic analysis and threat detection space. Second, our product, the Scirius Enterprise, could be used by every enterprise-sized company in the world with an average sale in the upper five figures or low six figures. Our traction to date validates this. Finally, the last company I ran in the security space, Emerging Threats, provided a 9x return to investors within three years. Matt Jonkman, the founder of Emerging Threats and an active member of VisionTech Angels, and I believe that this is a MUCH larger opportunity than the market that Emerging Threats addressed. I can tell it’s going to be an awesome ride!