ReliaQuest CEO Brian Murphy on Bootstrapping His Way to a Billion-dollar Business
Organizations of every size in every industry face unprecedented challenges in preventing cyberattacks and data breaches, but Fortune 1000 companies in particular struggle to implement the right security software and hire enough experts to thwart increasingly sophisticated hackers. In 2021, the number of security breaches increased 68 percent from a year prior – and the threats are only rising.
FTV first invested in ReliaQuest in 2016, providing its first institutional capital, because we saw great promise in the company’s cloud-native security operations platform and later participated in a follow-on funding that valued the company at over $1 billion. Founded in 2007, ReliaQuest broke $100 million in ARR in Q3 of 2021 and now has more than 1,200 employees. The company has grown well over 10x since our initial investment.
ReliaQuest’s key product is GreyMatter, a cloud-based security operations platform built on an open architecture that increases visibility, reduces complexity and helps to manage risk across network, cloud and endpoint business and security applications. Integrated with over 80 security and business applications, ReliaQuest’s GreyMatter is delivered as a service for hundreds of Fortune 1000 customers.
For our latest Think Forward edition, we talked with Brian Murphy, founder and CEO of ReliaQuest, about why effort matters most and how to tackle the toughest challenges with a simplicity mindset.
You bootstrapped ReliaQuest from 2007 to 2016. What did you learn from that experience and what advice would you give other founders considering that approach?
Those nine years of bootstrapping involved some sleepless nights, credit card advances and second mortgages, but I also learned invaluable lessons. I have a deep appreciation for the correlation between cashflow and growth that I don’t believe many startup founders who raise early stage venture funding do. We didn’t have cash to burn, so we instead maniacally focused on delivering for our customers. They loved our product and paid us for it, so then we had cash to continue growing.
When founders ask me for tips on how to build a billion-dollar company, I tell them: “run your company like a business.” Sounds much easier than it is. Businesses should generate revenue and manage cash outflows to make a profit; I tell them they can do this even when times are tough. I started ReliaQuest nine months before the 2008 recession; my daughter was only two and my son wasn’t born yet. Starting a company under that kind of pressure, I faced each day like a boxing match; I didn’t think about winning, I just threw one punch at a time. Every day, I endeavored to accomplish one concrete action to move the needle forward.
Security is a challenging sector since you have to stay one step ahead of cyber criminals, and it also takes deep technical expertise. What drove you to start a security company?
As a solo founder in the earliest days, I didn’t really have a business plan; I just knew I wanted to grow an infrastructure company, and the security side of things simply evolved. When ReliaQuest got started, we mostly did IT consulting work for government agencies, and we were drawn to security because it was the biggest challenge. We got good at building widgets to solve the world’s hardest security problem: getting access to disparate data sources and building correlation logic to stitch all the data together into something usable.
There really was no bigger security challenge – our clients had highly-sensitive data in so many places, and they didn’t even know where to look for it, let alone whether it was safe. Corporations faced a huge challenge finding and securing all their data. As data hosting moved from on-prem, to third-party, to hybrid cloud, to 100 percent public cloud, new security challenges arose each time, and so we kept building new technology to solve each new issue. When you’re small and growing, you have to find your “thing” and get really good at it.
Today we have 56 patents around cross-platform data visibility and monitoring. Our security ops platform, GreyMatter, helps companies increase visibility into their data, connecting to more than 85 different security platforms. In other words, our technology is the force-multiplier for a company’s security operations team.
After raising your first outside capital in 2016, you’ve since raised two more rounds of funding and ReliaQuest is currently valued at more than $1 billion. Why did you raise capital when you did, and what role has outside financing played in your growth?
Each time we raised capital, it was never about needing the money. The first time, in 2016, we were growing rapidly, and we’re a 100 percent recurring revenue business model, so we didn’t need the cash as much as we needed a strategic financial partner to help us grow to the next stage. FTV was the right partner to help us take it up a notch and scale.
Then, the second time, we wanted to get to yet another level – global expansion, new customer segments, outside board members – and I needed help with all that. This wasn’t stuff I could just Google. I needed trusted advisors who had done this type of expansion before, and FTV not only advised us but connected us with people in their Global Partner Network and beyond who helped us achieve our goals. I remember feeling like “if we were going to be a growth equity firm, we’d want to be exactly like FTV.” We knew FTV would allow us to grow and help us do it in our own way.
What do you look for when hiring great talent?
The most important aspect is to hire people who put in the effort, attitude, energy and effort, as we say. If you don’t have the initiative to invest in improving yourself, you won’t fit in here, because we believe that long-term success takes a focus on getting a little bit better in all we do. My dad was a diesel mechanic and he always told me there were two rules in life: if it has a moving part, it will break, and the first fix you attempt is seldom correct, so you have to keep working at it. We don’t want to hire people who see something broken and just leave it for someone else to fix. We hire people who will put in the effort to fix whatever they see that’s broken and keep trying until they find a solution. We’re adding on average 50 employees per month, so all our hires need to hit the ground running and just start putting in consistent effort! You can’t teach effort – it’s “You versus You.”
What is one unique aspect of ReliaQuest’s company culture, and how have you intentionally cultivated and maintained that as a leader?
We have one key guiding principle: simplicity. We want to do the simple things savagely well. If you can’t do the simple things, you will never make it to the complex. I learned this at my first job at Publix. I learned not to over complicate customer service – just do the simple things well, every time, and people will come back, be helpful. That is why they are a Fortune 90 company with over 200,000 team members.
Even for the biggest problems, whether in marketing, product, strategy, engineering or operations, our team members start with a simple question “What problem are we solving for” and work from there. Simple things are seldom easy so we use our values to drive our decision making. We want our teammates to be accountable, focused, adaptable and helpful. For me, accountability has driven me since I was a kid – you can’t sustain success without it.