A term being uttered in enterprises as they instill more discipline into technology spending is “vendor consolidation.” But cutting back any resources devoted to the protection of systems and data might seem ill-advised. At the current rate of growth of data breaches and other digital crimes, damage from cyberattacks will be in the several trillion dollars by 2025, by one accounting.
It sounds like a great opportunity for a company like Lacework, which takes a data-driven approach to cybersecurity. That might be doubly true because the company focuses on cloud environments like Azure and Amazon Web Services, which have seen rapid adoption but where companies still have holes in their defenses.
“Early on, many chief information security officers were criticized for not having any cloud posture management solutions,” explained Andrew Casey, CFO of Lacework, during our conversation in late January.
"They just said, ‘look to see which one we like, let's evaluate it quickly and then put it in place.’ They didn’t have time to evaluate whether it was a good investment.”
Andrew Casey
CFO, Lacework
- First CFO position: 2020
- Notable previous companies:
- WalkMe
- ServiceNow
- Hewlett-Packard
- Symantec
Today, CFOs and IT executives are much more discerning — and, given the macroeconomic climate, slower to pull the trigger on purchases.
But Lacework is marching on. Prior to the downturn in the public markets, the privately held “cloud-native application protection platform” was valued at several billion dollars. An IPO for any venture-backed company is off the table for now, but Casey, who joined as CFO in November 2022, led WalkMe through its 2021 debut on the Nasdaq and knows the paces.
This interview has been edited for brevity and clarity.
VINCENT RYAN: Lacework closed a $1.3 billion funding round in November 2021, with a post-money valuation of $8.3 billion. In total, it has raised $1.8 billion. Is that an advantage in this market?
ANDREW CASEY: Being very well-capitalized is a significant competitive advantage for us right now. We're not looking for additional funding. We don’t have to go out in a bad market to try and raise funds.
There are a lot of rumors that our competitors are struggling a bit. So, it's an opportunity for us to take [market] share.
Venture capitalists are saying startups need to extend their runway so they don’t have to raise funds in six months, or even a year.
CASEY: Arguably, the amount that we raised was a reflection of euphoria in the marketplace for investing in rapid-growth high-technology companies. It was a very favorable time to raise money, and I'm certainly glad we did ... We had to go through our own round of layoffs earlier in 2022.
But as I take the company forward, there’s a balance. I want us to be prudent, but I also want to make sure we’re investing in our capabilities and technology platform.
We’re trying to structure our agreements and our pricing so that clients get a fair value exchange: the customer walks away believing that their investment with Lacework is going to give them a real return.
I don't know if you've read Mark Leslie or not, but he has a thought process on how you make investments. You make investments, and then you wait to make sure that those investments earn the right level of return before you continue. I would say probably in 2021 and 2022, many companies moved away from that discipline when making investments.
At Lacework, we've made good investments, and now we're going to harvest the benefits associated with those investments before we start making additional ones. It’s not retrenchment, like other companies. But I am asking every one of our employees to be prudent. Don’t be wasteful, be prudent.
What are the important projects going on within Lacework?
There’s a bevy of strategic projects we’re working on. [For example,] we’re staffing and supporting our sales teams appropriately, so they're as efficient as possible … There are a lot of different ways we’re tracking the sales team. Are they finding the right customer? [In addition,] can we deliver a value-added solution to that right customer, and does that take our solution to the next step — helping the customer consolidate on our platform?
We’re trying to structure our agreements and our pricing so that clients get a fair value exchange — the customer walks away believing that their investment with Lacework is going to give them a real return. Nobody's investing in enterprise software because it looks good.
If our sales team was going after a global 2,000 client, they might start small, calling it a $150,000 opportunity. But if we do a really good job of representing the value that Lacework can [provide the prospect], that value could increase as the opportunity progresses to an ultimate sale.
Most of our company was built during COVID and was remote. I think that's led to some level of inefficiencies. When we have people come into the office, there's an amazing collaboration that happens that just doesn’t happen over Zoom.
Any new investments in finance technology?
CASEY: We're constantly looking at ways in which we can make sure that the processes running through our ERP are efficient. We're also building up our enterprise services capabilities. As we spin up a services component, we're going to have to augment [our tech stack] with a professional services accounting system to interface with our ERP.
Is the employee base totally remote?
CASEY: We have a hybrid model. We're probably anomalistic. In Silicon Valley, we're actually investing in offices.
Most of our company was built during COVID and was remote. I think that's led to some level of inefficiencies. When we have people come into the office, there's an amazing collaboration that happens that just doesn’t happen over Zoom.
Many times my corporate finance team and I are sitting down and, as we're re-architecting some reporting and key metrics, it's great to get in the room and start whiteboarding and having discussions.
Plus, I miss the interactions with employees I don't normally interface with. When I’m in the office, someone might come up and ask me, “Hey, I saw you on this all-hands presentation, and I really liked it. But I had a question for you.” Those interactions just don't happen if you're not in the office sometimes.