Vanta raises $150M Series D at $4.15B valuation as it expands from SOC 2 wedge to full security platform

That's right. And without further ado, I think we have our next guest. And I got to get this right. Welcome to the studio. How are you? Massive day. Massive day. Thank you so much for having me. Um, we're getting a little bit of feedback on the audio. Can we turn up the levels a little bit? Can we Can you hear us?

Okay, I can hear you well. Okay. Yeah, it's just a little bit muffled. Are Are you on uh headphones? Maybe take those out and we'll see if the computer audio is any better. Should be better. This better. That's way better. There we go. Welcome to the stream. No problem. Uh, kick us off. Give us the news.

What happened today? We at Vanta announced we raised $150 million series D. Uh, 4 billion pre 415 post. Congratulations. Thank you. Been waiting to do that. Um, appreciate it. Such a mass such a massive u milestone.

Uh, can you catch us up to speed on uh, you know, I think people know your story by now, but can you catch us up to speed on on just like the last couple years getting to this point? It was an overnight success. Correct. Definitely. Yeah, definitely. Haven't been working on this for like 8 to 10 years. Totally.

Um, but he's counting. Um, okay. So, we started uh most known for like automating sock 2. Yep. Also putting up billboards on the 101.

So, we still do both of those things, but we also um help our customers like build out their security programs, improve them in a bunch of different ways, and then take all that hard work and use it to uh build trust with their customers through audits, through trust reports, through security questionnaires, all sorts of things like that.

Is is the characterization of Vanta as like a point solution company, at least when you started the company, correct? Is point solution a porative in enterprise? Okay. Yeah. Yeah. Yeah. Yeah. Yeah. Break break break that down.

Why is it is it all because of Parker Conrad who's a friend who uh who's coined the the the compound startup and you have to do everything at once.

Um what what what are the trade-offs of being point solution early on and then how do you think about adding things on because it's there's probably some trade-off of you build trying too much territory trying to capture too much ter territory you can't hold on to it but at the same time yeah there's an easy argument if if Christina had started and said we're a platform that might have been rough in the beginning could have been a much uh could have still been successful but maybe a much smaller company.

Yeah. So w walk me through that journey. Yeah. Yeah. So we started I mean our word was wedge but it's a nicer word. Yeah you have right like it sounds better than point solution which sounds kind of like trivial and well wedges have points on them right totally they come to a point strong ones.

Yeah you need a pointy wedge. Yes yes yes but we started with sock two for startups uh and because like you might remember this but like 2017 like no startup got sock 2. Now you get it when you're like two founders which is a little wild. Um, but they were like so valuable.

Then we figured if we can do that, customers will let us do a lot and give us a lot of access and we can help them with a lot of things and then we can use our pointy wedge to expand into like a platform over time. And I'm like joking, but like that was a seed pitch. I posted one of the slides from it today.

It's like truly the 2018 pitch. And so it's kind of cool to be here uh, you know, a little bit later. And were you getting were you getting push back on uh, like market size at that point? where people saying like you're going to need an act two basically. Oh, totally. People weren't even like you need an act two.

It's like you need a new idea. Like you just pitch me on sock doing all the startups and no startups get.

So what were what were you uh what were you seeing then that other people were missing because it seems so obvious in hindsight that young startups would need sock 2 and and a variety of other things in order to sell into enterprise and do other things that they want to do.

But like what what were you seeing then uh that now looks obvious in hindsight? Think of this like if if you could make it easier like less time not necessarily less money less time for a startup to get a sock too they would 100% do one.

The problem was you like had to give your CTO up for a year who would go talk to a bunch of accountants and like then become very sad and so like no one would do that. Um but if they didn't have to do that everyone would go sign up and press the like fast so talk to button. Yeah. Yeah.

You I don't think it's an obvious idea at all. Like when when you when you start a company, most people think I need a laptop. No, no. I'm saying it wasn't it was nonobvious then. That's what made it a great opportunity. Totally. Um but it was clearly obvious to Christina and the team.

What What do you think of the uh It feels like you're one of the success stories of like uh selling to other startups early on and there's been this like criticism people have bubbled up of like it's this kind of like circular economy that happens in the startup world. we've seen a lot of people break out of it.

What's the secret to breaking out of it? Is that still a good wedge? Is that still a good go to market and uh just kind of what are your thoughts on that idea of like you know be being a startup that sells to startups? Yeah. Well, first I appreciate the use of the word wedge.

Um I still actually think it is like a good idea. There's like definitely some like circular oraborous thing uh in certain partially because like especially early stages everyone cares about growth. they don't care about your costs and so there's like can be some amount of trading that happens.

We tried not to do that and I think actually the couple times when I did that it just blew up later like it was a bad idea.

Um, but I think with that you like hopefully have startups that are growing like you have the cursors in your user base, you have the ramps, you have the whomever and then those customers like push you up market whether you're ready or not and if you can hang on to them you can like start serving bigger customers but kind of you need that growth out of the startup base too.

Yeah. Yeah.

on on that note of like that like people care more about growth than cost like were people ignoring margins early on you paying attention to margins early on though not at all what are those heard of software yeah non AI software then then talk to me about we we were just talking to another entrepreneur who uh has kind of a wedge type of product and is expanding and there's this trade-off off between uh take what you have into new places either up market or international uh versus add new products, new SKUs.

And that's kind of an an age-old question. How have you worked through it through the past couple years? And and do you have any like uh like frameworks for thinking through those types of processes? Yeah. So I think that what we I mean you do both, right? Both is sometimes hard to do at the same time.

And so what we did was like take the same thing if the go to market's working and you know do it in Europe, do it in Australia, do it in Asia, right? And then and at the same time start to like build the muscle to build multiple products because it is hard.

Everyone talks about it's hard and I remember being like kind of why and I don't know. I've lived through it. It's hard. It's I don't have a great answer. It's just like the organization gets optimized around like doing the thing you're doing and you have customers and you have revenue and it like all reinforces itself.

And so when you want to go take a group of people and do something that has no customers and no revenue, you kind of can, but it's it's just weird. It is hard. Are you big on is it Gresham's law, the idea that you like ship your org chart? Have you noticed that? No. No. Gresham's law is bad money drives out good.

I don't know the one I'm talking about. It's a different law, but it's it's this idea that you ship your org chart. So if you have an or chart that's, you know, heavily international, you're just going to wind up selling internationally. Uh, do do you think about it from that perspective? Conway's law. Conway's law.

Conway's law. Uh, have you have you been through the ringer of Conway's law? Have you learned how to fight it? Have you learned how to deal with it? Oh, totally. I think I've like learned like you can't fight it. You just have to change your org chart sometimes. Okay. Yeah. Right.

Because you're like going to ship whatever your org chart is. So like try to make your org chart the thing you actually want to ship. Does that make sense? Yeah. Yeah. Yeah. I've noticed that.

What what's the what's like the the correct way to keep morale high while basically doing a reorg and telling someone like, "Hey, you're going to be working on something different, but you're but you're talented and we like this, but it's just like it makes more sense for the business to do this. You're over over here.

" Like I mean, beyond all the like be honest, like actually say or like make sure you believe you're saying those things when you're saying them.

Um, I think we went through a phase where I went through a phase where like uh you tried to like we reorged kind of a lot and it was cuz you like always did feel like you had a better structure and I was like that that was too much. Also like it doesn't matter. Let it like the order like hang out for six or nine months.

Don't change it every quarter. You're just going to drive people crazy. Which sounds really obvious when I say it, but course that one. Yeah.

what uh what what are some like any new techn like technology trends that that you're seeing across the customer base in terms of like challenges and ways that you guys are reacting. I can imagine um social engineering like you know hacks and challenges must be skyrocketing but what what are you guys seeing broadly?

That's a good one. um especially with like AI and deep fakes and you know the like text message gift card scams but like ratcheted to a hundred like really good versions of those. Yeah.

Um I think the other thing we see especially for our European customers is they just get a ton of pressure from European enterprises on AI. Some it's on AI in general, some it's on the American model providers, especially the ones you might guess. Right.

And there's just like all this kind of default skepticism in Europe that then if European startups that's around like data data usage and Yeah. Exactly. And just like I don't trust open AI and so don't send any like I don't even want to use something use a tool that uses open AI. Yeah.

Um like a CTO or CIO saying that basically right. Yeah, that makes sense. Do do you think I I I I I want to know the thoughts on just general competition when you're selling a wedge product from bigger companies that might want to add this on as a feature.

Uh we've been talking to a bunch of founders about how to deal with competition from bigger companies. What what have you been through? How'd you get through it? And then I want to talk about how that landscape is changing. Yeah. So we've been slightly different.

It's like we never really had competition from big companies because people didn't build what we built before. They built vertical trash track task trackers but no automation.

Um what we had was in the COVID boom lots of folks decided to start Vanta knockoffs and so we had like a round of that uh and kind of went through the gauntlet that you know like gone through that whole roller coaster and now we're on the other side of it but uh sort of different. How did that manifest?

Was that like pricing pressure or just like like having the markets slice up differently? Needing to rep prioritize or kind of double down on kind of territory that you kind of claimed and felt you were confident on and then had to retrench a little bit. Some of all of it.

I mean I think in the early days we were kind of probably in retrospect like too pleased with ourselves sorry for like coming up with this category and this product. Sure. And like the honest answer is like no customer care.

I mean, they care, you know, like they're very supportive, but like they just want the best product for them and that might be the first one. They're not like, "Oh, you created the category. Great. Then I won't I won't look at my other options. " Exactly. Like no said no one ever. Right.

And so I think it pushed us to be like, okay, we did whatever we did years ago. Cool. What have we done lately for customers? Like what have we done today? What have we shipped, you know, this week, this quarter, this month? What's day?

Um, so it's that piece which I think we got a lot stronger because of that and then pricing pressure for sure. Um, because in our space because it's it's sales all the way through like there's no self-s served trial. Mhm.

The dominant strategy for a competitor is to like copy the demo, do the same demo and then say, "Hey prospect, these products are the same. You're right. You just saw the same thing, but like we're 30% cheaper, so like why would you go with Vanta? " Yeah. And like we kind of learned what to do with that.

Why why did you go international so early? Was it was it uh was it to defend against other people being like I'm going to build the Vanta for XYZ country? But it sounds like it was more customer driven.

Yeah, it was about like a 20% of our customer base I think at the time was outside the US and we hadn't done anything for that. It's just like you know founders in London you know watch TVPN. Like it's not like just cuz they're in London doesn't mean they like don't listen to American podcasts.

Well, and they're selling to American companies. Sure. Yeah. Yeah. Exactly. Y what uh what's up with all the colors? I feel like Vanta Black is the darkest black you can possibly buy. This like patented paint, but then after that Okay. Yeah. Oh, color. Yeah. Take take me through that. Uh so yeah, not not touching that.

Um, but we kind of coined purple in the early days and so we have we've become the Purple Llama Company. Purple Llamas. Where' the llama come from? Because Yeah. I mean, yeah. And by the way, by the way, we called every llama owner in LA. We were trying to get llamas here in the studio to join us.

We have a we have a third mic, but it ended up being it ended up being a massive challenge and we were worried about we didn't have a a a carve out in the lease that said we could bring llamas in our studio.

So, it ended up being uh but but I think you guys should actually uh it would be great to get to get some live llamas. Some live llamas. Popular with the kids in the petting zoo. Yeah. Yeah. Yeah. We tried it in downtown San Francisco. Downtown San Francisco also not the most llama friendly place. It's hard.

They're they're tough to do. You can't even you can't even bring llamas wherever you want in this country anymore. It's really um what is it coming to? It's a disaster.

um on on the kind of the AI like on the AI story, there's like this question of that I've been I've been noodling on with a lot of founders about like is AI a reason to launch a new product that the customer feels so an agent a a prompt box that they interact with versus just hey behind the scenes we're going to use a ton of AI you're not even going to know It doesn't really matter, but the product's just going to get better, more efficient.

Maybe our margins go up. Maybe we are delivering things that we want to deliver you faster, more reliably, more accurately, all these different things. Is there one area that's more exciting?

I know you're probably doing both, but how do you think about Yeah, I mean, I've seen I've seen a trend of companies that are basically clones of existing companies that were traditionally seen as SAS platforms and they come out and they're basically like, we're this, but it's an agent.

And then if you look and try to understand the product, it ends up looking exactly like SAS with maybe a slightly different workflow, but I don't know how much more valuable it is to customers or if it's actually a better experience. Yeah. Oh, totally.

There's like it's an agent, but actually it's a forward deployed engineer, but actually it's like a founder pressing all the buttons behind the scene, you know, and like I did that. It's a crowd app. Totally. It's a crowd app with like the founder like pressing buttons at 11:00 p. m. at night.

Um, so like definitely that I think it'll get better over time. To the first question, like we do a bit of both. It's actually more AI in the background just doing stuff.

And then sometimes when we're going to start like surfacing it more and we might call that, you know, oh that's an agent or the agent did that and like yes it is AI but it's really just getting rid of workflows behind the scenes that no one really wanted to do or needs to do. Yeah. Yeah.

I' I've been personally experiencing it in Gmail where it was very easy for them clearly to like add an extra panel with like now you can chat with your email inbox, but for me the search still doesn't work.

And so I much would I would much rather that just every email that comes in gets condensed down, summarized, and then when I go to search it really knows what I'm looking for and it just gives me a better product behind the scenes.

But that's probably like a harder technical challenge or or maybe just uh it's just less experimental. So people are kind of debating um what about in terms of like internal productivity.

Uh we were talking to a friend earlier that said that um he's seeing there are examples of 10x engineers going to 100x engineers because of tools like cursor and wind surf and devon cognition all that all all the different tools that improve developer productivity.

But he was actually more excited about designers becoming 1x engineers. And I thought that was a very interesting take. And if you kind of do like a divide by zero, maybe it's an infinity gain. I don't know. But he was saying that like that has been more exciting to him.

And I don't know like what are you seeing internally?

So some of that also PMS uh with like a Vzero repletable like right because you like have this idea for a thing and then you can make a version of it and then go stick it in front of five customers and like it just and you can do that in 15 minutes like actually um you know whereas before you'd have to like write the spec or draw the pictures and get the designer to make the mocks and then animate the Figma and you know whatever like that loop went from like ideally two days to 15 minutes and that matters so much for like just testing new stuff.

Yeah. Yeah.

Um what what about just this idea of like generally AI being like a reinvigorating force for founders who are in your position where like the business has worked the business like is big basically and like you have yeah the the valuation post product market fit like yeah the the the the like series B C D just shows like a clear story of just execution but then what John's getting at and and we um uh we've had on over at intercom from the show who actually left his company came back and then was like fully ready to just like restart the company almost because there was so much net new and even even Ben Thompson was saying like he was kind of getting bored of writing about tech and then AI happened and he's like I can't I can't wait to write the articles anymore.

Uh but what's your what's your experience been? like basically that that there's all these like magical product experiences that we've thought about but just couldn't build until now. My favorite like clear vant example was in 2017 when it wasn't clear if anyone wanted to sock too.

Um it was clear people answered security questionnaires like those long spreadsheets of questions and so we wanted to automate those and tried and like weren't good enough ML engineers and libraries weren't good enough that we didn't and went down the sock two path.

Anyway, it's kind of working, but like now Vanta has really good questionnaire automation. We thought of this building this in 2017. We just like couldn't until now. And that is like very fun. Yeah. Where next? You guys have just been chopping wood seemingly like just ex just executing day over day.

But but where where are you going from here? Hardware. Hardware. AI pendant from Vanta. It just captures every If you say a single word that if you say a single non just no way to say trust like a constantly listening AI pendant. Exactly. Yeah. Yeah. But what what's next?

You know, keep building stuff cool stuff for our customers. Uh we have a bunch of security products that are launching that I'm very excited about. So you like get customers in on the wedge. Uh you know, but then over time after they get their sock two, they start growing. they start needing more things.

They start thinking about building out different parts of their security program. So, a couple big launches there coming. Um, and then a couple more things that we have in store. Last question for my side. We'll let you go.

Um, uh, has the rise of defense tech, American dynamism, ITAR compliance been uh, like a like how have you been uh, like playing in that space? Oh, it's good. Yeah. Yeah. Actually, we're working with the government. Um, so this administration is trying to make it easier for everyone to procure software.

Um, there's like a Fed ramp, there's a new FedRAP 20X pilot we're in and we're doing a doing that for two reasons. One, so our customers can sell to the government and have a path there that is not, you know, years and consultants and like literally thousands of pages of long form text law like can do a lot there.

And then also helping the government go procure software. And so we are just like doing a ton there. Yeah. Yeah. It's funny the it feels like it's incredibly cumbersome to the defense tech founders that have to get ITAR compliance but then they kind of wear it as a badge of honor.

I've been oh yeah I have to use teams you know because my work's so important and I'm like yep like I your work is important but now it's become this badge of honor. Uh but it's great you know they they need to stay compliant. Anyway, thank you so much for hopping. Congratulations team.

It's it's uh I I love I love just the the steady march building momentum. Uh and uh I'm sure you'll be be back if history repeats. You'll be back on here uh very soon with uh with the next one. Knock on all the things. Thanks so much for having me. Fantastic. We'll talk chatting, Christina. Talk soon.

Up next, we have Dena from Lux Capital. I will take the intro, Jordy. And I will welcome Dena to the TVPN Ultra Dome when she's ready to hop on the stream. And in the meantime, I can give you some news. Check in with Tyler. How's Tyler doing over there? All right, I'm I'm up to 10th place.

I'm at 550, so I dropped I think 26 moves. I still I mean, are there obvious lowhanging fruit for you? At this point, it's just a grind. Just a grind. Just a grind. I'm just I think I got to just basically write down my moves and then just try to optimize one by one.

You need maybe like a screen recorder or something so you can watch some game tape. Yeah. Yeah. Hit the tapes. We need We need a coach. Yeah. Yeah. Who else could Who else could