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Marcos Torres

CFO

Huntress

play_circle_outline Maximizing Cybersecurity with Data & Risk Management for Small and Medium Businesses: Insights from Huntress CFO

play_circle_outline Huntress' cloud-based managed service model for security.

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Marcos Torres, Huntress

Marcos Torres

CFO Huntress

TheCUBE covers business and technology in New York City, focusing on cybersecurity. Marcos Torres, CFO of Huntress, discusses the importance of cybersecurity for small and medium businesses. Huntress offers managed cybersecurity services for various industries and aims to protect SMBs from ransomware attacks. Recently raising $150 million, the company is focused on R&D to enhance its offerings. With a high velocity go-to-market strategy, Huntress is expanding its product portfolio to create a shield for SMBs. They provide managed EDR, security, ITDR, and SIEM... Read more

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>> Hello, welcome back to theCUBE's coverage here in New York City in the Big Apple here on the floor of the NYSE, New York Stock Exchanges. It's theCUBE's new East Coast studio location, looking down over the floor, of course connecting business and technology together, going deep dives, looking at the journeys, extracting the data. And we're here with Marcos Torres, who's the CFO of Huntress, a leading cybersecurity company, defending companies for moving technology to give the customers an advantage while maintaining the Street posture. Marcos, thanks for joining theCUBE.

Marcos Torres

>> Thank you so much. Thank you for having me.

>> So we were talking before we came on here, obviously theCUBE's here in New York, so business and technology come together. Couldn't speak more clearly to what you guys do. I mean, you guys are the center with cybersecurity at the heart of business operations. I mean, it's literally a breach could end a company.

Marcos Torres

>> Yes.

>> And so there's so many categories of security. It's like 13-plus different categories, endpoint, this, that, but when you boil it up, it's a data problem and a risk management problem. Solve those two, you're looking good. That seems to be the high-order bit.

Marcos Torres

>> Yeah, for the most part, I would say, especially for companies that don't have the complexity or the budget to even think about it, or sometimes you don't have the time to think about these things. Huntress focuses especially on small enterprises, all the way down to small and medium businesses that usually don't have teams that are even worried about the IT problem, let alone the cybersecurity problem. So being that thought leader who's bringing outcomes to these small and medium businesses, it's super key to keep that 50% of the GDP that comes from small and medium businesses in business.

>> Well, so I cover a lot of tech events and more and more CFOs are coming into our conversations on theCUBE, mainly because, one, these financial investments involve heavy costs to deploy tools and platforms. It's a personnel and operational challenge, but it's also the risk management. You have to look and understand the threat landscape and look at your security posture as a financial, kind of, not financial purely, but as a CFO, you got to look at the things that are important. Okay, defend, that's on the battlefield. Okay, you got troops for that, you got software. But at the end of the day, there's governance, guardrails, and things you got to pay attention to, if you don't get right, you can have the best tech stack in IT and in security, the best defense, red team, blue teams, methodologies, all that, but if you've not got the processes right, you got to do both.

Marcos Torres

>> Yep.

>> This is where we are seeing that play out right now. What's your reaction to that? What would you say to that?

Marcos Torres

>> So my reaction to that is you're absolutely right. I mean, there is a financial implication, and from the CFO seats, you are responsible for the financials, but also the risk management, right? And part of risk management in cybersecurity is your security posture management, XSPM. Maybe I just came up with a new term. That's the cool thing to do is just add an X to whatever term you have already out there. So thinking about what is your security plus your management, and then what if? Because the reality is there is never 100% cure or defense. There's always going to happen something that's going to happen, and you got to be ready to minimize the impact of whatever happens. And having that mindset is you have to be able to do both, defend and then react and respond to whatever happens.

>> Give us a presentation, not presentation, but present and share the current snapshot of the business at Huntress. For the folks watching, they might know Huntress, so give them some stats on that. For the folks that know of you but might not know specifically what's up, what's new, give the update, what's going on with the company, and give a quick snapshots of the results.

Marcos Torres

>> Of course. So Huntress, especially we've been in the news lately, we are the latest and greatest cybersecurity, both unicorn and centaur, since we did a Series D with a valuation of $1.55 billion post-money. And also, we just crossed $100 million dollar ARR from our entire business. So from that perspective, we are the category leader of bringing cybersecurity to small enterprises all the way down to small and medium businesses. When you think about these businesses, for the most part, they either don't have an IT team in the payroll and they use external IT teams, call it an MSP, call it a service provider of some sort of fully managed IT, but those folks also don't have cybersecurity chops. So you got to have that fully managed cybersecurity platform that Huntress offers to make sure that these businesses are protected. And these are businesses that can be all the way down from a dentist's office, a doctor's office, an accountant, all the way down to manufacturing, construction, healthcare, where budgets are always tight.

>> Yeah, ransomware attackers, they're so well-funded and their techniques are so good, they won't discriminate anyone who has money.

Marcos Torres

>> Absolutely.

>> You have dentist's office, healthcare obviously getting killed with ransomware, and killing people too, so the threats go up and down the market.

Marcos Torres

>> Yes.

>> Now the top 1%, they have the cash, the big wallets, the big companies.

Marcos Torres

>> Correct.

>> But when you talk about the small and medium-sized enterprise, they're on bootstrapped IT teams and they're spread thin.

Marcos Torres

>> Correct.

>> They're using a lot of cloud technology. So is that the sweet spot for your metrics? Is that where you guys are winning? Is that where the growth is?

Marcos Torres

>> Absolutely. Absolutely. If you think about Huntress, Huntress is probably the first company that was founded and targeting that small and medium businesses. It was not something that was built for the enterprise that you just brought all the way down to the market by diluting the products. We were founded and created to make sure that we could deliver top-notch cybersecurity with both automation and experts at a cost that the SMB can afford, and also at high-gross margin. Huntress is right now running at 85-plus gross margin, which is unheard of out in the industry when you think about both humans and machine all accounted for.

>> So you're feeling good right now as CFO. You got a smile on your face, spring in your step.

Marcos Torres

>> Yes, that's correct.

>> Business is good.

Marcos Torres

>> Absolutely.

>> What are the drivers and where do you see more growth coming? Obviously, the IPO in your horizon most likely. I'm assuming that. Given those numbers, you're obviously an IPO candidate. As the CFO, you got to navigate to ship. It's still a growing market. The wave is coming still. I mean, it's nonstop.

Marcos Torres

>> Yes. Yeah, of course. There's a lot of things that are propelling and huge, huge tailwinds for the business. If you think about the shortage of talent, that is not going away, and nobody's really solving that. And the way Huntress is solving that problem is we run a 24/7 SOC so nobody has to go build or manage their own security team. There's also, again, the part of the market that we serve, the small enterprise and below, has been neglected by security vendors traditionally because those are expensive tools that require expensive experts to run those teams. And then you think about from the compliance side, cybersecurity, what science is doing is they're looking at what is the Fortune 500 doing to protect themselves and then turn around and give those requirements to the SMB? The SMB cannot handle any of those things, cannot afford it, and it's just a huge mismatch. And being that entity that can actually think about what are the true outcomes that the SMB needs to have, which is minimize the chances of getting an incident, and when you get an incident, how do you minimize your downtime? That is really what the SMB wants to get because all an accountant cares is can they file taxes on April 15th, yes or no? It doesn't matter what's protecting you, what it is, I just want the outcome, which is I want to be in business and get back in business if I get taken out.

>> Yeah, and I don't want any ransomware. I don't want anyone invading my system, no phishing attacks.

Marcos Torres

>> Exactly. I don't want my data out there, that type of stuff.

>> All right, so how old is the company?

Marcos Torres

>> It's about 10 years old.

>> So it's really young?

Marcos Torres

>> Yes.

>> So when did you guys reach escape velocity on growth? Was there a moment in time where things kicked up? Was it COVID? What was the key catalyst?

Marcos Torres

>> I think it was COVID, especially because you were talking about going to the cloud and digital transformation, which is interesting because digital transformation is kind of an old term, right? The Fortune 500, the enterprise went through that, I don't know, 20 years ago. So it's kind of something in the past, but if you think about it, right when COVID hit, most SMBs still had an exchange server sitting in the back room, and the only reason that got moved was because nobody was going into the office. Those expensive firewalls that people bought, completely useless because everyone's just working... The endpoint just moved outside of the perimete.r

>> Yeah, so the cloud, they went to the cloud.

Marcos Torres

>> Exactly. So they moved all those things to the cloud. So the SMB is really just going to... It's probably year two of moving things to the cloud. So even though that wave passed for the enterprise 20 years ago, it is now the wave for the SMB.

>> You know, Marcos, that's a really good point. If you think about an SMB around 2020-2021 timeframe, they might be a few years old on the adoption of technology. They probably had an all-managed service. They probably didn't have a lot of IT. If they did, it was maybe an exchange server or some small stuff around LANs that they might have in an office.

Marcos Torres

>> Correct.

>> But for the most part, they were probably cloud-native. And so okay, in comes the pandemic, they're not impacted like a big enterprise. There's no real disruption on provisioning work-at-home connectivity, which no one could forecast 100% disruption.

Marcos Torres

>> Correct.

>> So that was a whole nother issue on their side. But SMBs and SMEs, they were cool. And then, okay, now cyber hits. Ransomware becomes product-market fit right around that time too. I mean, it was ransomware beforehand, but it didn't really... I mean, it became a vanity, celebrity market, which it is now. I mean, these ransomware Ring units, they're like influencers. They got TikTok accounts.

Marcos Torres

>> Yeah. No, of course.

>> I mean, so it's like they're making bank. They're printing money.

Marcos Torres

>> Yes. And I think that's the one thing that most people miss about hackers and ransomware gangs. I mean, just to be super upfront, ransomware gangs are organized crime.

>> Period. Yeah.

Marcos Torres

>> Period. That is it, right? And you can actually start seeing the old-school organized crime getting into the business because this is an extremely profitable business. So if you start thinking about that, hacking 20, 30 years ago used to be about-

>> Smash-and-grab....

Marcos Torres

>> you know, espionage, smash-and-grab, getting still-to-date actual trade, a lot of state threat actors. Right now, it's a business. It's a multi-billion-dollar business. I mean, we don't know where those funds are going. I mean, certainly you have rogue states. Who the hell knows? But the reality is there's a huge incentive to continue doing this. It is completely insecure.

>> Yeah. And by the way, when they take someone down, they come back for more.

Marcos Torres

>> Of course, yeah.

>> It's like a renewal.

Marcos Torres

>> Yeah, they try to hit you on the reputation side. Yeah, exactly.

>> It's ARR for them.

Marcos Torres

>> Yes. It absolutely is.

>> I mean, I said it jokingly, I was serious, on theCUBE. It's product-market fit years ago, so now they perfected the scale, so they have escape velocity, and now we've been reporting on SiliconANGLE, and as you well know because you're in the business, ransomware as a service, I could start a ransomware gang.

Marcos Torres

>> Yep, yep. Of course. We've actually-

>> And dial up a managed service.

Marcos Torres

>> Funny enough, we've actually seen in the dark web, they run promotions where that split between the person who's deploying the ransomware and the one doing the payment processing, they'll give you a few more points because it's Halloween or it's, I don't know, Memorial Day weekend.

>> You get affiliate links. It's like pay-per-click.

Marcos Torres

>> They absolutely do. And that is the thing that people miss. This is not a hacker with a hoodie behind a keyboard trying to get in. No, this is spray and pray. And believe me, there's hundreds of thousands of endpoints just falling victim of these type of things every day.

>> You know, I got to ask you, on the business model side, as you guys look at the growth, obviously IPO in your future. Are you still, guys, looking at filing an IPO, staying private?

Marcos Torres

>> So we're very open to outcomes. Once you get to a certain number of valuation, there's only a handful of names that can buy you, and there's a certain amount of transactions that happen. So usually liquidity could be an IPO, but we're not necessarily set on an outcome just yet. Well, the focus of the company, we're very mission-driven and we're just here to protect the SMB. So whatever that leads us to, we really believe that support is our mission.

>> Yeah. It's a nice CFO answer. "I haven't made a decision yet." Yeah, but I mean, you're in rarefied air. You're at ARRs that are in the numbers. You're starting to hit the bells in terms of all the check boxes.

Marcos Torres

>> Correct.

>> But I think it's still early. Again, I'm not saying you should go public. I mean, I'm a big fan of private companies personally. Only when you're ready with all the machinery. I mean, going public's a real big deal.

Marcos Torres

>> Of course.

>> I mean, there's compliance, but there's benefits to going public because now everything's out there. So there's pros and cons.

Marcos Torres

>> Yeah. It's a huge brand exercise. It really gets your name out there.

>> Yeah. I mean, to me, my interest obviously in theCUBE is technology conversations, and we love seeing IPOs as more of the beginning of another journey, but the real action with CFOs right now from our perspective is the view on the boardroom conversations. It's clear that the boardroom-level conversation has to be culturally matched to the technology stacks, platforms, and tools, and the processes that go with it. So you're seeing a challenge on the tech side where you got to have, in your case, the owners or management of SMEs saying, "Hey, okay, we're going to go as a service, but I got to make sure everything's covered." And then they have to support that. That becomes a big cultural thing. We're seeing a lot of conversations. You guys are a little bit different because you're almost like, I won't say AWS, but you're like a managed service for security.

Marcos Torres

>> Correct. That's exactly it.

>> You are, you are... I'm sure the consumption's cloud-based?

Marcos Torres

>> Yes.

>> On-prem anything? No?

Marcos Torres

>> No, there's no on-prem.

>> All cloud?

Marcos Torres

>> No, all cloud. And that was something that we did on purpose. So making sure that it was simple and that it matched the way both the external and internal IT departments work in terms of integration with all their other tools, but also their business model. If you think about SMBs, there's not a whole lot of cash to pay a 12-month, a 36-month deal up front. You don't have that kind of cash. So being able to offer a flexible pricing model where you have minimums, you have overages where your commitment gets you better pricing, where especially for external IT departments, you actually get to resell and turn your break-fix business into an ARR model as well. That's where everyone is going. It's just basically the as-a-service model.

>> Okay. So I do have to ask the capital markets question since you are a private company.

Marcos Torres

>> Of course.

>> You guys are flush with cash, you got ARR coming in, so you're profitable or are you guys raising money?

Marcos Torres

>> Not profitable. We raised $150 million on a Series D in Q2 this year.

>> Okay, so you got some dry powder.

Marcos Torres

>> We have plenty of dry powder.

>> You've got revenue coming in?

Marcos Torres

>> Correct.

>> You've got plenty of runway still.

Marcos Torres

>> Yes. So we're not profitable, but the runway is-

>> But you're reinvesting?

Marcos Torres

>> Yeah, exactly. We're reinvesting a lot.

>> So what are those investment areas? What are you doubling down on? Obviously you're in growth mode, so you can burn some capital, not burn, but use investment capital to grow. What are the areas you're looking at investing in?

Marcos Torres

>> Sure. So big time, R&D. Because if you think about the needs of the small and medium enterprise and the SMB, we're not done building this platform that effectively should be the security stack for the SMB. There's a lot of things around education. So we generally talk about our flagship product, which is our Managed EDR, but there's also a security awareness training program that we run because the reality is a lot of these ransomware and a lot of these incidents happen with humans clicking on the wrong thing, and educating folks, educating the market, it's a huge part of our thought leadership process. But talking about R&D, which is your original question, there's a lot of more products that we can bring to the market. With our stance on how it should be done for the SMB, maybe the outcomes are the same that you're getting in the enterprise world, but it needs to be completely different.

>> So how's your go-to-market? Your go-to-market sounds like it's probably very lightweight, leveraged, pull model in?

Marcos Torres

>> Yes. High velocity. We close 200-plus logos on any month. And on the external IT department side, we are closing potentially hundreds of businesses through each one of those logos because we're deploying 20 to 40% of those fleets that are out there -

>> So your investment is R&D and product portfolio?

Marcos Torres

>> Go-to-market and R&D, exactly.

>> And create that shield for enterprises, small and medium-sized enterprises.

Marcos Torres

>> Yeah, exactly. It's the land-and-expand model. So we started with our Managed EDR product, but we've expanded tremendously with the Security product, the ITDR product that's been around for about a year, protecting those identities out there. And we just recently released our own SIEM, which is our version, our flavor, our very opinionated product on how SIEM should operate and the outcomes that the SMB needs while still following what the product should be doing.

>> Well, Marcos, it's great to have you on theCUBE. Thank you for coming on.

Marcos Torres

>> Thank you so much.

>> I'll give you the last word. Put a plug in for what you guys are doing, folks watching, what you guys are looking for, you're hiring, you're expanding. People are watching and they want to buy your service, how do they engage? Go ahead, take it away.

Marcos Torres

>> All of the above. I mean, I would say huntress.com is probably the best place to look at all our offering. We are generally focused on small and medium enterprises all the way down to small and medium businesses. It's a product that is made to compete with the highest-priced things out there that require you to build security teams. If you really want to take that off your plate, Huntress is this managed security platform that can take away all your problems when it comes to cyber.

>> All right. theCUBE's bringing you all the action, protecting you from misinformation, getting you all the data. Of course, big payloads going on here in the security conversation. I'm John Furrier here at our East Coast studio on the floor of the NYSE. Thanks for watching.