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Top Entrepreneurs: Cybersecurity guru defies conventional wisdom

Taking a different approach to antivirus software spurred big growth for Stu Sjouwerman, who’d much rather learn from success than failure.

  • By Brian Hartz
  • | 11:00 a.m. May 23, 2019
  • | 2 Free Articles Remaining!
Mark Wemple. Stu Sjouwerman has grown KnowBe4 from a cybersecurity startup to a tech firm that's been valued at $800 million.
Mark Wemple. Stu Sjouwerman has grown KnowBe4 from a cybersecurity startup to a tech firm that's been valued at $800 million.
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Call him a contrarian, but KnowBe4 co-founder and CEO Stu Sjouwerman doesn’t buy into the en vogue concept of failure being a virtue. He also doesn’t believe entrepreneurs should embrace their mistakes and be content with “failing upwards.”

Success, he argues, is the best teacher. It should be pursued from day one.

“‘Break things, fail fast and fail often’ is not something I subscribe to,” he says. “If you think about it for a moment, it implies you don’t know what you are doing — that you don’t have a good plan to begin with. It says that if you don’t make it, you pivot, but that means you haven’t done sufficient market research. If you know where you are going and execute on that, you will learn from your successes.”

“When you run a business, it’s not so much a marathon but a continuous series of triathlons that never stops.” Stu Sjouwerman, co-founder and CEO of KnowBe4

Sjouwerman, 62, has had a lot of success to learn from. Specializing in cybersecurity, KnowBe4 rocketed to $120 million in revenue in 2018, nearly double the $62 million it did in 2017, and it’s been valued at $800 million by private equity firm KKR, which recently invested in the Clearwater-based firm.

Nearly 25,000 organizations worldwide use KnowBe4’s Software-as-a-Service training platform. Sjouwerman, with a background in antivirus software, and business partner Kevin Mitnick — “the world’s most famous hacker,” as Sjouwerman refers to him — created the software to fight email phishing and other cyber-attack techniques that prey on human, not hardware, failures. He says the company adds 600-700 new accounts per month.

But no one is infallible, right? We all make mistakes; we all fail. Sjouwerman is no different. He says KnowBe4 has launched products that didn’t work out as expected, which sowed doubt in his mind — but the key to getting past doubts and indecision, he says, is to re-focus on the needs of your customers.

Too many entrepreneurs and startups, Sjouwerman explains, put their energy into what they think is an amazing idea without consulting the people who might benefit the most from it.

“Survey your customers,” he says. “If you start to doubt what you’re doing, the first thing you need to do is call your 10 best customers and say, ‘In your own words, what’s something that you get out of my product? Is there anything else we can do for you?’ If you can boil down what your product’s biggest benefits are, then you will know if you’re on the right track or not.”

That openness to feedback extends to employees. KnowBe4, Sjouwerman says, prides itself on being transparent about financials, so much so that every worker is awarded a $100 bill when the firm hits its break-even mark for the month.

“We are very much focused on production analytics and peak performance indicators,” Sjouwerman says. “Everyone sees everybody’s else’s statistics. It’s radical transparency. If we all need to jump in a particular direction, it’s very clear because everyone sees the trend.”

Sjouwerman, who has a wife, Rebecca, and three cats, does as much as he can to help his employees make their numbers, routinely working 70-hour weeks. He’s up by 6 a.m., starting his day with a jog and then catching up on email. He leaves the office at 6 p.m., eats dinner, takes a walk, reads or watches Netflix and then turns in by 10 p.m.

“This is the routine you need to stick with year after year after year,” he says. “Because your business is essentially grabbing 80-90% of your attention, there is little time for anything else. When you run a business, it’s not so much a marathon but a continuous series of triathlons that never stops.”

Sjouwerman’s biggest challenge is hiring to keep up with the rapidly surging KnowBe4, which he predicts will have 1,600 employees and generate $500 million in gross annual revenue within five years.

“Being in hyper-growth mode, it’s the riskiest phase of a company’s existence, and you need a special breed of person, someone who is relentlessly positive with a can-do attitude,” he says. “Hiring the right people and getting them in place is a constant effort.”

Read the stories behind the Business Observer's 2019 Top Entrepreneurs: 

Top Entrepreneurs: A life's passion doesn't come without sacrifices 

Top Entrepreneurs: Family business patriarch's big risks have paid off 

Top Entrepreneurs: Founder, CEO of real estate empire built company with focus on values, customer service

Top Entrepreneurs: Hardware store chain president adopts a Wynn-ing formula

Top Entrepreneurs: CEO grows boat club business, expands into other vehicles

Top Entrepreneurs: Glass company shines in grabbing market share 

Top Entrepreneurs: Ex-attorney cleans up with disruptive approach to business 

Top Entrepreneurs: Ice cream company owner scoops out winning formula

Top Entrepreneurs: Roofing component manufacturer's growth is no flash in the pan


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