3 Strategies Doubled Sales At This $1.4B Serial Entrepreneur’s Latest Company
Craft a compelling vision, make it measurable, and pace implementation based on the maturity of the market, your product, and your organization.
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Shlomo Kramer is unusually good at picking startup winners. His Cato Networks is a secure cloud network security service that's growing fast -- and that's not his first winning company.
Indeed, the three growth strategies he's using at Cato could help your company to scale. And they help your company to grow enough, you'd surely be better off.
Kramer has a great track record of startup investing success. He hauled in $740 million from the proceeds of two companies. Globes estimated that his August 2013 sale of Trusteer, an information security service provider, to IBM for "close to $1 billion" yielded Kramer $240 million. Moreover, it estimates that Kramer realized $500 million from selling his stake in Check Point Software, which had a $16.8 billion market capitalization on February 2.
He's made other successful bets in startups that now trade on NASDAQ. In March 2015, Kramer owned a 13.7% stake in Imperva ($1.5 billion market capitalization) and in August 2013 owned 1.5% of Palo Alto Networks ($13.3 billion market capitalization), which would now be valued at $206 million and $200 million, respectively.
But Kramer is not stopping there. In October 2015, he announced Cato's $20 million financing from U.S. Venture Partners and Aspect Ventures.
Kramer is CEO and co-founder with Gur Shatz, who had bootstrapped the company until 2015. Shatz brings "an extensive background in Cloud-based web applications security and acceleration. Previously, he was the co-founder and CEO of Incapsula, which Imperva acquired in 2014, according to my October 2015 interview with Kramer.
On January 31, Cato announced that it's growing fast -- bookings were up 100% "quarter over quarter," according to a company statement. And Cato's growth could come out of the hide of companies like AT&T, Kramer explained in a January 29 interview.
Cato is going after a market that is getting big fast. Software Defined Wide Area Networks (SD-WAN) -- it lets companies transmit and receive data using a cloud-service --
will grow at a nearly 70% compound annual rate to reach $8.05 billion in 2021, according to IDC.
That's because business data traffic has changed and telecom giants have not adapted their products to the change. "[AT&T and Verizon offer Multi-protocol Label Switching] MPLS which used to be great when the most common traffic pattern was between a remote office and headquarters," said Kramer.
But today's traffic is very different. "[An executive might] use his smartphone in a hotel room in Tokyo to access Workday with customer data coming from AWS. The WAN has to be reevaluated over the next five to 10 years to accommodate these changes," he explained.
Cato believes that its so-called is a much better solution for customers' current traffic patterns than the ones offered by AT&T and Verizon. "Cato Cloud securely connects all enterprise locations, people, and physical and cloud datacenters into a global, encrypted and optimized SD-WAN in the cloud. And it offers a migration path from the old to the new."
Cato believes that SD-WAN is flexible and based in software in the cloud; whereas incumbents offer "a rigid, widget-based solution. We are [borrowing from T-Mobile] the un-carrier," argues Kramer.
Cato believes that AT&T and Verizon have been slow to deliver their own SD-WAN service. "They have been trying to do what they know, which is to orchestrate big integration projects. But when it comes to offering a carrier cloud, the polite way to describe what they're doing is 'it's perpetually arriving soon,'" said Kramer
But AT&T is not sitting still. Randall Stephenson, CEO and chairman of AT&T, told investors during its first-quarter 2017 conference call that it needs an SD-WAN product in its portfolio. According to Stephenson, "You should assume we're developing [an SD-WAN] capability ourselves because we think it's a viable offer down market [for small and medium-sized businesses]. We're seeing some effect from it and while it's not material yet, we need to have it."
Cato says it has "hundreds of customers with thousands of branch locations across all verticals. Among these is Pet LoversCentre Pte Ltd, an Asian pet products and services retailer which runs "more than 100 sites on Cato Cloud," according to Cato. David Whye Tye Ng, CEO & Executive Director at Pet Lovers says, "I would recommend Cato to a friend, and that's a big deal for me to say."
Kramer's 3 growth strategies for Cato may help propel your business.
1. Create Compelling Vision
If you want your business to grow you must paint a compelling picture of where it's heading. To do that you need a compelling vision.
As Kramer said, "Vision starts from customer pain. A company must be sure that the problem it is working on will be important. It is a combination of art and science to develop a technological solution to that problem. And once you have the vision, as a leader you 100% personally believe in it and make sure everybody is aligned."
2. Build A Roadmap
Needless to say, if you have a compelling vision, you won't get growth unless you can quantify it. "To implement the vision, you must quantify it. Over time how many customers will you have? How many units of the product will you sell? Once you've built this roadmap you need to correct mistakes as you try to follow it and adapt your perspective to reality," he explained.
3. Pace Implementation
When you try to follow a roadmap, you have to pace yourself. You don't want to push aggressively for sales but only if you can do so without breaking the organization.
"You should only move aggressively if the maturity of market, the product, and your organization are in harmony. For example, if your product is ready but the market or your organization is not, then you should slow down and wait until both catch up. In a startup, it takes time for your sales, marketing, and engineering people to get comfortable working together. You need to let them learn," he says.
Kramer is one of the world's leading company builders. His growth strategies make sense to me and they're worth considering for your business.