This is a first in a series spotlighting the startups and LGBTQ founders behind them who are in the first track of the StartOut Growth Lab @ Nixon Peabody accelerator .
StartOut spent some time conversing with the charismatic and driven co-founders of Zeguro, Siddhartha “Sidd” Gavirneni and Dan Smith. Two global citizens and co-founders who kindly shared their fascinating stories about their entrepreneurial journey to date. Oh and by the way, they just happen to be gay too.
Sidd Gavirneni : I have been around. I started my career as a software engineer with an undergrad degree in Computer Science in India and then moved to Kansas for grad school afterwards. Yes, Kansas. Kansas had a great degree program in Information and Cybersecurity which always interested me.
After Kansas, I moved to Phoenix where I lived and worked for more than six years. I led product strategy and cybersecurity strategy for a telecom company before deciding to move to Spain to pursue my MBA. I really wanted to be on the business side of it all.
After finishing my MBA, the next logical step for me was to combine my experience in technology with business and the best place for that was the Bay Area. Initially I did some strategy and portfolio consulting when I landed here before I decided to go full time at Polycom, a company that specializes in video conferencing and collaboration. I led Polycom’s Strategy and Innovation Management team. It was all of these factors that really got me to start thinking about doing something on my own.
Dan Smith : I’m a third generation entrepreneur. I come from a very long line of entrepreneurs and small business owners in my family – crazy inventors like my dad. From a very young age I was always interested in business and the art of the sale. I was fascinated by understanding what makes people tick and why they purchase certain things. I remember being a part of my dad’s hobby business when I was 12, where he set up a fairy floss (cotton candy) and popcorn stall and would attend events & street fairs. This is where I learnt everything from finding customer-market fit, to marketing and branding but the most valuable skill I learnt was to find an opportunity where others don’t. I discovered the best part wasn’t the fairy floss itself, but was the excess that the cotton candy machine produced. My dad would throw out this excess – pure sugar that would melt to the side of the bowl. So I would scrape off this excess, place it into heat-sealed bags, and sell it at school. I made a keen fortune doing this, again at just the age of twelve.
Over the course of my career, I switched between working for the government and large organizations in consulting, defense, immigration, banks and financial regulators, and startups. Some ventures I started failed, some did ok, but all taught me some valuable lessons along the way which I was able to put into practice in each subsequent startup I launched. One thing I did learn – that formal education was not for me. I dropped out of my Bachelor’s degree to launch my second company and my Master’s degree to launch my third.
I think my father’s entrepreneurial spirit was passed down to him by his parents too. My grandparents were very adventurous. Both served in WW2 and started many businesses that ended up to be very successful. My grandfather joined the Australian Air Force as a navigator, on a Liberator bomber, and was one of the first to teach the American services how to use astro navigation to bomb far away targets using the stars. He was ingenious like that.
So yes, I’ve come from a very very long line of inventors and entrepreneurial role models. From all of that is what interested me in entrepreneurship from the very beginning. My passion – my core passion – is starting a business and growing it from a seed into something that is actually pliable. Something you can touch … you can see … and even feel. Entrepreneurship has always been a massive passion for me and is in my blood.
During your career journeys, did you see an opportunity in the marketplace that wasn’t being served that led to creating your startup?
Sidd : At a previous job, I was on the Information Security Board when a data breach occurred at the company. Someone posing as the CEO asked HR to send information about all of the employees. So private information was shared for about 3,000 employees – Social Security numbers, payroll information, and much more. I experienced first-hand what a company had to go through with a data breach. Lots of steps and requirements – from handling the situation by PR to the legal steps including credit protection of employees. Throughout all of this, I noticed how painful this process was and that got me thinking. This looked like a big problem and an opportunity. Since I know cybersecurity and I know business, I decided to combine these things to see where it might go. It was really interesting timing as I also learned that Dan was also going through a similar cybersecurity experience in his job.
How did you two connect as startup Co-Founders?
Dan : Sidd is known for his amazing brunches. I first met Sidd at one of these brunches when I tagged along with a mutual friend who had been invited.
Sidd : As our friendship grew, we learned that we were both in the cybersecurity arena and that’s how initial conversations started. It wasn’t until we were both experiencing cybersecurity problems at work that we began to have the real conversation on cyber insurance and the idea to create a business in this area together.
Are you OUT as LGBT entrepreneurs?
Dan : I wasn’t comfortable classifying myself as out up until last year. I’m a country boy, who grew up in a small country town in Australia. I only really came out to my parents in the last few years who have been extremely supportive. I was lucky in this respect.
How important has it been for you to be an OUT LGBTQ entrepreneur and has it made a difference?
Sidd : It has made a big difference for me. There’s a big taboo and stigma associated with being gay in India. My personal goals are to be a successful entrepreneur AND be a role model to people back in India demonstrating that it does not really matter whether you are gay or not. Success is how people define each other in India so I want to use this as a way to tell people that being successful has nothing to do with being straight or gay.
Dan : I find being out is important in certain settings. I don’t lead with saying, “Hi I’m Dan. I’m gay and I’m an entrepreneur,” but I do advocate speaking up in the business world. For example, I speak up if someone says an inappropriate joke especially if they don’t know I am gay. I stand up quickly where in the past I wouldn’t necessarily have done so. It’s very important for me to be ultimately comfortable in any business setting and in my own skin.
I’m a lot more comfortable with my views for how I see myself these days. I don’t need to have that fallacy – those two sides. By being out, I have only one side and being my true self and not hiding makes me an even better leader at the end of the day.
Would you say being an Out LGBT entrepreneur has given you an advantage in the workplace?
Sidd : Yes, it definitely gives us an advantage! And it helps that we are in the SF Bay Area. I wouldn’t necessarily say that being OUT would be an advantage in a different part of the country. That’s primarily because people here are very accepting and they don’t really care. People here also tend to be advocates of what they believe in (i.e. LGBTQ rights). Letting others know we’re gay is a strong advantage for our business, especially for adding great talent to our team.
Are more people attracted to your business because you’re LGBTQ entrepreneurs?
Sidd : Yes. So let me share a few experiences we’ve had in just the past few months.
One was with a new hire. A very accomplished person decided to quit her job and join us for NO pay. The reasons? Because she believes in what we’re doing and we’re already an organization that’s diverse and emphasizes diversity as an important value in our culture.
The second recent example is with one of our corporate partners. This person leads the global division for a global, multi-billion dollar insurance company. She is female which is rare in a predominantly white male industry. She wants to partner with people like us, who are diverse. So in this scenario, being gay and being multicultural works for us. But if we were in Kansas, I don’t think this would be the scenario.
Dan : I think Sidd put it very well. Our situation is just proof in the pudding that being out in business can attract some of the top talent to your business and can really create a difference in the landscape.
Sidd : Our team of six is very diverse – we have LGBT (of course), men, women, and different nationalities with three Indians, one Australian, and two Americans (with a fun look as he says “Americans”). And our advisors are diverse too. With our advisors, we have one female LGBT advisor, one British Muslim, one British Greek, and one Italian American. So every aspect of our team is diverse.
What do you think diversity adds to your business and your chance of success?
Sidd : It adds intellect, and definitely perspectives. We can see and understand how people look at business differently. If a team is to be successful, you need to be compassionate and you need to have that emotional intelligence. Diversity drives both of these things because even if you have any apprehensions about a different culture or race or gender, you end up understanding and knowing what that other race or culture is and this enhances the team’s overall emotional intelligence.
Dan: Diversity also allows other people to see the wide variety analytically and how others work. Someone might not have ever worked with someone from India so they won’t honor their work style. When they work side-by-side with them, they can’t help but gain a new understanding for how the Indian culture works and how to relate and work with someone originally from India. This is a huge benefit as that person can progress in their career and take this cultural awareness, knowledge, and experience into their next job. If they encounter something similar, it’s likely that their gained understanding for diversity will make work even smoother and more successful.
Sidd: One thing that helped me was my MBA in Spain. Being a Top-10 school, it attracted students from multiple ethnicities and backgrounds. I had classmates from 80 different countries! For team assignments, the school would always change the team member composition on almost every project. The faculty made sure that, in a team of six or seven, no two people were the same age, were from the same country, or were of some similar race.
Dan: We are Zeguro. Zeguro is a play on the Spanish word “seguro.” In Spanish, it means “to secure” or “to insure.” We wanted it to be a bit whimsical and a new word to give us that difference in the marketplace since what we do is cybersecurity.
Sidd: How we decided on the name also goes back to diversity. We had a set of five names that we created and sent a survey out to our friends around the world. They all looked at the names and one of the options was “what’s your suggestion”? A friend from Brazil suggested “Zeguro” for our name. We Googled it and looked at each other and said that’s our name.
What are your roles within Zeguro?
Sidd: I’m the CEO. I focus on strategy, fundraising, product management, and team building.
Dan: I am the President and COO and I focus on everything else for the business: sales, marketing, the cybersecurity product from an architecture and design perspective, culture, operations and team management.
What does Zeguro do in the cybersecurity space? (As the interviewer, I know nothing about the vertical so asked if they could present it so I could understand).
Sidd: Cyber attacks are a real danger. 65% of all attacks happen on small businesses, and 60% of small businesses that have a breach go bankrupt in 6 months. And unfortunately, these small businesses cannot afford to protect themselves. Zeguro is that automated platform that helps businesses be secure. We are their virtual cyber security officer – to assess their cyber risk, decrease that risk, and provide insurance when something bad happens.
Dan: The other statistic, that needs to be updated given an increase cyber attacks, is that in two years following a data breach, 90% will go out of business. So a data breach is literally a death sentence for these businesses.
Zeguro is about providing a service that augments the capabilities of the information security officer or an insurance officer within an organization by providing them with with the tools and capabilities needed to do their job easier, quicker and more efficiently.
Is this a newer area overall in the industry?
Dan: It’s a completely new area in cybersecurity.
So you’re the ones defining this new area?
Sidd: Yes. Cyber insurance in general started in 1999 when the tech sector began. However, cyber insurance has always been very much focused on very large companies. The landscape has also changed drastically since 1999. The number of cyber attacks and threats has drastically gone up. And, insurance companies do not know how to deal with dramatic increase in cyber threats. This is the turning point in cyber insurance and we are at the cusp of it.
Dan: We sell insurance (points to notarized certificate hanging on their office wall)
When you say small and medium sized businesses, and thinking about the StartOut community, is there a particular sweet spot within the whole world of SMB that you work?
Sidd: Our target market is SMBs with revenues under hundred million. We know this is a big range but the needs of these businesses are usually about the same.
So as an application and as an insurance carrier, you have a steady recurring revenue model?
Dan: There are fourteen (14) major services that a company needs to go through if they have a breach: Forensics, PR, Outbound communications, Inbound communication, and more.
Sidd: Some of these services and steps are required by law so companies must adhere to the regulations.
Dan: Forty eight (48) states have different rules and regulations required for when you have a breach and the steps you must follow. Just think about it, 48 different states and each with different steps. It can get complicated quickly. So it’s all about understanding what needs to be secured and what needs to be insured. What our online platform does from the cyber security insurance side of things is it identifies exactly what an organization has and/or needs. We then provide insurance specifically for that need. At the moment, insurance is a catch-all policy that includes everything even if a business doesn’t need every component of the policy.
Sidd: The new thing that we are starting in the industry is Modular Insurance.
So you’ll be competing with the larger insurance agencies by doing this?
Sidd: Yes, we will be competing with any company that sells cyber insurance but the key difference still is our focus on the small to medium business sector which is currently ignored. We also automate it all for our customers. They sign-in, assess their risks, and purchase only what they need through our platform’s recommendations.
Do you ever turn clients away if someone is on the platform and doesn’t fit the bill?
Dan: We won’t offer them insurance until they can get to our baseline security posture. We still will help them and provide them with all the recommendations and all the needs and all the policies and all the controls so they can get to that baseline level. At that point we can then offer them different insurance options.
So what do you project to happen in revenues for Zeguro?
Sidd: Fingers crossed, we will have $40M in recurring revenues by 2020.
Dan: Of course these are highly conservative projections!
Within the SMB sector, are there certain industries or verticals that are your primary focus?
Dan: Yes, our initial go-to market is focusing on a segment of the market that is in extreme need right now. It’s the Financial sector. In New York, they just passed a regulation that dictates a number of new security rules and regulations. Businesses that are regulated by the New York Department of Financial Services (DFS) need to follow these new rules and they also must be in compliance by September. If not, they could be fined. Our platform is built to help these companies adhere to these these new rules and regulations and to report to the state superintendent on an ongoing basis that they’re keeping up and being compliant with these regulations. So this is a big, pressing need and it’s something that is going to accelerate our go-to-market launch.
Similar to the added paid platform features like in TurboTax, is Zeguro guaranteeing that a customer will be compliant with any state’s regulations?
Sidd: It’s a mixed bag. It depends on the state and the specific regulation. Take the new regulations monitored in New York DFS for example. We guarantee bits and pieces for what we can but there are so many actions that need to be taken by a client that happen outside and offline from our platform.
Dan: What we also do is aggregate a lot of information and data from all the various tools and then we put it all together in one view, in one dashboard to show all of your cybersecurity needs across people, process, technology and insurance.
Anything else you’d like to share with the StartOut community about your business before we switch gears to talk about StartOut and the new Growth Lab?
Sidd: Our goal is to quickly grow the team from 5 to 12 by the end of the year.
Dan: And that number will probably accelerate after that.
When did you join StartOut and how did you learn about the organization?
Dan: I joined Startout through an event I attended in the Castro with one of my friends a couple years ago. I was introduced to StartOut’s CEO at the event and was very impressed with it all. I used to be on the working committee with the Board of Gay and Lesbian Mardi Gras back in Sydney. I volunteered hundreds of hours to help put together and produce one of their events to make sure that it was a global success. This was my way for getting directly involved and giving back to the Community. In Australia, Mardis Gras is a rite of passage for young gay men. It’s where you can go where everyone accepts you. When I was young, small town, I looked up to Mardi Gras and wanted to be there – a place where I could go and be accepted and wasn’t judged. So to give back through such an organization provided an amazing experience and left a mark on me. When I moved to San Francisco, I was looking for a similar group or not-for-profit that I could potentially get involved with and be readily accepted. StartOut was and has been it.
Sidd: I joined StartOut a couple of years ago when I became active with various events as a panelist. When I experienced these first events, I appreciated Start. StartOut helped me understand and see the whole picture for the irrelevance of being gay in a professional setting or how it could be relevant. StartOut really got me used to the idea of saying that it’s okay to be gay and out professionally. StartOut also helped me with networking and introductions to other professionals in the community. Like they say, “birds of the same feather flock together” and it was nice to see other people who were interested in technology and entrepreneurship too. But at the same time these are people who are also gay and willing to talk to you, to share ideas and to help your business.
Dan: For me, it was the community feel of StartOut. It was everyone getting together for the benefit of like-minded for a similar goal. That for me provides a strong sense of community and sense of belonging in an environment where my passions are so deeply embedded in what I do every day, that is entrepreneurship. So an organization that hits these threads so deeply and provides a Community around that, is absolutely massive for who I am as a gay entrepreneur
Sidd: I’ve been to other gay professional events at a bar and they were just a big okay.
Dan: Yeah, events like that tend to be piss-ups (Aussie Slang for an event that all you do is drink)
How did you get selected for the StartOut Growth Lab @ Nixon Peabody and what motivated you to apply?
Sidd: It was mostly due to being active and involved with StartOut. Over the past year we’ve been very involved with StartOut – attending most of the events and participating as panelists. I was even in the StartOut Marketing video if you’ve watched it.
Dan: We both presented and worked on the diversity panel for StartOut.
Sidd: We also had StartOut in Zeguro’s usability testing. We worked directly with Andres, StartOut’s Executive Director, who shared with us the early, unfolding details for Growth Lab at Nixon Peabody and what was envisioned. StartOut learned first-hand where we were in terms of our startup journey – that we were much more than just an idea and we had already developed and were testing the alpha of our platform. A little light bulb went off for both of us that we knew Growth Lab could be a good thing for us beyond just office space so we pursued it.
Dan: You should have seen our last office. It was the size of a shoe box! Our office was located above a weed dispensary, which made everyone super relaxed but you have to start somewhere, right?.
Sidd: Office space was definitely one of the key factors since we were and are trying to save money. But introductions and resources to others were equally important. StartOut has introduced us to various investors we wouldn’t have met without being part of Growth Lab. This whole idea of being part of this sub-community (Growth Lab) of this bigger Community (StartOut) is really great because of the introductions that we’ve gotten through Growth Lab and the Marketing that we can derive from this. All these factors just play into it’s importance to us.
Dan: The Marketing side of this is important for us. Adding StartOut Growth Lab to our website and pitch deck, appeals to investors too. Investors see that we’re growing and part of an accelerator in addition to winning various competitions.
I should also add, StartOut has introduced us to most of our service providers like our current lawyer and his law firm. This is invaluable to get intros to the community that are able to help our business.
Since Growth Lab is a 6-month program, where do you hope to be with Zeguro then?
Sidd: I think the success would definitely derive from the relationships that we make here. As a business, irrespective of whether we are part of the StartOut Growth Lab or not, you have to make money and we are confident in our ability to do that. Startups however, survive on relationships and to me, success will be defined by the relationships that we make during this period through the Growth Lab.
Given where you are right now with Growth Lab, how can the StartOut Community help you?
Sidd: There are three things.
Number 1: For folks in the LGBTQ community across the globe who are looking for great opportunities to make a difference and join a great team, we are looking for talent. We’re specifically looking for great engineers and people who are talented in machine learning and artificial intelligence.
Number 2: We are looking for advisors, mentors, and investors who can help us, guide us, and enable us to get to the next level.
Number 3: We’re looking for partners in the security and insurance sectors. They can be customers or joint ventures from a product perspective.
What advice would you like to share with others who are thinking about joining StartOut and getting involved with the Community?
Sidd : You get out of StartOut what you make use of and put into it. Be as active as possible in the Community and you will see an immediate difference.
StartOut is about the people. StartOut is about networking – about who you can meet to follow you and can help you with your dream. If you’ve got any type of inkling to do something for your entrepreneurial self, then StartOut is a very good starting point. StartOut gives you the ability to meet some great like-minded people, some smart folks that may want to follow you on your crazy idea of launching your company. One of my past companies failed due to not choosing the right business partner and that was a huge lesson for me. So if you can already find people that understand how you think on a personal level and an emotional level, then it’s just finding someone more on the intellectual and/or passion side of things and you can do that with StartOut.