Join CEO.com for an exclusive live virtual event to hear from Nick Schneider, CEO of Arctic Wolf.
In an age where remote work is the norm and cyber threats loom large, Nick Schneider, CEO of Arctic Wolf, sheds light on how they've achieved 100% year-over-year growth for eight consecutive years. Hear about the challenges and triumphs of leading during a pandemic, Arctic Wolf's go-to-market strategies, and Schneider's vision for the future of cybersecurity.
Nick, thank you so much for coming on the show, for being a part of this. You have a really interesting company in your hands that you've built here for the past, more than 15 years in Arctic Wolf. Maybe we start there. How did you get started building this company?
Yeah. So, I've been here for eight years. The company was founded by Brian NeSmith and Kim Tremblay who had worked together for quite a few years in the industry at Blue Coat, and then Brian had done a few other cybersecurity endeavors. And I came to Arctic Wolf really because we were solving a problem within cybersecurity that I didn't view the market wholesale had really tackled, which was really to be able to deliver the outcomes of a security operation and do so in a way that was palatable for an SMB mid-market small enterprise.
And now, more often than not, here over the last few years, even the large enterprise customers, and that most of those customers were looking for someone to deliver outcomes. So deliver them the feeling that they were safe or protected as a business, not to deliver just a multitude of additional products or point solutions. And Arctic Wolf had a really strong story there, kind of before the MDR/XDR market really existed. So, I came over, helped to kind of build out the go-to-market functions, did several other things kind of within the business, and then ended up in the role I'm in today.
Security is becoming more and more important by the day. I mean, if you look at what's happening in the retail and e-commerce space, I mean, it's getting crazy. They said they've never seen anything like it in the industry ever, and that's just that industry. How important is security right now, and, I mean, does that put you right in the thick of all of this?
Yeah, I mean, cybersecurity has been evolving now for quite some time. I think, with the advent of cryptocurrency, you had a mechanism for bad actors to make a significant amount of money in particular, which really escalated things. And now you have bad actors that are organized much like a traditional company in some ways, and are really sophisticated, and they're great operators and they're able to do things in a way and achieve an outcome that wasn't really possible all that long ago.
So, it's become something that's really critical within an environment, and because of the sophistication of the bad actors, they're also able to do things that are a lot more detrimental to a company, meaning the activity that they do matters more, i.e., It's more expensive for a company when something does go wrong.
So, cybersecurity is still an evolving space. It's something where the attack surface and the methods that the bad actors have at their disposal to get into an environment or to do something within an environment that's going to be to the detriment of the company that they're attacking will continue to evolve.
AI is adding to that, and I think we're honestly still in the relative early innings of the way in which this market will progress. And I think it's still a little bit to be determined as to exactly how the market will shake out or how the bad actors will evolve their practices, but a lot of work and a lot of effort being done by many companies trying to figure out how to get themselves and get their security posture at a point where they feel protected.
And that's really what we do is surround the company and the customers that we work with with a security operation, and the outcomes there are really to make sure that they feel protected and they understand their risk and their security posture wholesale, and that we can work with them to improve that posture over time to effectively reduce or eliminate their risk in time.
How has AI, in the growth of it and everything that's happened particularly this year, but even starting into last year, how has that changed Arctic Wolf? How has that changed your strategies both internally and in the whole security realm that you guys focus on?
Yeah, so I think there's a few different lenses to view that in. One is in the lens of Arctic Wolf or the customer, which is how can you leverage AI to improve the efficacy of your solution or the efficiency of your solution? So I think there's a lot of opportunities to leverage AI within the data center, within the data that we're ingesting, to make sure that we're getting, through that data, in an efficient way and providing the most high accuracy results to the end user.
And there's a multitude of different ways to do that through the way in which we build detections, the way in which we set up our security operation, the way in which that operation is transposed to the customer, the way in which we communicate to the customer.
So, there's a ton of opportunity kind of on the Arctic Wolf fender or customer side. And then, unfortunately, there's also opportunity for the bad actors. So, now they can write a really compelling email with perfect grammar and really tight looking graphics, and it's getting harder and harder to decipher between what is a phish and what is a real email. And that's still a number one attack surface for most bad actors, is just working through humans, through business email compromise or other mechanisms where understanding and trusting the sender is kind of half the battle. And AI is just making it that much harder to delineate between what is real and what is not real or what is coming from a bad actor.
So I think this is going to evolve over time. I think you're going to see that the adversaries have an opportunity to leverage the technology in a way that makes protecting against that a little bit more difficult. But I think you're also going to see that the cybersecurity vendors and the customers or businesses within the space are also going to leverage AI to defend in a more material way as well.
What are your thoughts on AI? Is it scary? Is it good? Is it, what do you think the future is 5, 10 years from now and how does all this shake out?
Yeah, I mean, look, it is not going to go anywhere. So, I think, what we have to understand is how it's going to be used and how it should or shouldn't be used within the world that we live in. There's a ton of really beneficial use cases for AI, both in cybersecurity but also in a multitude of other industries.
But there's also some stuff that can be done with AI that's not so good, or that can be a little "scary.” But I think, if we're diligent about it as a community, we can come up with ways in which to minimize the risk of that, which is scary, and leverage that, which is advantageous to society. And I have faith that we'll figure it out.
As I understand it, the growth of Arctic Wolf, a lot of that could be credited to you and building the sales organization that you've built and stuff. I wonder for those listening, for those who are going to be watching all of that, how do you build a strong sales organization? What have you learned in your experience with Arctic Wolf? And even previously, I mean, you were doing stuff for Code42.
Yeah, so I mean, I've been kind of the go-to-market engine my entire career. First and foremost, no company gets built strictly by the way in which the sales and marketing engine is built, especially early days. It's all about how well the team organizes and works kind of inter-departmentally to achieve the same outcome, which is generally to ensure that you're delivering something of high value to your customer base and doing so in a differentiated way.
And so, early on, a lot of it is making sure that you're tying what you're learning in the field through your customers, from your partners, potentially through ecosystem alliances as to really what the product market fit is, and then leveraging that as a feedback loop into the product organizations and the marketing organizations and fine-tuning kind of your messaging in the way in which you're attacking the market.
And then as you scale, it's about finding ways in which to do that in an efficient and repeatable way. And early days, that's a lot of trial and error. So you have to build out a team that understands kind of what that means and understands what it means for the way in which they're going to have to work early on. You're getting a lot more no than you're getting yeses in the early days of a business, especially if you're on the front end in the sales organization.
And then, as you build out the teams over time, you start to kind of specialize in folks that have been at companies in different stages along the way, and/or are specialized in what you've determined your specific product market fit is, whether that be a technological product market fit, or whether that be kind of an industry, a segment of the industry, a go-to-market motion, a route to market that particularly works well for you.
And you kind of fine tune that sales engine to make sure that you're set up in the most efficient manner that you possibly can to achieve the outcomes that you're after. And the second big part of that is demand. So, I see a lot of times where you have sales and marketing operating independently, and that just doesn't work. Sales and marketing have to be one machine, it needs to be a go-to-market motion.
So, understanding how to generate demand, doing that in a way that is commensurate with your whole go-to-market motion, and making sure that the demand can justify the way in which you've set up your sales team so that they can be successful is really, really important. Especially early on, where one rep not doing so hot could be a massive detriment to your overall plan.
And that changed a little bit over time in terms of kind of relative risk to a plan, but it's always a core to the way in which the go-to-market team is built, and frankly, the predictability of the success of the team.
How have you thought about working from home versus in office and this whole debate that's happening within every company and throughout the business world ever since Covid? And now that we're kind of post-Covid, how have you thought about that and maintaining the culture in whatever way you've decided here?
Yeah. I mean, look, just like everybody else, we went from what was historically a fairly well-defined in-office culture to completely out of office culture overnight for a year or two, right? So, now thankfully, our business was set up technologically so that we didn't really miss a beat with regards to our ability to conduct business, but it certainly changed the way in which people worked. And I think through that, we learned some lessons about what can be done virtually, and we learned some lessons about what's more efficient and effective in person. And we've slowly been kind of evolving what our "return to office" strategy really will be over time.
My personal belief, and I think the belief of the majority of the team here, and I think you're starting to see it in the rest of the marketplace, is that while the days of five days a week and you show up at 7:00 and leave at 6:00 are probably gone, I still believe that humans can be more productive if they have some time to interact in a more natural fashion than a constantly scheduled Zoom call. So we really encourage our employees to, if they are hired or were hired in a collaborative role or a customer facing role or they're near office, to be in the office or make an effort to be in the office a few days a week.
But we understand that people have either some newfound flexibility requirements, or people just in general need time to do things in their personal lives, and that as long as they're getting their job done, they get their job done. So, it's all about balance for us, and I think that's different role by role.
There are some roles where being 100% remote is completely fine. There are other roles where it's really important that folks get in and collaborate. And I think, especially as you're building a business, especially as you're building a business, and especially if you're building that business at a high rate, so if you're a high growth company, there's kind of two aspects to it that are important.
One is, can the person that you're asking to come to the office do their job? And the second is, can the new people that are around that person or the other people in the office that are around that person, be able to do their job or learn or work as effectively if that other person isn't there? Right? So, it's twofold. One, what is best for the individual, and two, what is best for the team.
And I think, striking a balance there is what's really important. And I think you've seen some businesses that have struck the right balance and you've seen others that have tilted too far one way or the other. And we've tried to be really conscious about how and when we kind of change that balance as we try to find the right equilibrium here.
Yeah, that's interesting. What have you learned about leadership in that process and what it means to be a good leader? Because, I mean, navigating that takes leadership, right? Going from working from home, doing the 7:00 to 6:00 stuff, and now what you just said, what have you learned about leadership just in general and how have you applied it to that particular problem?
Yeah. I mean, leadership versus management is a very different thing. So I think, leadership, especially through what has been, you have Covid, you have what is now kind of a macroeconomic environment that's a little unpredictable. So there's been something that has kind of popped up, call it every year or two, in one way, shape or form. And at least my opinion is, a lot of that has to do with the way in which you've engaged, in the way in which you've treated your employees or your team kind of over time.
So if you have a really strong relationship with folks, if there's a high level of trust in the organization, if the organization understands the mission you're on and they're bought into the mission, they believe in what you're trying to do, and then you're able to explain the why on stuff that might be contentious or the stuff that might not be particularly popular, and you're willing to understand that the role of a leader is not necessarily to be the most popular person in the room, it's to make the decision that they feel is best for the organization as a whole, generally speaking, you get through these things relatively smoothly, right?
So, if the team trusts you, if they are on a mission they believe in, if you're explaining kind of why you're making the decision and you're understanding that the viewpoint that you have or the decision that's being made by the business may not be the most popular decision, but the receivers of that decision understand the reasons why the decision is being made, you cut through a lot of noise as opposed to being dictatorial.
There's been plenty of opportunities to test that theory over the last few years. And certainly, as you're building a business, there's an opportunity for leadership almost every day, if not every day. And for me, it's really about making sure that the way in which you're leading the team doesn't ping pong around based on the event or based on the crisis of the day, but that you're kind of steady in the way in which you've engaged and steady in the way in which you've built trust. And if you do that, you're going to have a receptive team to work with you to make sure that you're achieving the mission that you're on.
I can't help but notice this knight helmet you have here in the background. What's the significance of that thing?
Oh, that's a long story. This was from like eight years ago. I left it in the room, but we had one of our leaders here that was going into battle on a specific deal, and he's got a good sense of humor. One day he came into the office wearing a knight helmet.
He passed it over to me, and one day I was about to take it home and I'm like, "Ah, no, I got to keep this up here. It's a good conversation starter." And now, you've proven it once again.
That's incredible. Well, Nick, I can't thank you enough for spending some time with us. At CEO.com, we believe chances given are just as important as the chances one takes, and I end every interview the same way, with this same question. And I wonder who has given you a chance that has led you to where you are today?
Yeah, good question. So, I'll tell a little bit of a story here. So, I graduated from school, I was a track and field cross country athlete, thought I was going to go into the legal or policy fields, and met a few people that were in the technology industry. I didn't know anything about technology when I got out of school, and was introduced to a few different people at a company called Compellent Technologies.
So Brian Bell, Dennis Johnson were two. And when I originally interviewed, they're like, "Hey, sorry, we're not hiring young bucks here. Better luck next time, but we're more than willing to engage with you and help you to understand the industry."
And we stayed in touch, and those two guys gave me my first chance at Compellent. I was very early at that company and did a bunch of different roles there, and kind of learned about the industry, learned about what it took to build a company that was relatively small into something that became a publicly traded company and then got acquired by Dell. And that didn't happen without kind of the initial opportunity there. And it's a really interesting story in the way that we engage our teams here today as well, right?
So, I started as an SDR, right? And within the sales ranks, that is the most junior role, but you can learn a lot in an earlier stage company in any role within that business just because of how much you're exposed to, and Dennis and Brian gave me that opportunity. And we've given, kind of over time here at Arctic Wolf, hundreds of people that same opportunity, and at Code42, and at Compellent, hundreds more.
So, it's a story that I'm able to tell, but it's also an interesting story in that I think most people that have kind of gone through this journey, and Minnesota Tech have touched each other one way or another through a similar story. So, it's been fun and it's been enjoyable to kind of take that journey with a lot of these people. And Brian just so happens to work on our leadership team here now, so that story has come full circle and it's a fun one to continue to live.
That's incredible. Nick, again, I can't thank you enough for coming on, spending some time with us. Congrats on everything you've built and continue to build, and we'll follow along and we'll be in touch in the future.
Great. Thanks for having me.
Thanks Nick. See you.