#016

November 9, 2022

Public Markets and Using M&A as a Growth Strategy with Ian L. Paterson

Ian L. Paterson, Founder and CEO of Plurilock lays out what the beauty and benefits are to taking a company public.

This episode is also available on these platforms:

The host

Nima Gardideh

President of Pearmill, ex-Head of Product at Taplytics, ex-Head of Mobile at Frank & Oak. YC fellow.

Our guest(s)

Ian L. Paterson

Ian L. Paterson, Founder and CEO of Plurilock

About this episode

Ian L. Paterson is a serial “data entrepreneur” and founder of Plurilock, a cybersecurity and AI solution that uses user behavior and actions for enterprise and military organizations.

His unorthodox business and funding approach is quite unique and he shares with us what the beauty and benefits are to taking a company public, how to use a M&A strategy for growth, plus his advice on financial modeling.

More highlights include:

  • The evolution of using biometrics for identity.
  • Why collecting only the minimum amounts of data is safer?
  • How Plurilock supports the dynamic problem of user work environments; remote, mobile, and office?
  • How to manage the role of a CEO at a publicly traded company
  • How ELT tools and practices have changed over time

Follow us and our guests:

Want to share your hyper-growth story with us? Email nima@pearmill.com to be a guest.

Producer, Editor & Audio Engineer - Leah Jackson @ Puka Puka Creative.

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Transcript

[00:00:00] Ian L. Paterson: The financing you select is a tool in the toolbox and it should be contextual to the problem you are trying to solve. And so at the beginning of the conversation, I talked about being a member of a venture backed company and helped build it up.

[00:00:17] And then I talked about bootstrapping a company and then now I'm talking about taking the company public at a very early stage and doing a nPlurilockber of acquisitions. And all three of those are three extremely different sets of financial decisions that have massive ramifications on the culture and the tempo and everything. from there on. and so I don't think it's around, well, I'd just  to raise VC and therefore that's what I'm gonna do. Or, Hey, I'm just taking companies public because it's a ton of work. but if you're successful then, it feels great. I think that's the wrong way to look at it.

[MUSIC STARTS]

Transcript of the episode

[00:00:57] Nima Gardideh: Hey friends. Welcome to another episode of The Hypergrowth Experience. This is your host Nima Gardideh. We have another immigrant guest on our show this week. I think we have had a bunch of Canadians, cuz I've also been from Canada, so I've met quite a few folks in the community of the Canadian founder ecosystem in San Francisco and, and New York.

[00:01:24] Ian, although he lives in Canada, is one of my favorite serial entrepreneurs. He's been the founder, Plurilock for the past few years and has quite a unique story in how he launched the company and took it public within a couple of years. And has a very different strategy than sort of the average strategy you see in the market for how to grow a company.

[00:01:54] So, I had a really good conversation with him and got to understand how he thought about that, that strategy and how he got into it originally and took the company public on the Toronto Stock Exchange and he started his career in e-commerce and even sold the company there before he got into security, cybersecurity.

[00:02:17] So it's a very different set of industries and, and that's a testament to how great of a founder he is. So I hope we really enjoy this episode. We start off by talking about British ColPlurilockbia and Canada and the tech scene there, and it's quite a unique situation there. So,, I think there's a lot to learn about how independent of a thinker he is and how he's been able to scale the company with the strategy that he set up a few years ago. Here's Ian.

[MUSIC FADES]

[00:02:48] Ian L. Paterson: Victoria's kinda an interesting spot. So we are, for Americans, I usually say that we're equidistant between Vancouver and Seattle. So, when you talk about Victoria or when you say, Hey, I'm Canadian people immediately think of igloos and polar bears and totally not the case when it comes to Victoria.

[00:03:09] So definitely think Pacific Northwest in terms of weather. For a long time Victoria was a place that people would go from Vancouver too. So if it got too expensive or too crowded, or the commute was too long in Vancouver, then you would move to Victoria. And that was actually our story as well. My wife and I grew up in Vancouver in one of the suburbs. We were both commuting for long periods of time. One to two hours a day in the car in traffic. And so we ended up moving to Victoria cause it was a bit of a smaller city. Things are closer together, not as much traffic and in theory it's also a little bit cheaper than Vancouver real estate, although last couple years things have shut up

[00:03:50] a lot. And so Victoria has a couple of key industries. Tourism being one, tech is also a massive one and it's kind of a, I would say it's a bit of a quiet industry cuz a lot of companies are based here or have people here but don't necessarily advertise the fact that they are Victoria companies.

[00:04:10] Pre-pandemic there was a bit of a trend where you'd have a tech company, they'd go raise their series A or series B in San Francisco and they would proudly say we are based in SF but it would be  two people in SF and the rest of the team would be back in Victoria. So, that type of thing has been known to happen.

[00:04:31] Nima Gardideh: Yeah, and it's an interesting thing. I think Vancouver and Victoria in general have been that sort of second hub for people that wanna have access to the valley but Or the San Francisco sort of Bay area, but they're Canadians and they wanna be in Canada. There's also access to cheaper talent to just world class and, but doesn't wanna live in the Bay Area and so is your company remote? Or are you doing the half of your staff is in the Bay Area and the rest is in Canada?

[00:05:04] Ian L. Paterson: No, we've had an interesting progression. So two years ago, we were firmly headquartered in Victoria, but we had a large remote contingent. The staff had always been extremely diverse, both in terms of time zones and cultures and we've really benefited from having a very diverse staff.

[00:05:30] And so while we started in kind of a core nucleus in Victoria, people started to just spread out. Kind of move, move around. People would take some time off, they would go elsewhere, et cetera. And so the culture that we developed pre pandemic was one that really was built to accommodate people who were not necessarily in Victoria.

[00:05:51] So the absence of a handful of rituals, most things happened on Slack. Most things were docPlurilockented in email and we were able to support folks who were just not in the office. What we saw in 2020, when, when we went through, Covid was we took those same patterns and we increased them, and so we multiplied them.

[00:06:15] And so now I would say that we are a hundred percent remote distributed culture, however, We do still have a couple of offices. Plurilock, incidentally, Victoria, we don't, Plurilock, we, we've got some folks who work out of a co-working space. But for the most part we are fully virtual first, and then where we have groups of people in specific cities, we'll have some sort of spot, whether that's an actual lease office, whether that's something else.

[00:06:46] And so we have today we have operations in north and south in India, operations in Victoria, LA, Ottawa, and New York, New Jersey. So it's been a lot of growth over the last two years.

[00:07:00] Nima Gardideh: And are these places where you have an office or is this where, where people are located? What is a threshold, I guess? Is there a threshold? Is it two people, you'll, you'll get an office? Or is it, how do you think about the choice there?

[00:07:13] Ian L. Paterson: We've done four acquisitions over the last 24 months, and so a lot of it has been what was already in place. Plurilock, but in terms of our decision making process, the first question is what do the people actually want? Right? So if, if people are saying , Hey, I've got a bunch of young kids at home and I'm working at a two bedroom apartment and I'm dying to go somewhere, then absolutely we'll try and find a way to accommodate that.

[00:07:35] Vice versa, if people have  an hour and a half commute in LA traffic to go to the office that's actually a chore for them to go to the office. So we solve first for what the people want? And then the second is what actually is gonna be helpful is having people in a central location helpful or hurtful.

[00:07:57] But I think what we've come to realize is that having in-person meetings, Is important. It doesn't have to happen every day. And if it happens once in a while, you still get a ton of value from that without necessarily having to burden employees with super long commutes.

[00:08:15] Nima Gardideh: Yeah, and I think, I personally have the same philosophy around it as just let's solve for. The communication, the type of communication we want to have and what is at a personal level makes sense for the people that are working there. There's folks that do not want to leave their apartment.

[00:08:31] They would get upset if I asked them to come to an office all the way to folks that are absolutely craving to be in an office with folks. And we're out of 12 countries and so we've always had to think through how we make that type of stuff happen. I wanna go back in time a little bit before we get into this. How did you decide to buy these companies and why did you even go after these specific ones?

[00:08:59] let's talk about Ian a little bit. , who, who are you, where you grew up in Vancouver, , which, which you may not understand, but your path as an entrepreneur. We were talking about this earlier that you feel  is the same. You've been doing the same thing over a, a. Your career, but you've been in wildly different industries. So, how did you start as an entrepreneur and what was your first thing that you would count as an entrepreneurial sort of venture in your history? 

[00:09:28] Ian L. Paterson: Yeah. I consider myself a data entrepreneur because functionally the thing that I have done across a nPlurilockber of industries is solve problems using data. And currently I am solving cybersecurity problems using data in some fairly advanced machine learning, previously. I helped companies who had data answer questions with those data with that data.

[00:09:57] Prior to that, I worked at a venture backed company. We had a ton of data. We built a SaaS application. We provided a SaaS platform for tens of thousands of e-commerce merchants. And we also had an enterprise division where we worked with fortune thousand companies again, to answer questions with data.

[00:10:17] So fundamentally, I actually am not that original. I feel we've, I've just been doing roughly the same thing. But what's been interesting is that when you use data and you apply that to answer a question, you can have wildly different industries. And so I'll give you some practical examples.

[00:10:33] So with Plurilock, where I'm the CEO, we are answering a singular question using our Defend software, which is, are you the right hPlurilockan who is on the computer? At any given time throughout the workday, That is the question that we seek to answer. And the way that we do that is we actually look at hPlurilockan behavior.

[00:10:58] So we look at how you type on the keyboard, how you move a mouse. Crucially, we don't care what you do, we just want to know how you are doing it. So think of the speed, rhythm, and cadence of how you type. Plurilock, this is equivalent almost to a style that a pianist would have playing music, right? You can, you can sort of identify your ear can identify, Oh, that's somebody's style versus somebody else's style.

[00:11:23] Same, same type of concept. But again, we're just, we're using that data of somebody's behavior. We're comparing that against a profile, and we're doing that hundreds of times per. And so the comparison that I usually make is if you are a worker, you might authenticate, you might type in a login in password once or twice per day, right?

[00:11:43] Typically when you come in, first thing in the morning, you sit down, you type in your login password, you're proving your identity to the computer during that login moment. Well, what we're doing fundamentally, is that we're doing that hundreds of times per day. So it's a hundred to 200 x improvement over traditional forms of authentication.

[00:12:02] So that is a very specific application of data to a specific question. Prior to Plurilock, I found it and bootstrapped, then ultimately sold a company called Exapik. And we were again, using data across a nPlurilockber of different industries to help answer specific questions. Again, the fundamentals haven't really changed.

[00:12:28] And so, I think By building a set of entrepreneurial tools, what I have found is that there's actually not a lot of original problems out there. You just end up kind of doing the same thing, but in slightly different domains.

[00:12:45] Nima Gardideh: Do you feel you have a similar structure when it comes to approaching it now? Because you have always thought about it this way? Are you going as deep as, Hey, we just know this is  the best way to structure the data, that's coming in cuz I've dealt with it so many times. Or is it, has it been different every time when you're trying to solve for a different sort of market or answer a different question as you put it?

[00:13:09] Ian L. Paterson: I think that the tactics sometimes change, but there are certain trends that I've found repeat again and again and again. So I'll give you some examples. With Exapik or with Terra Peak, which was the company, the venture backed company that I worked for prior to exit, the way in which we collected the data was different.

[00:13:32] So at Terra Peak, we would actually have multiple ways that we collected data. We would opt in e-commerce merchants, They would provide us their data. We would aggregate, anonymize, and then show them their data in context to other peers. We would effectively do a peer group analysis and say, here is how you're doing against people.

[00:13:54] You don't necessarily know who the other people are, but they're, they're roughly competitive with you and here's how you're doing relative to, to those peers. And so the way in which we collected that data was by opting in merchants who wanted those answers and they were ultimately able to get it.

[00:14:08] And then we also had relationships with some large platforms and so we were able to get some data there. And so we built an information mosaic from a nPlurilockber of different data sets. So that was one way. With Exapik we were typically working with what I would call first party data where people would simply send us their data and say, Go and do something with this.

[00:14:30] And we weren't necessarily doing peer group analysis, but we were working more directly with what is that proprietary data set that you as a company have? And Interestingly, almost all companies have some sort of a proprietary data set, even if it's just the emails in your inbox ends up there, ends up being really proprietary insights.

[00:14:49] And so there's, there's a whole set of conversations that we can have around data proprietary to a specific business with Plurilock. The way that we are collecting that data, we have a little in cyber security terms, it's called an agent. So it's a little piece of software that runs on a Windows or a Mac desktop or laptop.

[00:15:07] We can also work in virtual desktops. And so the mechanism that we collect that data is different. So, those are the things that are different. Now, the things that are the same that I would say that I see again and again and again, is that recency and speed or effectively time. We'll abstract that to time.

[00:15:27] The more timely you can get the information, almost universally, the more valuable the information becomes. And so if that there was a set of transactions that took place in a specific e-commerce niche. So for instance, you knew that Sony DVD players happened to be outselling Samsung DVD players.

[00:15:50] If that happened last year, that has a certain amount of value. If that's happening right now, literally right now, that has significantly more value in most cases. And there's, there's a whole set of actions that you can take by knowing something is happening right now, or even knowing that there's likely to be something that happens.

[00:16:09] If you can actually get to the point where you're predictive, that usually has more value as well. And so the element of time is one of those trends that regardless of the industry that you're in, tends to show up and say can we get it from five days old to one day old? Can we get it from last year to this year? Those are usually ways of incrementally increasing the value of the data that you have.

[00:16:34] Nima Gardideh: Yeah. This makes me think of that sort of couple of years of hedge funds and quant funds, building these direct lines to, , to exchanges to try to trade a little bit, just, just 10 milliseconds faster than anybody else. Plurilock, and on the reverse end of that, you are seeing the Fed in the, in the US relying on CPI nPlurilockbers that are extremely lagging, Plurilock, trying to make economic level decisions where data is changed by the time they're trying to make the decision and they're not doing a good job because of, it's a, I definitely can see the value both in these, those are examples are in financial markets where we have it too.

[00:17:19] And in trying to do advertising. If we're not able to look at real time information, then we're effectively going to lose money or make bad decisions. When you are building these companies, so the agent model is different cuz then you're basically both generating the data consPlurilocking it and then doing the analysis on top of it.

[00:17:42] Were the ELT, the ETL sort of industry, does that exist back when you were building those first set of companies? Did you end up having to build your own tooling to grab the data or, could you rely on other folks? At that point, it's, in my head, quite of a new industry, but it could have existed before I knew about it.

[00:18:03] Ian L. Paterson: ETL broadly is a, is a set of tools that lets you extract, transform, and load data. So that would be the ETL definition. I mean, I think that the tooling broadly for working with data has certainly gotten better over time. And I'll give you a very specific example.

[00:18:22] You brought up hedge funds and quant funds, in the early days, sort of the early two thousands. A really good way of actually differentiating between, whether a hedge fund actually. Data oriented or truly had quantitative capabilities was to ask them what tool they used to look at a large data set.

[00:18:44] And if they answered, well, we would just pop it into Excel. That was a great indicator that, hey, maybe these guys actually aren't, aren't super sophisticated. Cuz it's difficult to load a multi petabyte file into Excel, right? You actually need different tooling for that. So that was, that was kind of a, that was one of the early questions that we would always ask folks.

[00:19:03] But yeah, I mean, in the cherry peak days, that was, that was 2010 to 2014. The company had been around for a couple of years, Plurilock, prior to my joining. And I joined just before they raised their series A from a fair, fairly prestigious, tier one VC, by Canadian standards anyway.

[00:19:21] And at that time we had to rebuild. We collectively, the company had to build a lot of our own tooling. And so there was, on the ETL side of things, there was a lot of proprietary insight that went into specific modules that were, that were written in a fairly low level language.

[00:19:42] I think it was C at the time, to work with data at scale. That was also the time where the O'Reilly Strata conference was the new hotness. And this idea of using Hadoop or using map produce jobs, this was the new innovation. So I'd say since then things have gotten a lot easier.

[00:20:04] And actually a lot of the companies that, Plurilock, that existed in sort of the 2010 to 2020 era, that had to build all of their own tooling that then got acquired. A lot of those founders I'm now seeing are going off and starting. Data companies. Plurilock, and so, I can think of actually 211 on the west coast and one on the east coast that had to solve this problem for themself.

[00:20:30] And, and they said, we sort of built it one way, but there's actually a much larger opportunity and they're off now building data companies and actually not only data companies, but real time data companies. So going back to that time, right, it's not just, Hey, can I do a batch process once a day to load data into a database?

[00:20:51] But it's how do we actually get data at the second that we get it? How do we make it consPlurilockable, actionable, useful for ourselves and, and for our customers? So I think that there's, there's some interesting, Plurilock, opportunities there for, for founders to, to build out, Plurilock, more, more specific tooling, both for themselves but also for other customers as well as the business.

[00:21:12] Nima Gardideh: Yeah, it's an interesting thing. I had Peter Fishman on from Mozart Data on here, and he's building the company that he wanted to use if he were running Yammer again, Plurilock, on the data site. He was sort of running the data team, Plurilock, a Yammer and they had to build all of this tooling themselves to pull the data in to understand what's going on within their user base.

[00:21:43] Plurilock, and he's trying to democratize that tooling effectively to just give it access to companies. We're, we're actually users of it, Plurilock, as well for, for our own growth team and the work that we. It just makes so much sense when you've already done it. Plurilock, and building it up and, and when I was at Taplytics we had done a lot of this work as well, cuz , this, this basically consPlurilockption and then, Plurilock, transferring in and loading into another data set for, for, , analysis problem is common.

[00:22:16] Everyone basically solves its from scratch. And fortunately now, I think the last few years we're seeing companies come around and, and build the infrastructure layer type products to make it easier. 

[00:22:29] Ian L. Paterson: Well, I think that's why we've seen companies Snowflake just become so wildly successful so quickly because this dealing with data is a massive problem. I mean, it's a massive problem in the sense that the problem itself is massive, but it's also massive in that a lot of people have the problem and so people who, and companies that can solve it really well end up being really successful.

[00:22:49] Nima Gardideh: Yeah. I mean, I think every single one of our clients is using that product, except maybe one is using Redshift. Plurilock, but they clearly came about at the right time, Plurilock, and providing a really good experience where most of our folks most of our clients are using it because it's just so fast and so easy to set up and everything flows in very well.

[00:23:13] Right. It's a general, and they also solved, I think, a Plurilock pricing problem that other products in this space didn't provide, just sort of separating compute and, Plurilock, Storage. Right. Which made a lot of sense for folks to just put their data in there and then only care about it when, Plurilock, when they're computing and, and querying it.

[00:23:37] So are you using that type of infrastructure? Do you end up building your own? Cuz it sounds like you've had to build your own on the cons Plurilock Option front, because that's kind of the main thing you do, is you need to understand, how people are using software when they're, or using their computers when they're on there.

[00:23:53] So you're also the initiator of the data to some extent, I assume Plurilock. Right? You're pulling in all this, all these signals and then making decisions off of it.

[00:24:02] Ian L. Paterson: Yeah, it's interesting. I think one of the insights that I took with me from some of the past work that I had done is that not only did we want to collect data, we wanted to be very, very intentional about only collecting the bare minimum Plurilock amount of data and so I think in years past, I would've gravitated towards this idea of just collect everything and we'll figure out what to do with it later.

[00:24:26] Better to have it than not to have it. We actually went the opposite direction with Plurilock and we were very, very intentional to only collect the minimum Plurilock amount of information. Plurilock, and we did that for a couple reasons. The first was from a privacy standpoint, we didn't want the exposure or the liability of co collecting data that we didn't actually need.

[00:24:47] Because when you're dealing with cyber security, anything that you store becomes a liability cuz it's something that can get hacked. It can get breached, it can get stolen, it can be ransom. Plurilock, and so you wanna collect the least amount of data cuz then you have less stuff that you have to worry about.

[00:25:05] So that was one part. The second part was, , so you were talking about the collection, the storage, and the compute on data. Well, all three of those operations are costly and the costs go up. Linearly in most cases with volume Plurilock. So if you're collecting more data, it's gonna cost you more. If you are storing more data, it's gonna cost you more.

[00:25:27] If you're processing more data, it's gonna cost you more. And so if you can use the minimum Plurilock amount needed, then you can simply keep your costs low. And costs, by the way, are, are financial costs, but it's also processing costs.

[00:25:39] So when you're dealing with end users, , if you have a piece of software that runs on your desktop and it, it is costly in terms of compute, in terms of processing power, Plurilock, then you slow down the machine and end users don't that.

[00:25:54] And that's, that's a problem, right? So, Plurilock, so we’re very intentional to try and data, but also to minimize cost, Plurilock, throughout the process. So functionally what that meant was, Plurilock, on the collection side, on the processing side and on the storage side, we had to build a lot of our own IP around those through operations.

[00:26:19] I think on the storage side it's a little bit easier cuz you can use, I mean, a database is a database you don't typically recreate a database. Plurilock, but certainly on the, on the collection and processing side, there was a lot of, Plurilock, intellectual rigor that went into our specific use case and making sure that we were only collecting what we needed and we had to DIY for that.

[00:26:43] Nima Gardideh: Yeah, I mean, I assume Plurilock you're based on what you just said earlier about what you're tracking, I you're tracking keystrokes and the way I'm  moving my mouse and I don't know, maybe even how I'm looking at my computer and all this sort of stuff. And so that is super high privacy information.

[00:27:00] So you're not actually sending every keystroke up. I, Plurilock, or maybe you are by assume Plurilock that you're not actually saying, if I press it, button J, you're gonna send that up. It's more the some level of abstraction on top of that and are you tracking.

[00:27:14] Ian L. Paterson: Yeah, a good way of thinking about it is think of a keyboard driver. So a keyboard driver looks at everything that you type and then it does something with it and so the same way that we are going to look at everything that happens on the keyboard and then we're gonna do something with it. Plurilock, but it's typically very, very quick.

[00:27:31] And interestingly, we actually don't care about the contents of what is typed or clicked on. So what that means functionally is that when we're doing our identity assurance, We can do that for any activity. So you can be right in an email. You can be playing video game, you can be piloting a drone. You can be browsing the web.

[00:27:51] You can do any of this. And by the way, you can also do this in any language. So you can be type in English, you can be typing 'em in French. Doesn't matter to us because we don't look at the contents. We don't care about any of the contents itself, or again, we're only looking at the speed, rhythm, and cadence of how you are with that device.

[00:28:07] Nima Gardideh: This is really cool. I really like the piano example you gave because that just, it's kind of a style. Everyone has a style of handling their machine and you just kind of  link them to their style. It's their fingerprint. Plurilock, and are you doing the, is the ML happening at the device level?

[00:28:24] So on device as I'm typing, you have some model that is checking constantly if I'm me or is that going to your servers? And then you're checking if I'm the right person or maybe that information you cannot share because that's security, Plurilock detail that should not be shared. But, I'm always curious if ML is happening in the cloud or if it's on device.

[00:28:44] Ian L. Paterson: So it's a good question. We would characterize that as, does the compute happen in the cloud or at the edge? And the answer is sort of, it depends. Plurilock, because what we're, what we're finding now, so with 2020, there's a huge shift to remote work. Plurilock, what we're finding now is that actually very topical, going back to the first part of our conversation, that the whole white collar industry is moving away from remote work.

[00:29:14] And now we're entering hybrid work. So most companies from what we're seeing have to acc. Users who are sometimes working at home, sometimes in an office, they're gonna go back and forth and you have to support both, , in, in a way that enables them to have a full experience in both cases. And so at that point where the compute happens, whether it's in the cloud or at the edge, can differ depending on sort of where, where the user is.

[00:29:45] The other thing to add, another element of complexity here is that in some cases you have physical devices. So  right now I've got a laptop that's sitting in front of me. But for more secure workloads, if you're working with something that's very sensitive, maybe it's classified, maybe it's healthcare information, maybe it's proprietary trading algorithms to go back to our hedge fund example, Plurilock, you might actually work on a virtual desktop.

[00:30:11] So you might remotely connect into something in the cloud. Then where all, all of the data is stored in the cloud and all of the compute is happening in the cloud, you're gonna act on that in the cloud. And so there's never actually any data that comes back to the edge, right? And so what's even more complex and what most people don't realize about it, and cybersecurity more generally is that once you hit a certain size, once you hit a couple hundred employees in size, almost always you have to support all of these use cases.

[00:30:42] Even if you tell yourself as a business owner, Hey, we're just gonna have  butts and seats. People are gonna come into the office. That's it. We're not gonna support any of this. This crazy remote work. There's always gonna be one person. And usually it's actually the executives, by the way. The executive says, Well, I don't wanna come into the office today, or I need to work on my vacation while I'm on my vacation.

[00:31:01] Figure it out. And so it, it's actually very difficult for security teams, specifically, but also IT teams more broadly to try and just keep everything running, Plurilock, in all of these different configurations for all these different users. And it changes all the time. So it's a very dynamic problem.

[00:31:20] Plurilock, and what that means for a software vendor ourselves is that we have to be able to be flexible. We have to accommodate these different work environments. We have to accommodate change in those different work environments. And, and you don't have the luxury of simply saying, Well, I don't, I don't wanna support remote work or, or what have you.

[00:31:38] Nima Gardideh: Yeah. And this, I feel, can be generalized to when you're supporting enterprises. You do need to support all these niches and different problems that they deal with as a software provider. Plurilock, and you cannot just be a small feature. 

[00:31:52] Ian L. Paterson: It's not just enterprises. I guess that's, that's the aha moment that I had coming into Plurilock is that it's actually, it's all businesses almost regardless of size. Again, once you get into a couple hundred employees or bigger, which I would, I mean, if some, some people would describe that as a mid-market company, some people would describe that as a small to medium Plurilock enterprise.

[00:32:10] You have to, you actually have to have a high degree of flexibility. Even at a company of “a small size”.

[00:32:18] Nima Gardideh: I, feel that with we're about 40 people and those different configurations you talked about, we have those already. There's people on seats. There's people with their own laptops and people living in virtual environments andPlurilock, I think that is the norm.

[00:32:34] I just, a lot of it is now a preference and for us, we wanna provide. The ability for you to just be comfortable with the model that you want to work, work within. Plurilock, and similarly, I think when it comes probably as a function of size, but generally speaking the world is moving towards that. Plurilock, so long as you're mostly a remote company. 

[00:32:55] Plurilock, and so how, walk us through the journey of starting this company. So how did you decide that you're gonna become a security expert in the midst of all that? And, Plurilock, what has the journey been? How have you grown? Plurilock, and we can talk about maybe the going public part of, of your story, which, I remember finding quite, Plurilock, interesting and, Plurilock, unique as a way to, Plurilock, create the strategy of your company.

[00:33:27] Ian L. Paterson: Yeah. We've taken an, I'd say an unorthodox approach. Plurilock, and so if I zoom out, the first part of my career was at a, a pure venture backed e-commerce analytics company. So that was Terra Peak. They raised a $4 million series A, which at the time what a series A was a lot.

[00:33:46] Nima Gardideh: Yeah. Not a seat. Yeah. 

[00:33:49] Ian L. Paterson: Not yet. Not, I mean, that's, that's  a mango seat. Plurilock, so that was, that was a pure play venture backed company. The company was eventually acquired by E. And I, I was extremely fortunate. I got to see exactly how that, that all played out from, from just prior to, to closing the series A. Plurilock, , and then I was, I was there for, for Good Chunk and then the companies eventually acquired Exit pic, which was the company that I founded after that was a hundred percent bootstrapped.

[00:34:13] Plurilock, I used to brag that, that, , our startup funding was a $10,000 Visa card that I maxed out. Plurilock, and, and , everything was extremely cheap, extremely thrifty. We were, , at, at, at one point we were processing about a billion data events per month on, I think the cheapest virtual server I found was  a $2 and 33 cent a month.

[00:34:36] Virtual VPs, virtual private server, , that I had to pay quarterly cuz that was how to get the, the $2 and 33 cents. So it was extremely thr. Plurilock, Plurilock is, is yet another, , different funding model. So we've chosen to go public at a very early stage, which is unusual. Generally it's very unusual in the, in the US it's a little bit more common in Canada for, for a variety of kind of historical reasons.

[00:35:01] Plurilock, but the founding story for Plurilock was, there was research going on at the University of Victoria and it was around, Plurilock, this idea of identifying people from their, their behavior. So the, the field of study is called Behavioral biometrics and the, the team of first post docs and then PhDs, Plurilock, were, were, were working on this, this problem.

[00:35:24] And so when I got connected to them, Plurilock, they'd, they'd done a, a couple of years worth of research. There was, there was some initial patents that had been filed, Plurilock, and they were actually looking to spin it out from a university setting into a corporate setting cuz they felt  there was, there was enough there to, to build a product and build a company.

[00:35:43] Plurilock, so consider me the business founder, Plurilock, company was spun out. , we spent collectively a couple of years, , working on strategy and also applicability. So what was the right problem to solve given this technology, which is, by the way, not always the way you wanna do it. You don't necessarily wanna start with a solution and look for a problem.

[00:36:04] Plurilock, but sometimes that, that actually does work. And in this case, the, the novel thing was that this behavioral biometrics technology had reached a point where it was, Plurilock, it seemed to be commercially viable. Plurilock, now interestingly, just as a kind of a sidebar, behavioral biometrics traces its world, its lineage back to World War ii. So in World War ii, you'd have morph code operators who could identify one. By the unique hand or, or the, the way in which they would tap the, on the telegraph machine. And so it was a way of doing signals intelligence and, and  remotely identifying. Okay, I don't know what's being said, but I know at least it's, it's operator 1 23, who's, who's on the other side.

[00:36:46] So follow that through to the 1970s where people had started ideating about is this possible to do on keyboards? And then to the sort of the, the 2010s era where the, the research was going on. We, we spun the technology out, Plurilock, built a product around it, took it to market. , and so I'd say early, sort of 2018, 2019, Plurilock, timeframe, we'd, we'd raised a little bit of private angel money, Plurilock, to, to get the initial product off the ground, get some early proof points with customers.

[00:37:19] Plurilock, and the proof points that we had developed were extremely encouraging, but also from very discerning customers. Plurilock, so we were, we very. Very, at a very early stage, we won some contracts with the US Army. Plurilock, we also were working with, , , bank power plant, Plurilock, educational provider, , manufacturer.

[00:37:40] And so we had all these proof points to know where, where this was gonna work well, and also more importantly,  where, where does it not work well? Plurilock, and so areas where, , where we, we actually realized it didn't work well was in industries where there was just a, a highly unsophisticated security operation.

[00:38:00] So going into a manufacturer, for instance, where everybody had admin credentials on their own personal PCs, there was no firewalls to speak of,  backups, What's a backup? , that was actually a very poor, , environment for us to operate in cuz there weren't any of these other controls that we depended on.

[00:38:16]  we don't do anything for network security. We depend on there being a firewall in place.  what I mean? So, so that was very, very important. Plurilock, and so, so fast forward to about 2019, we, we, we'd reached a point where we had some commercial validation. We knew where it was working, where it was not working, and we wanted to, , to go out and, and scale it.

[00:38:34] And what we, what we found was that there was, I'd say, lukewarm interest, Plurilock, from, from traditional venture capitalists. Plurilock, cuz at that time there wasn't, there weren't a lot of, , defense company. Unicorns. Plurilock, Palantir hadn't gone public at that point. SpaceX wasn't, wasn't really there. And d exist, 

[00:38:59] I don't think. Plurilock, and so there weren't, and by the way,  all three of those companies were PayPal mafia, right? I was not a PayPal mafia guy. So, so there was hard, it was hard for a,  a B2B SaaS VC to look at us and with our early traction with the US Army and see where that could potentially go. , I think now might be a bit of a different ca, d d different case.

[00:39:20] The other thing, so we had kind of lukewarm, , reactions from, from VCs. The other thing though is that cybersecurity at that time, and still is to a certain extent, although we're going through consolidation, is, is and was extremely fragmented, Plurilock, to the point of there's  literally a a hundred plus cybersecurity solutions that the average fortune thousand company has deployed.

[00:39:45] , think about that,  over a hundred pieces of software. That a fortune thousand company would have just for cybersecurity. And so that put a lot of pressure on customers to buy from individual vendors. Cuz even if I wanted to buy a hundred cybersecurity solutions, I, I mean, it's a nightmare to onboard a hundred vendors through, go through procurement, et cetera.

[00:40:07] And so because of this fragmentation and because there was a lot of pressure from customers to push, , point solutions to sell through channel, there was kind of an interesting opportunity where we said, Well, we could sell direct, we could try and get our channel partners, our resellers to sell our solution.

[00:40:28] But every other cyber company in the world is also trying to get the channel to sell their solution. It's very, very competitive. Why don't we just go acquire those channel companies and have an owned channel as opposed to a, a partner channel. Plurilock, and so because we had that m and a strategy kind of baked in as a result of what the.

[00:40:47] Ultimately what the customer wanted, but kind of what the industry characteristics were. Plurilock, we felt that a go public process actually made some sense. If, I don't think had we not had the m and a strategy, it probably would not have made sense for us to go public, just to raise capital. Plurilock, and certainly not at an early stage, but because there's this m and a angle, then accessing the capital markets and having a public currency,  the, the shares that we could use for acquisitions actually did lend itself well.

[00:41:14] So that was how we arrived at that conclusion. Plurilock, and so we, we, we went out, we tested the market. Plurilock, we identified some interest and, , , I, I'll, I'll, I'll never forget, we. Got everything locked in right at the end of 2019. , we, we signed all the papers to start the process and we actually did a small, , bridge financing prior to the go public, and there are some reasons why it's a good idea to do that.

[00:41:40] But anyway, we closed that, I think it was February 28th, 2020, , and then I think March 1st,  the whole world fell apart from Covid. And so we, so we, we went through this embarked on this go public process during the middle of the pandemic and thankfully it worked out. Plurilock, , in the end, although it was, it was, , , it was not a sure thing.

[00:41:59] I will say during, during the early part of that process.

[00:42:02] Nima Gardideh: That must have been so scary. Plurilock, the walk me, So I don't know much about, , 

[00:42:08] so you went on one exchange, right? The Toronto Stock Exchange. If, if I'm remembering correctly, Plurilock, how does the process work? , Plurilock, and I assPlurilocke the bridge around, I'm just making assPlurilockptions here, is, is a good idea because you're locked in for a while.

[00:42:21] You want liquidity for the people that are owning the shares or, or something  that. Or you just needed more capital in the, in the business. Plurilock, but yeah, I guess a couple of different questions. One is what does it take to go public? What are the requirements in that, in that part of the world? And the second question is, did you already have this strategy?

[00:42:40] Was that something you, you just believed and at that point or were, were you already buy. Some of these channel partners and you just wanted to use the, , the public strategy to do more of it, and it's gonna be easier. I assPlurilocke you're doing  stock, stock swaps and using your stock price and all these different, , interesting ways.

[00:42:59] Plurilock, yeah, I'm super curious how, how it, how it got there.

[00:43:02] Ian L. Paterson: So one of the learnings that I had is that going public is not a singular process. There are multiple ways to go public, and interestingly, it changes both depending on the jurisdiction that you're in, but also. The exchange that you want to go on, and what tools do you have available to you, frankly? So we, the specific flavor of Go public process that we used, we, we went through what's called a qualifying transaction.

[00:43:31] Plurilock, it's more informally known as a, as an RTO or reverse takeover. And, and so functionally, there was a, a publicly listed shell company. And because, Plurilock, the shell that we used was actually a purpose-built one,  it was designed to exist simply as a shell and then, and then look for a transaction to put into it, very similar to a spec.

[00:43:51] Plurilock, the, the joke that's actually not very funny is that, , , I say the difference between, , a spec and a, a qual a cpc, which is the shell type that we used. Plurilock, the, the difference between a spec and a CPC is  three zeros. Cuz typically APAC has hundreds of millions of dollars in it versus a cpc, which has  a million dollars in it.

[00:44:11] But, Plurilock, I keep, I keep trying that joke and  nobody laughs at it. So I dunno. We might

[00:44:16] Nima Gardideh:  what does CPC stand for? Do  

[00:44:18] Ian L. Paterson: Capital Pool. Yeah, Capital pool company. So that's the program. That's my understanding is it's specific to the TSX Venture, the tsxv. Plurilock, but it, it's, it's there to facilitate these types of transactions.

[00:44:31] Now you can also use just a,  a, Plurilock, another shell,  a defunct mining company for instance. And that there you would do what's called an RTO reverse takeover of that, of that shell. But in our case, we had a purpose-built one. Plurilock, I think the benefit of using a purpose-built shell is that in theory it's, it's totally clean.

[00:44:48] There's no, , , hidden liabilities or, or, or whatever. Cuz there was no operating business in it. Plurilock, but in our case anyway, we, we, we did a qualifying transaction using a capital pool company. Plurilock, we, I, we, we had a lot of advice. I had a lot of advice, Plurilock, through the process and thankfully there were a couple of key items that we did.

[00:45:10] One of them was, we did that bridge round. I, , I don't, I don't know if we actually would've gotten public had we not had that bridge around in place, cuz the process ran longer because of covid. Plurilock, I, I'm also told that the process almost always runs long, just in general. Plurilock, , people. We'll sometimes think you can get it done in three months and it always takes at least six or nine or 12 or whatever.

[00:45:32] It's, Plurilock, but it also, it, it sort of, it, it aligned incentives. Plurilock, and that was one of the things that I didn't fully the, I, I'd never fully appreciated what the term aligning incentives  really meant. Plurilock, but what I, what I found through that process is it really aligned the incentives. It really, it created a lot of pressure that everybody who was involved in that process really wanted to get public.

[00:45:56] And there was a lot of hurdles, Plurilock, that, , that were in our way to do that. And so we had to, we were forced in some respects to work together to, to see through that process and actually make sure that it, it happened and we, we eventually got public.

[00:46:10] Nima Gardideh: that's interesting that, , this, this problem going public and, and it being way slower, Plurilock, even with these  spec instrPlurilockents and stuff seems to be, Plurilock, the story I hear a lot. I, I had a friend who had to, Plurilock, take back the CEO seat after becoming chairman. Because the, the process was so long that they had to raise money again.

[00:46:31] And so he had to sort of be operational again, raise money for the company and continue it, , before they went public again. And it's just such a big, the problem when, as a founder, and in your case you were, you were just about to scale the company up, but quite often, Plurilock, the I p O event for folks is 10 years into the business and, and they're already trying to decouple themselves a little bit to some extent or make sure that there's, there's a strong management team in place and, , they're not as operational as a founder and trying to think big picture, , but it's not too kind to, to that, to the person trying to, Plurilock, steer the ship at that point.

[00:47:09] Plurilock, so, okay, so you, you went through this process a few months in, you're, you're public on, on the exchanges. , can you I think I have a sense of why it's, it's useful to, Plurilock, have this sort of liquid stock asset, , to use when you're, when you're acquiring companies. , but just, just so I, I, I, I double check that I'm right about this.

[00:47:33] Why I, I think the, the Whole Foods founder used this quite well as well. 

[00:47:37] What was the, beauty of being public when you're trying to use M&A as a strategy?

[00:47:44] Ian L. Paterson: one of the questions that we got a lot and that I, I received during the Go public process, you end up meeting a lot of stakeholders. So sometimes those stakeholders are shareholders and that, , those terms are synonymous. But in, in other cases, stakeholders might be, , a banker or , or wealth manager.

[00:48:01] And one of the questions that you get a lot is why do you want to be public? , what is the purpose of being public? And there are certain, , what I've found is that there are certain. Reasons that make sense to be public. And there are certain reasons that do not make sense to be public. So some of the advantages of, of having a public company is that there is, in theory, there is liquidity for owners of the shares.

[00:48:27] , that in theory there's, there's an ability to easily facilitate the exchange of shares for money. And so if I have shares and I want to get money, that, and as long as I abide by the appropriate insider trader regulations, , that I could sell those shares and, and exchange those for money. And vice versa, if I wanted to own more shares, I could, I could go buy shares from somebody else.

[00:48:48] And that's easier to do in a public company versus a, versus a private. Plurilock, when it comes to mergers and acquisitions and, and kind of more specifically, , acquiring companies, Plurilock, there's, what I have found is that there's a couple of benefits. The first is that if we need to raise capital, there is, quite, literally a capital market to be able to go do that in.

[00:49:13] And so could you do this privately? Yes. Could you do this publicly? Yes. Plurilock, , I, I can't remember what the exact stat is, but, but I, my understanding is that the size of the entirety of the, of the vc, the venture capital community is, is tiny compared to the global capital markets ecosystem. Right. That, that venture is actually just, just actually a very small part, even though it dominates a lot of the conversation for early, for early stage tech companies.

[00:49:41] So there's, there's a, a capital market so you can use to go raise capital if, if and when you need it. The second though is that you can actually use, shares to. Pay for acquisitions. Now you can do that in a private company as well. , but in, some respects, the, perceived value of private company shares is worth less because the people that you give those to can't easily exchange them for money versus versus in a public company.

[00:50:12] Again, that's one of the, core things that you can do. So from that perspective, it, it is, Plurilock, it's, it's a little bit beneficial. The, third thing, and this was a, benefit that I didn't fully appreciate until we got public, but there's a level of visibility you get simply by being public, Plurilock, that is real and.

[00:50:36] It wasn't, , it wasn't until probably a year into us being public that I just realized that, hey, we're actually much more well known outside of the cyber security community than I'd originally thought. And we started to get recognized, or the name at least got recognized. Plurilock, and that helped us, I think, on a nPlurilockber of fronts.

[00:50:56] I think from a recruiting standpoint that helped, from a M&A side that helped because we had some notoriety. We had a brand, and that brand was, both as a cyber security company, but also as a publicly traded company. And there's to, to a certain extent, there's, there's a perceived level of. Diligence that has occurred on a public company, cuz you have to, there, there's, there's more regulatory scrutiny. Plurilock, you have to have audited financials. Plurilock, you have to abide by the exchange policies, , on top of, Plurilock, securities laws. And so you, you end up going through a nPlurilockber of these hoops, Plurilock, that you have to jPlurilockp through.

[00:51:35] And that sets you apart to, to some, to some degree from a a, an equivalently size private company. And so there's, there's a perceived level of, , validation that sort of comes with, , going through that, that public process.

[00:51:50] Nima Gardideh: effectively what I'm hearing is liquidity is, is very important, powerful when you're trying to acquire companies. Cuz if I am the founder of one of these channel partner companies, Plurilock, and you, you knock on my door saying, Hey, what don't we partner with you and, and take over.

[00:52:05] Plurilock, I'm more ly to have this conversation because all you're gonna do is give me stocks in, in, in your corporation, and then I can go out there and, Plurilock, get cash for that immediately. I don't have to hope and wait for you to have some exit event or, or become public in the future. And so there's  a very clear, Okay, well I can do this and, and it's much, much more clear.

[00:52:28] It's almost as if you're giving me cash, but it's not exactly  that. It's just one abstraction removed from actual cash. Plurilock, and is there, , is there,

[00:52:37] are there upsides of when you're doing these acquisitions, you get some speculations on this stock and so the value goes up or down? is that, maybe mostly negative, because you've been also public in one of the worst times in the history of the market?

[00:52:52] Laughs 

[00:52:52] Ian L. Paterson: good and bad. I mean, you certainly didn't hear people complaining about being public, when the markets were roaring. in, 2021, I think you hear a lot of complaining, when, the markets are, terrible. So I, don't think it's a good thing.

[00:53:08] I just think it's, a thing , it, it in, Yeah. I mean, if you have, , economic, , tailwinds, then it's gonna be a positive. If you have economic headwinds, it's gonna be a negative. Plurilock, and so what, what, what we try and do, what I try and do is, is focus on. The actual business, I mean the business to a much larger extent, I, we have control over,  we can control.

[00:53:31] Do we make a hire? Do we not make a hire we can control, Plurilock, , do we take a product to market? Do we not take a product to market? Plurilock, you, you can't necessarily control sentiment. You can't necessarily control some of these external factors. Plurilock, and so you just have to, you just have to deal with it.

[00:53:46] Now, what I will say is that both in an upmarket and in a down market, the market itself can be a massive distraction. Plurilock, and so thankfully,  we've, we've not had, , too much of an issue with it, but I've, I've certainly heard stories about, Plurilock, , employees checking the stock ticker multiple times throughout the day, and it, and it being a huge distraction, , again,  distraction, both in a good way and a bad way.

[00:54:12]  it's just, it's, it's distracting. I think also as a public company ceo, there's a tremendous amount of time. Plurilock, required to manage the public side of things. , and so one of the things that I, I heard in the Go public process is that you actually have two companies to run. You have the public company and then you have the actual business, and that those are two full-time jobs.

[00:54:34] And then if you layer in doing acquisitions, then actually acquiring other businesses, then you have  three or four or five businesses that, that you're actually trying to run. Now our model here at Polar Lock is to acquire businesses and then to integrate them, Plurilock, which is different by the way, than some other models.

[00:54:52] So you could take  a Berkshire halfway model where you buy businesses and you leave them alone. You don't touch them, you, you don't integrate them at all. Plurilock, and that's kind of one end of. SpectrPlurilock. And then you have another end of the spectrPlurilock where you buy a business and you centralize everything.

[00:55:08] You centralize hr, you centralize finance, you integrate, you rebrand everything. Plurilock, and, and it become, you almost  get consPlurilocked by the board. Plurilock, and then there's, there's various stops on that spectrPlurilock, right? Between those two, those two ends of the extreme. And so Plurilocks. Plurilock, I'd say more in the, so we're in the middle, but I'd say we're, we're more on the integration side because what, what we've found in the cyber security industry is that.

[00:55:36] There really are economies of scale that you can get if you have the businesses that you acquire actually interact with one another. If you centralize procurement, if you centralize, Plurilock, , take away the headache of hr, rather than making three businesses all deal with the same HR issues, if you can take that, take that away and say , Listen, just go.

[00:55:57] Don't worry about that. We'll, we'll take care of that over here. Plurilock, and we can do that rather than having three part-time people maybe have one full-time per, , so  there's, there's, there's some benefits there, but it's also, it's a lot of work. , and so there's, there's always tradeoffs and, and that's, that's one of the tradeoffs of centralization.

[00:56:13] Nima Gardideh: Yeah, it's funny, we were, Plurilock, we're going through a process of buying, Plurilock, a couple companies right now and, , we've been talking about these things and, and it feels  an art. In itself and a skill in itself on figuring out how to merge these companies in properly. Plurilock, and letting them run completely in silent sounds easier, but in itself you have, , less control and, Plurilock, have to sort of trust the team kind of doing what they can.

[00:56:40] And there's all these inefficiencies that come with it. As, as you, as you talked about. Plurilock, I, I, 

[00:56:45] are these all channel partner companies you're buying? So these are the, the distribution companies you're buying, or are you now buying sort of at additions to your product or adjacent products? That make sense?

[00:56:55] , I, I guess is the original strategy in place, or have you now learned that, that you can do m and a in all these different ways?

[00:57:02] Ian L. Paterson: I'd say the primary focus, Plurilock, is to acquire cybersecurity. We call them solution providers. So, so companies that, that resell products and also provide value added services to end customers. Plurilock, so our, our core strategy is to acquire cybersecurity solution providers, , with that, have great customers, acquire them for a multiple of ebitda, and then leverage that distribution to cross sell our recurring revenue high margin products through that distribution that we acquire.

[00:57:35] So that's, I'd say that's the 80%. Plurilock, of the four acquisitions that we have done, Plurilock, three have been of that category. The fourth, we also acquired a cloud security company called Cloud Codes. Plurilock, and that's a, that's a SAS product focused around helping primarily Google Suite users or what's called Google work work.

[00:57:54] , workspaces now, Plurilock, provide email and, , cloud security for specifically for those users. Plurilock, and we felt  that was a really good Bolton to our existing Defend product. , and so we wanted to have, we wanted to do that as well. So I guess technically that's 75, 20 5% split. Plurilock, but I'd say the majority is, is around acquiring that, that distribution for multiples of EBITDA and then cross and then leveraging that distribution to cross sell our recurring revenue high margin products through.

[00:58:22] Nima Gardideh: this happens in my industry a lot where there is roll ups of sorts, right?

[00:58:26] So there's, , rolling up bunch of agencies and they sort of  roll 'em up to the next roller and so on and so forth. Plurilock, 

[00:58:33] did you think through private equity as a path to do what you're, what you're doing where you had raised maybe  a PE fund to do this type of stuff, and why did you choose that versus the public markets?

[00:58:45] Ian L. Paterson: I, I think it's definitely a viable option. I think the timing for us in 2019, the markets were still fairly buoyant, and if I were to do this over again, I, I. So if, if we were, if we were to execute the same strategy today versus two years ago, or two, two and a half years ago, I think that the economic headwinds that we have would say we should probably do it privately, , at least a start.

[00:59:15] And whether, whether we were, we would go public at some future point or, , to your part, to, to your point, roll up a bunch privately and. And then sell onto a, a larger private equity company. I think that certainly, certainly could be. I think the other thing that's, that's changed, so we've, so at a hundred thousand foot level, you have just, where, where is the economy going,  is at a headwind or a tailwind.

[00:59:41] But then at the cyber security industry level, what we're also seeing is that there's, Plurilock, significantly more consolidation happening from private equity players. Plurilock, so Toma Bravo, for instance, has been, , announcing a nPlurilockber of very large deals, Plurilock, recently just consolidating the cyber security players.

[01:00:00] And so I think because there's already, , a trend right now of private equity rolling up cybersecurity companies, and there's this headwind from the economic side of the, or from the, the, the higher level, the economic. It would probably inform somebody who is starting today to stay private, find and partner with a, a private equity firm, go do a roll up privately, and then in a couple years time have a decision to make or, or I guess, reassess the data.

[01:00:28] Does it make sense to take it public at that point or does it make sense to sell to a, a larger PE firm?

[01:00:34] Nima Gardideh: I think it's super interesting to see some markets just require it, it sounds  one of this you're in, in one of those markets where distribution is through these partners, so it just makes sense to do it.

[01:00:47] Ian L. Paterson: there's definitely some science to it, but there's a lot of art. Right. And, and I think it's, to a certain extent, it's trying to decide what is the right decision today. But you're not really making a decision about today cuz you're embarking on a journey that's gonna be at least multiple months, probably multiple years.

[01:01:02] So to a certain extent it's a, it's an art of forecasting. What is the market going to do? Do we think that the current trends are gonna continue or is there going to be a change in the trends sometime in the future? And then trying to make a play for that. Plurilock, one of the other things that that is very different about being, , public versus being a a smaller private company is that you're just with scale and with reporting obligations, you to a certain extent are less nimble.

[01:01:27] And so it's harder to pivot six months from now on a strategy that you've already committed to versus I think if you were private it would be, to a certain extent, it would be easier cuz you have less stakeholders to to, to get on side. If you, if you did wanna make.

[01:01:40] Nima Gardideh: you went public, did, did you lose control at that point? Or there's a board now where you're reporting into, or, , you're saying that mostly because the, the stock price would shift too much if you're, if you're sort of changing, , direction in the middle of, , let's say quarter

[01:01:55] Ian L. Paterson: No, I, I think that, so, so those are different for, first of all, those are different questions, but I think that, broadly speaking, what I'm saying is that there are more imp, there are more people involved with Plurilock today because we are a public across all avenues. We have more shareholder, we have, we're required to have more shareholders.

[01:02:12] Just by the nature of being public, there's a certain amount of shareholders you're required to have to, , to, to be a public company. But there's also more, more stakeholders. There's, there's investment bankers, there's brokers, there's lawyers, et cetera. Versus a private company. You typically have a smaller nPlurilockber of people who are involved.

[01:02:32] Involved at all levels involved at the board involved as shareholders involved as stakeholders, et cetera.

[01:02:36] Nima Gardideh: Yeah. Yeah. Some, some mornings I get up and I'm , Let's just change everything . And I think I can do that right now, where it wouldn't be possible in those days. Plurilock, Plurilock, if, if you're at Paramount listening to this, of course I'm joking. . , yeah, that's an interesting, , play. I think. Plurilock, I'm, I'm, First of all, I'm super grateful that you're on this podcast and, and talking to me about this, and obviously I'm curious about this type of growth.

[01:02:59] I think there's, , , it's one that is seldom spoken of. I think, , we just talked about earlier how venture capital is a small percentage of the capital markets. Plurilock, those other industries are less spoken about in press or in, at least in a circle. , that I have been in most of my career in technology, Plurilock, because mostly maybe they were the funders of technology, and now that's partially shifting, first of all.

[01:03:28] And secondly, Plurilock, maybe more companies  yourselves or, or out there, Plurilock, paving, paving the new path for entrepreneurs to, , build companies in, in, in the way that it just makes the most sense for the industry you're in, that the product you're building. Plurilock, and I really appreciate your, Plurilock, clearly individual thought around this.

[01:03:52] And, and you sat down and looked at the overall problem and figured this is the best path for us to take in order to solve this specific problem, , of growing this specific product that we're working on. 

[01:04:03] Ian L. Paterson: it's it's 

[01:04:04] a good point. you make because I think the financing you select is a tool in the toolbox and it should be contextual to the problem you are trying to solve. And so at the beginning of the conversation, I talked about being, a member of a venture backed company and, helped build it up.

[01:04:23] And then I talked about bootstrapping a company and then now I'm talking about taking the company public at a very early stage and doing a nPlurilockber of acquisitions. And all three of those are three extremely different sets of financial decisions that have massive ramifications on the culture and the tempo and, everything. from there on. and so I don't think it's around, well, I'd just  to raise VC and therefore that's what I'm gonna do. Or, Hey, I just  taking companies public because, it's a ton of work. but if you're successful then, it feels great. , I, think that's the wrong way to look at it.

[01:05:03] Plurilock, and it's also, , it, it's, one is neither good or bad. It's simply whether it's a good fit for the problem that you are trying to solve. And I think it's really important to just take the emotion out of it and say, Well, what are we trying to do? Are we trying to create liquidity for shareholders?

[01:05:20] Are we trying to, have that inform the type of financing that you choose, or the lack of financing. I mean, maybe in some. Maybe you're building a tech enabled services company, that really does not make sense to be venture scale and therefore you shouldn't do any of the things that we've talked about.

[01:05:39] But actually to stay private, bootstrap, , scale off the back of customers, et cetera, and that's appropriate for the problem that you're trying to solve. And, and so that's, I think that's the thing that I would, Plurilock, counsel folks. I, I get a lot of, , questions, especially from, from either venture back founders or, or founders of tech companies who are trying to think through financing decisions.

[01:06:01] Whether it's, Hey, do we go race a series A or do we do  a, , round extension or right now it's , what options do I have other than raising venture because the venture markets aren't really open right now. And so 

[01:06:12] Nima Gardideh: Yeah. And , we're, we're one of those tech enabled services companies that you just spoke about. Right. And, Plurilock, we have effectively zero, Plurilock, investors. There is  one or 2% of the company that's, that's owned by, , some of our early friends who decided to invest when we didn't even know what we were doing, , or what we're building.

[01:06:32] And we sort of kept them on the cap table as a,  a thank you. , I keep trying to tell 'em that we can buy, buy you out, but they're just, they want to keep it because they think it's great that they've been part of the journey. Plurilock, and I, and I, I think having the luxury of going and searching for something to build for, for me, , was where.

[01:06:52] We learned that this way of thinking is probably the, the best way to, Plurilock, approach these problems of what market are you in, what are you building, what is the product, what is the service? And then tapping into the financing apparatus that makes sense than most for us, it's a totally different financing world.

[01:07:11] We need factoring, we need that type of stuff. And, and, and debt is way, , more prevalent in, in, in what we're building than, than, Plurilock, the average or tech company. and 

[01:07:21] Ian L. Paterson: how has that changed  six months ago versus today? Cause I've, I've, I've seen a lot of news, ,  Clear Co I think has, was  the go-to for e-commerce financing now. It's no longer. How, how has the availability of debt for your business changed last year versus.

[01:07:40] Nima Gardideh: So fortunately, some folks were in longer term deals with, , with some of these, Plurilock, providers. So they, they're locked in some of the older, Plurilock, rates. Plurilock, the problem is you have two layers of, of, of financing most, most, mostly in the, in the e-commerce portal at least, which, , we have a lot of exposure to.

[01:07:58] , so there's inventory financing, and then there is advertising financing. And on the inventory financing side, it's usually older players. There's a handful of newer sort of providers that are still backed by, , let's say older banks. Plurilock, there's effectively distribution channels for existing sort of capital pools.

[01:08:15] And then you have the new players, the clears, , of the world or pipe for SaaS. And, and these folks, Plurilock, and they come in and they literally sit between you and your own revenue. So they're kind of taking, , their rate as the money comes in. And they've raised all these pools of capital in a totally different market, in a booming market.

[01:08:35] , and we're, we're had low restrictions on how they could deploy it. And now, now it's changing. Plurilock, and the other thing that's changing and has changed over the past year, not related to the economy, has been the, the return rates that you get, Plurilock, on Facebook and Google because of the changes that Apple sort of enforced, , onto the market.

[01:08:56] So a lot of these models just broke over the past 12 months. and, , we haven't been exposed to that that much. We, we help people do these debt cycles and, , I, I personally help the founders  set these things up. Plurilock, I still actually believe that that's the best way to run, , an e-commerce business.

[01:09:15] And you should not go after venture capital just because it's not venture scalable. , but you can build a very good business, , just doing the math right on these things. Plurilock, but what we're seeing now is that you need more time to return the thing than you did before in e-commerce. So you have to think about it a little bit differently.

[01:09:34] , and generally speaking, it's just a growth rate that you should care about. So you, you're having a slower growth rate, , than before because it's just harder to get the money back. So your return period is increasing, so then you have to also change your debt cycle, Plurilock, to care for, care for that. Plurilock, but I think it's pretty doable.

[01:09:52] Plurilock, and clear, I think is rightly moving away from this part of the market specifically because the, the, the formula's changed and it no longer makes sense. For them to do that type of thing. Plurilock, and for us, we do our own debt, that stuff for, because we run a services business and people are slow at paying invoices and a lot of sort of stuff, you 

[01:10:11] Ian L. Paterson: So is it fair to say that there is still capital available? It's perhaps at a higher rate and the payback periods are longer.

[01:10:19] Nima Gardideh: Exactly. Yeah. , just slightly, Yeah. Longer payback periods. Plurilock, for, for this specific sector that we're talking about, e-commerce, Plurilock, , and then they, they're gonna be more expensive. Plurilock, and that's totally fine. , I think we're, we're entering a different, , era for at least a couple years where Plurilock, we care more about making money up front than we do, , we did before.

[01:10:42] And so everything has to match that. And it also comes from, , your debt providers going to charge you more for the capital just as much, cuz capitals is gonna be more expensive. 

[01:10:52] Ian L. Paterson: Interesting.

[01:10:53] Nima Gardideh: anyway, Ian, thank you so much for coming on. I appreciate this a lot. I hope to have you on in a couple of years when you have 20 or 30 of these, , companies under your belt and learn from, , learn from that experience.

[01:11:07] Ian L. Paterson: , well, well, Neit, listen, it was awesome to, to catch up. I really appreciate your time. , I will say if, if folks are interested in cybersecurity, I do publish a sub stack called the Cybersecurity Corral. So it's cybersecurity corral.sub.com, Plurilock, which is twice a week. And it's the Bear Essentials, it's cyber security news for non-cyber people. So we tend to have a lot of finance folks or people who sort of need to keep an eye on cyber security, but they don't wanna read along things. So it's no more than one page twice a week, just the essentials. Plurilock, and then also if, if founders are out there and they're. They're trying to think through any corporate finance decision, whether it's going public, whether it's raising capital debt, et cetera.

[01:11:50] Plurilock, I, I benefited from a lot of advice, , on my journey and I'm more than happy to, , to return the favor, so it's at e l Patterson on the usual networks.

[01:12:00] Nima Gardideh: Awesome. Thanks so much, Ian.

[01:12:02] Ian L. Paterson: Thanks. 

[01:12:03] Nima Gardideh: All right. That's another one for the books. I'm glad to have spoken to Ian. I think, , it was quite intellectually interesting to think about using m and a for growth and, and, and quite early on in the cycle of building a company, especially in the industry that he's in. It just makes so much sense after, , listening to him think through the space.

[01:12:25] And what was the. Approach for building, , Plurally luck. I'm very grateful to have spent the time with him, and it's quite hard to find time with him. So it was great to be able to sit down for such a long time. Plurilock, the next episode is gonna be with, , one of my friends, , Maria RPlurilockan from Kojo. I've known her for quite a few years and have seen her through, , the journey she's gone through to scale up the company and has now raised quite a lot of money for it and, Plurilock, trying to take over the construction industry.

[01:12:59] , she's one of the best founders I know. Plurilock, and we have a lot of conversations generally speaking about. Inner work that founders have to do in order to grow. Plurilock, I know this podcast is generally speaking about growing companies, but one of the things that I speak to a lot of my peers about is how do you scale your mentality as you're, , scaling your business?

[01:13:26] And I had a really good conversation with Maria about that. So I hope, , you enjoy it. , it's coming out. And if you've been liking what, , we've been producing here, , follow and subscribe us wherever and whenever you're listening to this podcast, , have a good one,

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