From NASA to nine-figure ARR: Adam Markowitz on building Drata, trust and timing in SaaS

Speaker A: We fell in love with the problem before the solution. The problem itself resonated so much with us because the product that we were selling to universities was meant to help students and recent grads prove the very things they were saying on their resume. And then when it came time for us to prove all the things we were saying, when it came to our Scary Climbs class year, the first time we were asked to, we couldn't. And that stung in such a unique way.

Speaker B: Welcome to the SAS Revolution Show, a podcast by SAS Doc. Here we interview SaaS founders from around the world who've been there and done that as they share the ins and outs of how they built their businesses, their operations, their path to securing investment, and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your wellbeing, and navigate the complexities of this ever changing industry. I'm your host, Alex Diemer, and together we'll explore the good, the bad and the ugly in the journey to SaaS success. All right, welcome to the SAS Revolution Show. I'm your host, Alex Stuma, uh, CEO, founder of SAS Do. Also general partner of Back Future Ventures. Delighted to be joined today by the co, founder and CEO, uh, of Drata, Adam Markowitz. How you doing, Adam?

Speaker A: I'm great, thank you, Alex. Thanks for having me.

Speaker B: Yeah, good to have you on. I. I'm, uh, seeing like, I, I don't know if that is a cowboy hat in the background, but then there's also a nice picture of, like, good sunset and some good weather and a glow. It's leading me to ask you, what part of the world, uh, are you in right now, Adam?

Speaker A: I'm in Southern California. I'm in San Diego. Um, yeah. That's funny. I just realized, yeah, there's a picture of some waves and the beach. It's very appropriate.

Speaker B: And the hat, is that a San Diego Southern Californian hat?

Speaker A: That's not. That's a gift from a family friend in Texas.

Speaker B: There we go. Well, a Texas hat. And Texas is a place as close to our heart as we do SASOC usa, uh, in Austin. Um, so, uh, a big fan of Austin, but haven't spent a summer there. I've heard it's particularly hot. Uh, and I hear people that live in Austin don't spend their summers there either. So, uh, that's for another story. But, Adam, thank you so much for coming on the show, um, and paying it forward to the sasoc community. We always like to get to know our guests, um, in the first instance and so would love uh, to know who is Adam Markowitz?

Speaker A: Adam Markowitz is a father, um, and uh, the co founder and CEO of Jurada, an agentic trust management platform. Um, but uh, yeah, it wasn't always the case. I can give you some background if you want.

Speaker B: Um, yeah, well I understand I didn't know this and I'm sure the listeners didn't know this, but in terms of your background, uh, you had five years of working uh, at NASA on the space shuttle program. Um, coincidentally there's a great documentary on the BBC at the moment around the space program which I've caught a bit of. But um, would love to learn more about that and how you came from that to moving to, from being an aerospace engineer to being an entrepreneur. Um, it's a big shift. I'm sure many others have done it, but you're the first I've spoken to.

Speaker A: Yeah, yeah. I don't know how common that path is, but uh, I, like I said, I grew up in Southern California, uh, in the 90s. And so the NASA space shuttle program was, was in its heyday. That's the initial inspiration for the 4 year old in me who always wanted to be an astronaut. And I've never grown out of that. I still would love to be an astronaut one day. Um, but uh, that, that led me to, yeah, an educational background in aerospace engineering and then astronautical engineering for grad school. Um, brought m. Me actually to San Diego first undergrad. Uh, I studied aerospace engineering at UC San Diego, um, and like I said, astronomical engineering at USC afterwards. Uh, and started my career in working on that very program, the space shuttle program that inspired me. I was there for the tail end of the program. Uh, no one knew it was the tail end of the program, but I was there for it. Uh, and they retired. NASA retired the space shuttle fleet in 2010, 2011. I like to say I retired along with the space shuttle program, at least from aerospace to start a company that was based on the problem I experienced and solved for myself making the transition from college to career. Um, I landed that job working on the space shuttle program by bringing a portfolio into my job interviews alongside my resume to help prove the skills that I was listing on, on that very resume with evidence, actual evidence of the project, papers, presentations, the things that I said prove the skills and competencies that I was claiming to have. And that was the initial impetus for a company I started called Portfolium over a decade ago now here in San Diego. Um, it was like a LinkedIn for college students as you could call it, centered around any portfolio with their academic work. And here's a lot, we learned a lot. I say we myself, daily, two co founders, we first time founder for me selling a uh, product in ed tech. We, we learned a lot real quick and a lot of it the hard way. I said we cut our teeth in ed tech, but it was an amazing journey. Seven and a half year journey. I'm selling into hundreds of schools, bringing millions of students into this network, um, and helping them connect their learning with opportunity, uh, and earning trust by proving they deserved it. That was our motto. And the best way to earn trust is to prove you deserve to prove with evidence. Selling, um, software into universities, especially a social network of sorts, led us headfirst into the problem that we then set out to solve. Withdraw the problem. Um, and that was how do we ironically earn the trust of these customers with the sensitive data that they're handing us. In this case, university is handing over sensitive student data and needed assurance of our security posture. They needed us to prove all the things we said we were doing when it came to our uh, security and compliance. And so that ultimately led us down the path to uh, build tools to streamline, to automate and then eventually um, build Jurada as a standalone company after Portfolium was acquired in 2019.

Speaker B: How uh, crucial in your thoughts, is it or not that having had this one startup under your belt, um, you know, with experience, all the learnings to the, the success of, I uh, guess scaling rapidly, you know, the second time, uh, do, I mean, do you think. Because I believe, you know, you've gone from 1 to 100 million ARR, ah, in you know, only a matter of years with Drata without portfolio. Do you think that would have been possible?

Speaker A: I don't think it would have been, no. Um, I think about it a lot actually because like I said, we, we learned so much so, so quick with, with Portfolium across every dimension. Even though when you look at it over seven years, you know, we never, we never really scaled Portfolium, uh, we never reached, I guess, meaningful, I should say revenue scale. I should really clarify that Our CTO is going to get mad at me because we scaled the product to support millions of monthly users, eventually uh, millions in revenue, but you know, never beyond 100 employees. Um, and again that was over seven and a half years withdraw to you know, 100 employees in dozens of countries, thousands of customers, nine figure ARR. And that was all in less than, you know, three and a half, four years. Um, so it Wasn't like we, we, we had a playbook that we could just copy paste. We had a ton of experience, a ton of resilience. Initial team that we had worked with for quite some time, which was the ultimate superpower when we started Drata, especially during COVID lockdowns, being fully remote and having tight knit team had spent years together in, in a very tough space. Uh, that, as I said that was just a cheat code early on in 2020 and 2021. Um, but yes, a lot of lessons learned that definitely helped us tactically, operationally, strategically and then maybe even mentally as founders within uh, within the tech space.

Speaker B: Well, let's dig into the Drata story. Right. And so as we heard, I guess with NASA or when working in NASA, um, that sort of spawned the idea of problem that you had to build portfolio. And with portfolio there's a problem that you had which had led you to understand, uh, why you wanted to go ahead and sort of build Drata. Um, uh, but as you said, in three and a half years you're taking this company to scale, um, one to 100 million. Uh, would uh, love to dig into that. And it's a big range. Right. So there are obviously many stages within that, but you did it in a short time. What are the lessons? How have you done it? What can you share? Um, uh, with the audience?

Speaker A: So both, both companies, as you mentioned, it was a problem that we experienced, solved for ourselves and then set out to solve for the market. Right. Um, the difference with Drata there was a lot more. Uh, say we fell in love with the problem before the solution. Um, the problem itself resonated so much with us because the product that we were selling into universities was meant to help students to visa grads prove the very things they were saying on their resume. And then when it came time for us to prove all the things we were saying when it came to our scary clients class year, the first time we were asked to, we couldn't. And that stung in such a unique way. We, we felt the problem so near and dear. Um, and so there was so much empathy for all of our eventual customers who were going through that same problem. Um, and yes, we started solving it for ourselves, building tools in house at a portfolium for our own use case. So by the time that company was acquired and we saw how big that problem actually was, not just for ourselves, but for any company out there that was storing or processing customer data in the cloud, which is every company today, um, you know, we were, we were uniquely positioned to Solve it at scale. Um, and we didn't, we didn't say, okay, let's go solve it. We still went out and talked to the market. We talked to dozens and dozens and dozens of potential customers to see how their paying was similar to ours, how they were trying to solve it themselves. Um, before we wrote our first line of code, um, to a degree we just didn't do the first time around. And so I attribute that a lot to the immediate lightning and evolved product market fit that we had at Drata, but we did not have with the EdTech company at all. Um, and because we put the time and that effort in and we have that lightning model product market, the appreciation for the problem, the opportunity to solve it that fed this execution kind of virtuous cycle. I always point to this flywheel of we know how big this problem is and how massive the opportunity is to solve it. We are uniquely positioned to do it. We're going to go do it. Uh, and when you see those results start to compound and the appreciation builds and the execution like around and around, you go on. There's this flywheel. And that's been part of the secret sauce for from day one. But we went 0 to 10 million that first year, um, which was about 10 times faster than we thought we were going to go. Which just shows how, how immediate that part of market fit was. Which we know how rare it is,

Speaker B: how it is very rare. And look, I mean most of the, because it's so rare and I don't know what the percentage is right. You know, most of the founders that um, you know, I speak to within community over let's say the last 10 years, it is just a real struggle to get to product. The majority will struggle ah, to get there. And that's why it's such a, you know, a hot topic. It never goes out of fashion. Right. Um, at the startup stage and uh, obviously being, well it, it is blessed by obsessing over uh, the you know, a problem, you know, getting into finding a uh, uh, real problem with a massive market know, I'm sure you know, creating a great product, all the elements. But maybe could you break down like the elements of like how you got to product market fit and then when you got there, um, you know, okay, you realize we've got product market fit, then what do you do as a company then to kind of capitalize on it, you know, where do you invest higher, you know, what channels, et cetera, you know, how do you compound from that?

Speaker A: Yeah, I mean a lot of things we'll talk about strategy and execution. Execution strategy, right. Um, but there's also a timing element where that one, you have the best strategy and the best execution and just not time it right. Um, and, and kind of miss wave. I've got this, this picture behind me is surfing. And so I always use the surfing analogy of like you're a little too far in front or a little too far behind the wave, you're going to miss it um, no matter how perfect your, your form is. Uh, and so timing is one of the things where we, we did get lucky there. Um, now there's plenty of companies that went to attack this at the same time. So they all got timing right and lucky they didn't have the right strategy, the right execution or both. And so you need all three in my opinion. And um, in terms of timing like we saw the, the writing on the wall, we, when we experienced that problem it was at the same time that uh, GDPR was coming online. And as a multi tenant social network implementing the controls to comply with GDPR was, was again a real pain that we felt we experienced was solved. And then over the next couple of years we were on the front lines seeing the problem growing, seeing the need for that assurance that third party vendor risk, uh, process, um, different standards and frameworks, uh, like Stock two, uh, going from a nice to have competitive advantage to all of a sudden we look around and everyone has it. If you don't have it, it's a problem kind of. Steve is compounding to the point where, where's the puck going here? This is now something that every company is going to be expected to do. They don't have the resources to do it or the experience to do it. We know that because we felt it. Um, and so the timing, I always stress just the timing of it. Once we launched and you see the repet like the repeatable motion, we went from founder led sales to having a sales team within a matter of weeks. Um, and we had amazing folks that were with us at the prior company that were those initial sales folks. And so things um, that you know in the prior life where maybe most more commonly you have to go through these transitions founder led motion to a more repeatable motion that you can scale. And we had to do everything on fast forward. Um, that's why I said to the original question, if we didn't have the prior experience of going through it in a more let's say slow kind of traditional sense, we wouldn't have been as quick to make adjustments to the process. As we would be able to keep up with the demand. And what a horrible problem that would have been. Uh, because these opportunities are so rare, the window is open for only so long. And so in 2020, 2021 we officially launched, that window was open, um, and we took full advantage of it. The execution was our way of showing our appreciation for the customer problem and the opportunity itself. Um, that was part of the initial culture, the DNA of the company and that's the folks that we attracted. And so operationally the things that we set up to be able to keep up with the demand, having things like day one when we launched just automated inbound lead routing, um, again, if we hadn't set that up in a prior life and didn't have that ready to go on day one, inbound opportunities would have flipped through cracks because there just wouldn't have been automation there. And so have folks joining in their calendars, filling up with opportunities and a whole demo environment already ready to go. Um, these were things that just helped us go so fast. And speed was really the, still is the ultimate competitive advantage. We also took a partner heavy approach pretty early and I attribute a lot of the success to that because that's one of those things again, culturally you have to embed within a go to market motion or it's as tough to kind of inject a shoe gour in later. So uh, you know, hats off to the amazing team that helped us do

Speaker B: that just on that because I think also uh, another one of these things that certain companies get, the partner model like, right. And uh, you've cracked that. Uh, but I think the majority are uh, kind of uh, sitting on the outside thinking like, you know, will a partner model work? You know, they haven't quite done it. Uh, perhaps you can explain a little bit of like um, how you approached it, how it worked for you. It may not be a one size fits all having a partner model, but why you went down that road and how it worked for you.

Speaker A: Yeah, no, it's a good caveat. I think any and all the devices, it's never a one size fits all. What works at one company in one space might not work at another even in the same space. So um, it's a good take, uh, everything with a grain of salt kind of caveat. Uh, for us, I'd say the one core piece that even let us know that hey, maybe we should be taking a partner heavy uh, approach here was just listening to the customer, as silly and simple as that sounds, being so customer centric from the moment we set out to solve this problem, um, listening to them, understanding that a lot of these companies were, prior to drata, were working with some sort of nsp, mssp, um, that would come in and do this work. And so these, these teams were themselves looking for software that could help them do this faster and at scale. And so if we were able to work with them in a onetomany fashion, that could help us just accelerate our, our whole go to market motion. But how we went about it is a whole another discussion. Uh, and again, have to get certain things right. Almost have to luck out with some of the initial partners that we did bring on because you can't partner with everyone. You have to really be with, with who you go after. Um, I think we made some good decisions on, on who we, who we partnered with and then built out a team to actually expand it to have different types of partners that we went to market with, whether they were tech partners, you know, audit firms, um, channel partners. And uh, today, it's today channel, just the whole partner program drives over a third of our pipeline. Ah, storage is that, um, they, they touch another third. So, you know, two thirds of our pipeline is sourced or an andor influence through a partner. And that, uh, again, unless that's done pretty early on, it's tough to shoehorn that in later because the direct motion becomes so predominant.

Speaker B: What about yourself personally as a CEO? So again, just, you know, the rapid growth of the business, rapid growth of revenue that, uh, you often hear. I often hear that, you know, CEOs have to reinvent themselves at, you know, the 1 to 10 billion, you know, 10 to, I don't know, 20, 20, 50, 50 to 100. Must have had to do a lot of reinvention if that's the case in a short period of time, you're like, I could imagine, uh, maybe even myself and where we're not growing anywhere near as fast as you, but just thinking about, okay, like a reinvention of, you know, like 10 to 20, um, and spending a lot of time thinking about it, but you wouldn't have had much time to think about it. So how did you, how did you deal with that, really?

Speaker A: Ah, good question. Because, yes, the job itself changed very fast and continues to, um, but just the idea of, I mean, growth is change, right? So everyone's role at the company has changed so rapidly. I mean, if you've been at Dorada for more than six months, your, your role, your remit has changed within that six months. Um, and that's reprogramming our brains to remind ourselves that that's a good thing. That means the company is growing, we're seeing success. If it was the same thing every day, it means we're stagnant, we're not growing, we're not changing. Um, so first was just like mentally accepting that. And I talked to a lot of CEOs who give a lot of good advice. One um, always stands out and I won't. I'll uh, take what they said and apply it to Drata. But something to the effect of, you know, I set out to build a trust management platform but ultimately my job is to build a company that delivers a trust management platform. So the idea of uh, being a, I mean maybe Most co founder CEOs are great product oriented. They don't, I don't know, I shouldn't say most. I am a product and customer oriented founder CEO. Um, so the idea of company building was never my main intention but that is the job. And so surrounding myself with folks that complement those skill sets, those, those areas to, to do it effectively, uh, that's, that's been a must have necessity for me. And um, so I've tried to make sure I have that, that right kind of compilation of folks around with complementary skill sets. It's another thing I was pointing to too even in the earliest days having three co founders, myself and two others that were the same co founders from the prior company. So yes, there's that prior experience that you know, repeat team coming back together, that's a huge competitive advantage. But even the dynamic between the three having very complimentary personalities but complimentary skill sets. Right. There's a cto, obviously technical, I'm m running all of engineering. We had our Commander CRO running all of goto market. And then you have myself who dabbles in both enough to be dangerous, um, can help kind of point and steer the ship. And so I, you know, I never take that for granted because that was another huge reason why we were able to move as fast as we did, um, as early as we did.

Speaker B: Speaking of, of change like so you launched in 20. 2020, um, we would say let's classify you, categorize you as a traditional B2B software, sort of like platform. Um, but now we're in this AI era and over the last 18 months or so SaaS companies will uh, certainly have been encouraged and I'm sure would be the case in your side. Uh, um, because there's a bit of an existential moment that if you don't move to become AI first That uh, you may become irrelevant very quickly. So perhaps you could just share a little bit about your thoughts in terms of um, how you view this movement to become uh, AI first sort of businesses, what you've done internally Pedrata and also then what it means for the space and your customers.

Speaker A: Yeah, maybe I could start with the last part there because I think it is the most be interesting for us the fact that what you just described, every company out there needing to become AI first or adopt AI at a rapid pace, um, like as an existential threat if they don't, um, that is driving a whole new set of demand for the very platform now that we've built. Um, so any of our success to date prior to the kind of call it geni boom I said has attributed a lot to just riding the wave of the kind of cloud proliferation of SaaS when all this third party risk started exploiting because we were relying now more on more and more third party cloud vendors, uh, which then drove a need for that minimum bar of security assurance and the rise of a product like Drata. Um, now every company used to bring in AI specifically vendors and there's a whole new set of risk criteria that need to be evaluated against and who is better positioned to help them solve that than you know, a platform like Drata that's built this network of thousands of companies continuously monitoring and proving and showcasing that very security posture. So um, that has driven a whole new, I keep saying that's got a magnifying glass over the very space that we set out to, to help build this trust management category. And so that's been a nice boon as you can imagine. Um, and again I, I should so much to the timing and execution because if we didn't launch when we did, if we didn't grow this network with thousands of customers, we wouldn't be so uniquely positioned to now solve this page where our largest customers, our Fortune 100 customers are calling us and saying I have this mandate. My CFO has literally given us a green light, a blink check to the breeding AI vendors because it's a huge, it's an existential risk to your point, if we don't. And so how am I going to do that? We're already a customer of yours. This has to be something you're building or if not already built. And sure enough, we want your agent to trust uh, vendor risk management offering that does exactly that. So that's kind of the first thing I always like to point out from folks when it comes to the AI boom Um, it's also driving a new set of uh, regulation and the set of frameworks that our customers have to go comply with. Um, the number one hand, um, raiser right now for our customers is the need for them to go comply with ISO 42001. AI specific framework from ISO. Right. And so, and then there's the, this AI was management framework that's more around the corner. And so this is just adding to the stack, adding to the otherwise very manual painful problem of needing to comply with multiple frameworks at once continuously. That's our, that's our, one of our bread and butter use cases, at least the one we initially started with. And so we have the most repetitions with. Um, and then yes of course our cell. We are not unique to this AI boom. We are bringing in AI solutions ourselves. We have been embedding AI into the product for the last two years from both a, I guess all three layers of the cake from the embedded AI, the on demand kind of chat AI and then our purely agentic offerings as well. So um, yeah it's at the highest level. It has just brought a whole new set of demand uh, to the very category that we set out to build.

Speaker B: And what about, thanks for sharing that. What about uh, your own personal use of AI on a day to day basis versus also what are the team, what tools are uh, the draft team deploying that you can share for their use? Whether it's for GCN motions or you

Speaker A: know, other departments, every department, um, almost in a, uh, the competitive fire that's part of our culture uh really shows up in terms of how folks are adopting AI to improve efficiency, improve productivity, both in many cases. Um, and I would say maybe it started on product engineering in terms of tooling to help them out from writing code to um, building prototypes to writing tickets and stories. But um, other departments quickly caught up and in some cases even surpass. And I would put marketing top of that list in terms of their adoption and use of AI. Um, every leader of the company, every, every individual of the company, but especially our leaders have had to kind of rewire their brains, myself included. So how do we take an AI first approach to the problem? Not hey what tool can I go get? It's what is the actual problem I'm trying to solve or what is the thing that I'm spending time on that I really shouldn't be. Um, and everything from obviously uh, content creation, um, copywriting, uh, you know, actually creating the, the use cases, helping create the very tailored um, you know, value Metric, uh, QDR decks for our customers every single time we, we get on call with them. Being armed with the right data to provide a better experience for them. Um, culturally having that customer obsessed customer first mentality helps narrow the focus of where we're going to go. Apply AI to the use cases because what better place to start with then making the customer experience better? Um, but yeah it's been, it's been a journey like every company has been on but it's, it's one that we know is existential. It's ah, a must across every department.

Speaker B: Has it changed the way that you've gone about like hiring? Are you looking for like specific, I guess kind of skill set? Does it matter if you've got a resume of you know, an MBA versus from Harvard versus somebody that like, I don't know, is an AI expert? Um, ah, and have you created like a head of AI role or specific roles within the business? Uh, around this new sort of era?

Speaker A: We have um, on the product team. There's uh, obviously team of AI folks and engineers who have a VP of product from AI product. Uh, but in terms of hiring in general, you're uh, talking that built a company in the edtech space to help students from any university or any background, um, prove their skills beyond just where they worked or where they went to school. And so we're very much a, ah, competency first, uh, potential for pedigree kind of mindset. Um, I know it's so overused at this point but the message to the team um, was you know, AI isn't going to replace your job but someone using AI will. Um, and it really helps. I mean it's such a simple way of saying it. I know again it's overused but in terms of setting the, setting a new standard for how we think about solving problems, that's a great way to play it.

Speaker B: What's next for Drata? Um, you know, how do you foresee, you know, not only maybe the next 12 months but the next kind of few years?

Speaker A: Like I said, the AI boom has put a magnifying glass over the space in such a great way. Um, it's only magnified the same problems that have always been there from a third party risk standpoint in terms of security, privacy, confidentiality. Um, so couldn't be a better time. The times now for what we're doing and the execution date has really opened up the opportunity to solve the bigger problem around trust management as a whole. Um, to start from compliant automation four and a half years ago to Then have a modern automation GRC offering, a security assurance offering and now a vendor risk management offering. It really completes the full stack trust movement platform. Um, and it's. We talked about it that a story rapid growth. We want to continue to compound that growth, um, internationally as well. We're now 30% of our customers are um, outside the US we have teams in London and Sydney as well as across North America. So it's been a rapid journey and it's only going to accelerate from here. I um, think uh, we're probably most excited right now for this agentic vendor risk offering, um, because we are so uniquely positioned to solve it. Which was always the. What was the plan? Um, plans don't always go the way you think they will, but when they do, it is pretty amazing. And like I said, the most excited I've been um, in such a short amount of time that we've been building to now unlock this bigger opportunity, the very problem that we set out to solve. Um, we're just doing it much faster than we expected.

Speaker B: Amazing. Well, I think uh, it seems a clear sort of case study, like one not only of timing that you mentioned, but having real sort of like passion for a problem and uh, that really kind of helping uh, uh, grow and scale a company uh, as rapidly as you have. So uh, congrats on that Adam. Um, and sharing uh, a story and the lessons with uh, the SAASOP community. Really appreciate it. Um, thank you so much for being on the podcast and uh, hopefully we'll get to see you at um, uh, one of the sasoc events sort of next year, uh, in person.

Speaker A: Definitely. Thanks so much Alex. Appreciate it.

Speaker B: Thanks for listening to the SaaS Revolution Show. If you enjoyed this episode, please leave a review and follow the show. It helps more SaaS and AI founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry. For more insights and to join the SAS Talk community, head to sastock.com.